FN

Fabrinet

HALAL

Score: 88/100

stock

Is FN Halal?

Provider of precision optical and electro-mechanical manufacturing services for technology companies — a permissible manufacturing business with a debt-free, net-cash balance sheet.

What You Should Know

Fabrinet is a publicly-traded company that provides precision optical, electro-mechanical, and electronic manufacturing services to original-equipment manufacturers of optical communication components, lasers, sensors, and other advanced products, handling complex assembly, test, and supply-chain work on behalf of its customers. Providing contract manufacturing and assembly services is a general-purpose industrial-technology activity that is permissible at the activity level under standard Sharia methodology; Fabrinet earns manufacturing-service revenue rather than interest. Fabrinet maintains a debt-free balance sheet with a substantial net-cash position, so it comfortably passes the debt-to-market-cap screen; the primary financial-screen consideration is the interest income generated by its cash and investments, a small portion of which should be purified. Subject to verifying ratios at the time of investment, most major Sharia advisory boards classify Fabrinet as permissible with purification of small interest-income components.

⚠️ Concerns

•Fabrinet holds a substantial cash and investments balance that generates interest income — verify the interest-income-to-revenue ratio against the 5% threshold and purify the corresponding portion of any returns
•Debt-to-market-cap ratio should be confirmed against the 33% Sharia threshold at the time of investment, though Fabrinet typically operates debt-free with a net-cash position
•Fabrinet derives a large share of revenue from a small number of major optical-component customers — this customer-concentration risk is a business and valuation consideration rather than a Sharia screen concern
•As a contract manufacturer, Fabrinet carries meaningful receivables and inventory — verify the receivables-to-assets ratio against the preferred board's threshold at the time of investment