Thu, Jun 13, 2019 - Page 12 News List

Wistron eyeing production in US

RELOCATION:As part of its move out of China, the company is mulling expanding back home or in other countries such as Malaysia in light of the US-China dispute

By Natasha Li  /  Staff reporter

Wistron Corp chairman Simon Lin, center, speaks at the company’s annual shareholders’ meeting in Taipei yesterday.

Photo: CNA

Contract electronics manufacturer Wistron Corp (緯創) yesterday said that it aims to set up a production facility in the US as the trade dispute between Washington and Beijing rages on.

“We sell one-third of our products in the US,” Wistron chairman Simon Lin (林憲銘) said at the annual shareholders’ meeting in Taipei, adding that the company is seeking to move one-third of its production out of China.

“We already have a site on the [US] west coast, but it is more oriented toward PM [product management], R&D [research and development] and sales,” Lin said.

The company also has an after-sales service center in Dallas, Texas, but it is equally unsuitable for production, he said.

“We are currently considering three sites ... one in Texas, one on the east coast and another on the west coast,” Lin added.

The company is more interested in renting an existing facility to cut costs, he said.

“Normally, it would take us six to nine months to set up a production site,” but that process could be shortened to three months if, for example, Washington levied tariffs on another US$300 billion of Chinese goods, he said.

Given the unpredictable nature of relations between the US and China, Wistron had previously expanded production in countries such as Mexico, the Czech Republic, India, Malaysia and the Philippines.

Major clients agree that Wistron should keep two-thirds of its production in China, but a number of new customers are demanding specific products and recommending moving all production out of China, Lin said.

“For the new clients, we will move entire production lines to Malaysia, or back to the Hsinchu Science Park (新竹科學園區) in Taiwan,” Lin said, adding that the company has negotiated with clients to share the rising relocation costs.

The company might expand production capacity in Taiwan, because the plant in Hsinchu has reached full capacity, he said.

Wistron is relocating production for notebooks to Southeast Asia and also plans to move production of smartphone products, he added.

The company’s facilities in India mainly manufacture products that apply Internet of Things technologies to ATM payment gateways, but India has not been as supportive of the business sector as China, Lin said.

Most companies in India must wait more than four months to start a business there, while the Indian workforce lacks the consistency and discipline that their Chinese counterpart excel at, he added.

Overall, the trade war has an impact on the electronic components industry and the greatest challenge for the supply chain is the management of logistics, Lin said.

At the meeting, shareholders approved a proposal to distribute a cash dividend of NT$1.5 per share, representing a payout ratio of 85.23 percent based on last year’s earnings per share of NT$1.76.

That also implies a dividend yield of 6.28 percent based on the stock’s closing price of NT$23.9 in Taipei trading yesterday.

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