Lenovo, Compal Set Up Laptop Production Venture in China
September 27, 2011, 5:23 AM EDTBy Mark Lee
(Updates with closing share prices in second paragraph.)
Sept. 27 (Bloomberg) -- Lenovo Group Ltd., the world’s third-biggest maker of personal computers, will team up with Compal Electronics Inc. to make laptops in China as it looks to boost production.
The two companies may invest a combined $300 million in the venture in the eastern Chinese city of Hefei over the next 18 months, they said in an e-mailed statement today. Lenovo climbed 11 percent, the most since May 2009, to HK$4.96 at the 4 p.m. close in Hong Kong trading, while Compal rose 2.2 percent to NT$30.15 in Taipei.
Lenovo, which acquired the PC division of International Business Machines Corp. in 2005 to expand outside China, is boosting production and expects to overtake Dell Inc. this year as the second-biggest vendor globally. Compal, based in Taipei, is the world’s second-biggest contract maker of laptop computers and a supplier to Lenovo’s rivals, including Hewlett-Packard Co. and Acer Inc.
Lenovo will hold 51 percent of the venture and Compal will own the rest, according to the statement. The venture is expected to start “full-scale” production by the end of 2012, the companies said.
Lenovo, with headquarters in Beijing and North Carolina, acquired control of Medion AG and the PC operations of NEC Corp. this year to expand in Germany and Japan.
Lenovo accounted for 12 percent of global shipments of PCs in the quarter ended June 30, up from 9.7 percent in the previous three months, according to research company Gartner Inc. Hewlett-Packard, the industry leader, fell to 17.5 percent from 17.6 percent, while second-ranked Dell Inc. rose to 12.5 percent from 11.9 percent.
--Editors: Nicholas Wadhams, Garry Smith
To contact the reporter on this story: Mark Lee in Hong Kong at wlee37@bloomberg.net
To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net
