Sat, Jun 22, 2019 - Page 12 News List

Pegatron plans local production boost

LONG-TERM OPTIMISM:Pegatron’s chairman was quoted as saying that as costs in China would inevitably go up, firms would exit even without the US-China trade war

By Natasha Li  /  Staff reporter

Pegatron Corp (和碩), an assembler of Apple Inc iPhones, yesterday said that it plans to significantly boost production in Taiwan to cope with expected US-China trade issues for the next few years, but is cautiously optimistic about the second half of this year.

“We plan to triple production in Taiwan,” a company official told the Taipei Times by telephone, quoting remarks Pegatron chief executive officer Liao Syh-jang (廖賜政) made at the company’s annual shareholders’ meeting in Taipei.

Its operations outside China account for only a single-digit percentage of overall production, Liao was quoted as saying.

The firm operates three plants in Taiwan in Sinfong Township (新豐), Hsinchu County; Guishan District (龜山), Taoyuan; and Sindian District (新店) in New Taipei City.

Pegatron began mass production at the Xindian plant this year after its fab there was completed at the end of last year, while the company is still negotiating leasing terms over the Xinfeng plant, the official said.

Pegatron chief financial officer Charles Lin (林秋炭) said that the company has rented out part of its production capacity at the Guishan plant to Pegavision Corp (晶碩) while the contact lens subsidiary waits for its plant in Taoyuan’s Dasi District (大溪) to be completed.

Pegatron would recover full use of the Guishan plant in two years, Lin said.

The company’s plant on Batam Island in Indonesia in January started shipping products, the official quoted Liao as saying, adding that the location was chosen for its proximity to Singapore.

“Singapore serves as a container freight station,” the official said, adding that the city-state facilitates shipping to other countries, such as China and the US.

The Batam Island factory specializes in products affected by US tariffs, Liao was quoted as saying.

The second half of the year is traditionally a high season for consumer electronics, but the company cannot predict whether it would perform better than last year, Liao was quoted as saying.

However, Pegatron chairman Tung Tzu-hsien (童子賢) expressed optimism over the long term, despite external market factors.

Production “costs in China would inevitably go up... The [US-China] trade war only accelerated the process,” the official said, quoting Tung.

Companies would eventually relocate — even without the US-China trade dispute — to reduce costs, the official quoted Tung as saying.

Tung also offered a hopeful outlook on the future of cutting-edge technologies, such as artificial intelligence and 5G, the official said.

At the meeting, shareholders approved a distribution plan of NT$3.5 per share, representing a payout ratio of 82.35 percent based on earnings per share of NT$4.25 last year.

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