Lite-On Technology Corp (光寶科技) yesterday said that Tsinghua Unigroup Ltd (清華紫光) is to inject US$55 million for a 55 percent stake in its subsidiary in Suzhou to jointly develop the Chinese market.
The announcement came less than three months after Lite-On on Sept. 28 announced that it would invest US$45 million to establish a subsidiary and build a plant for storage products, such as solid-state drives (SSD), in Suzhou.
Tsinghua Unigroup and Lite-On had held collaborative talks on setting up a storage business for more than six months before Lite-On’s announcement in September, a Lite-On investor relations officer said.
“We believe that the two firms’ cooperation will create synergy and pave the way for developing China’s growing storage market,” the officer said by telephone.
Total paid-in capital for the Suzhou subsidiary would be US$100 million and the two firms are to set up a new board after Tsinghua Unigroup’s capital injection, Lite-On said in a filing with the Taiwan Stock Exchange.
The Chinese company is to hold 55 percent with three board seats, while Lite-On would own 45 percent and have two board seats, the officer said.
She said the Suzhou company would be led under a co-CEO structure, with Lite-On and Tsinghua Unigroup each proposing a candidate for CEO.
Tsinghua Unigroup is to handle customer relations, given its connections in China, while Lite-On is to take charge of supply chains and contract manufacturing, she said.
Lite-On’s storage products are used in a wide range of applications, such as PCs, enterprise servers and data centers, she said.
When asked if the Suzhou plant would focus on manufacturing products for data centers, the officer said that Tsinghua Unigroup would have the final say over product plans.
However, demand for data center infrastructure in China has boomed in the past two years, she said.
Construction of the plant is expected to start next year and it should begin operating in the fourth quarter, she said, adding that it should start contributing to Lite-On’s revenue in 2019 at the earliest.
It is Tsinghua Unigroup’s second investment in a Taiwanese company in the past two months.
Siliconware Precision Industries Co Ltd (矽品) on Nov. 24 said in a filing with the Taiwan Stock Exchange that it sold a 30 percent stake of its subsidiary in Suzhou to Tsinghua Unigroup for 1.02 billion yuan (US$154 million) to accelerate its development in the Chinese market.
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