* Rising costs fuel margin concerns
(Adds comment and updates stock price)

HONG KONG/TAIPEI, Aug 31 (Reuters) - Shares of Foxconn
International Holdings Ltd fell more than 10 percent on Tuesday
morning, its biggest single-day percentage fall in 17 months,
after the world's top contract cell phone maker reported
first-half earnings fell deeper into the red.

Parent Hon Hai Precision Industry Co Ltd, Taiwan's top
electronics parts maker, led technology shares lower in Taipei,
sliding as much as 6.6 percent after it reported a
weaker-than-expected quarterly profit.

Taiwan-based Foxconn Technology Group, which includes Hon Hai
and Hong Kong-listed unit Foxconn International, could see
margins continue to trend down because of wage increases in the
mainland, analysts said.

It would also take time for the group, which manufactures
electronic devices for global brands including Apple Inc, Dell
Inc, Nokia Oyj and Hewlett-Packard Co, to benefit from relocating
its manufacturing facilities to inner China from higher cost
coastal cities, they said.

Foxconn fell to as low as HK$4.98 in first hour of trading,
the lowest level since July 22. As of 0402 GMT, they stood at
HK$5.13, down 7.73 percent and lagging a 0.86 percent fall by the
Hang Seng Index.

"There was no catalyst to boost the stock in the short run,"
said William Lo, analyst at Ample Finance Group. "However, we see
some catalysts in the longer run as it relocates its
manufacturing facilities inland and its growing bargaining power
with clients such as Nokia to increase (product) prices,
particularly after it posted a deeper loss."

Lo forecast buying opportunities after a sharp fall to below
HK$5 per share.

Foxconn recorded a January-June loss of $142.64 million, far
worse than the $18.7 million loss it recorded a year earlier, hit
by falling handset prices and higher depreciation costs as it
moves production to inland China to escape rising labour costs.

PARENT HON HAI FALLS

Hon Hai, the most active stock on the Taiwan stock exchange
by both volume and turnover, was down 6.2 percent to T$113.5 at
noon, versus the TAIEX's 1.5 percent fall.

Despite the decline, Fuh Hwa Securities Investment Trust
Vice-President and Fund Manager John Chiu said he saw limited
downside for Hon Hai shares, based on hopes that Hon Hai was
likely to make more iPhones and iPads for Apple in coming months.

"It will gain more orders from Apple in the second half, so
don't have to be too pessimistic," said Chiu, adding that Hon Hai
should see initial support at T$100-T$110.
(US$1=HK$7.77)
(Reporting by Donny Kwok and Baker Li; Editing by Chris Lewis)