Pegatron Corp (和碩), one of Apple Inc’s iPhone assemblers, yesterday said it is forfeiting control of a once fully owned subsidiary to Chinese rival Luxshare Precision Industry Co (立訊精密) in its latest effort to diversify its manufacturing sites geographically.
Its indirect share of Pegaglobe (Kunshan) Co Ltd (世碩電子) would drop to about 37.5 percent following the Chinese subsidiary’s latest share offerings, Pegatron said in a filing with the Taiwan Stock Exchange.
Luxsan Precision iTech (Kunshan) Co Ltd (立臻精密), a subsidiary of Luxshare, would subscribe to all of the new shares issued by Pegaglobe, which are worth 2.11 billion yuan (US$298.86 million), the filing said.
Pegaglobe has increased its registered shares to optimize its business as it braces for a rapidly changing industry environment and market conditions by forming a strategic partnership with Luxsan, Pegatron said in an e-mailed note.
The partnership would help Pegatron better utilize its resources and balance its global deployment, it said.
As Pagaglobe’s business model would remain intact, the deal would have limited impact on its operations, Pegatron said.
The firm said that it is diversifying its capacity geographically to provide as many options as possible for customers.
China remains its major manufacturing hub, with non-China capacity accounting for 15 percent, it said.
For Luxsan Precision iTech, the deal matches its strategy of boosting its smartphone assembling capacity to seek a bigger share of Apple Inc orders.
The Kunshan-based company in 2020 acquired two Wistron Corp (緯創) factories in China’s Jiangsu Province.
Wistron, which used to compete with Pegatron and Hon Hai Precision Industry Co (鴻海精密) for iPhone manufacturing orders, has disposed of its Chinese and Indian iPhone manufacturing capacity to focus on better-margin products such as artificial intelligence servers.
While Pegatron’s Chinese presence is shrinking, the company is expanding its manufacturing footprint in Vietnam.
In a separate filing yesterday, Pegatron said it plans to spend about NT$1.19 billion (US$38.74 million) to build new manufacturing facilities in Vietnam through its Pegatron Vietnam Co Ltd subsidiary.
Additionally, the firm would spend about NT$825 million to build employee dormitories in Vietnam, a separate filing said.
In Vietnam, Pegatron primarily makes consumer electronics such as smart speakers for Google, Surface laptops for Microsoft Corp and gaming consoles.
In Mexico, Pegatron makes electronic control units for vehicles, charging piles and components used in charging devices for a North American-based customer reported to be Tesla Inc.
The company also operates factories in India, Indonesia and the Czech Republic, it said.
Pegatron plans to spend US$300 million to US$350 million on new equipment and facilities this year.
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