Pegatron Corp (和碩) yesterday announced it is to spend NT$2.41 billion (US$79.23 million) purchasing equipment for its manufacturing facilities in China as it is expected to start producing Apple Inc’s latest iPhones.
“The investment is part of the company’s plan for this year’s production,” a Pegatron investor relations official said by telephone.
Pegatron is to invest NT$1.08 billion to buy manufacturing equipment for its subsidiary Pegaglobe (Kunshan) Co Ltd (世碩電子) and to spend NT$1.33 billion on subsidiary Protek Shanghai Ltd (昌碩科技), it said in a filing with the Taiwan Stock Exchange.
The official did not disclose whether the investment was to prepare for iPhone-related manufacturing, but Pegaglobe and Protek Shanghai are widely known as the company’s iPhone assembling bases in China.
Pegatron chief financial officer Charles Lin (林秋炭) on March 14 told investors that the Pegatron board approved spending of between US$400 million and US$450 million this year to expand the production capacity of its design manufacturing service.
Lin said that about 70 percent, or between US$280 million and US$315 million, would be invested in new equipment for production.
The capital expenditure of up to US$450 million is more than double the US$200 million of last year and 2015.
Market analysts said the large investment is for new iPhones, as the latest generation of Apple devices is expected to have significant differences with previous ones.
Pegatron officials said the NT$2.41 billion for Pegaglobe and Protek Shanghai accounted for nearly 30 percent of total equipment purchases this year.
Pegatron is to keep buying new equipment in the coming months to meet demand for the peak season of production, the official said.
Pegatron chairman Tung Tzu-hsien (童子賢) in February told reporters that he thinks the smartphone industry would have an interesting year, as one of Pegatron’s large clients is to launch a new smartphone with innovative features.