Wed, Sep 25, 2019 - Page 12 News List

Inventec to spend US$2bn on relocation

HEDGING RISKS:The company is to expand its laptop facility in Taoyuan, as part of a broader plan to shift all of its US-bound shipments to Taiwan by the end of the year

By Lisa Wang  /  Staff reporter

Inventec Corp’s (英業達) board of directors has approved a plan to spend NT$2 billion (US$64.5 million) to move part of its laptop production back to Taiwan to avoid US tariffs on China-made goods, the contract electronics maker said yesterday.

It is part of a broader production capacity reallocation plan by the company to minimize operating risks from the US-China trade dispute, which has triggered large-scale production moves from China not only by Inventec, but also its Taiwanese peers Compal Electronics Inc (仁寶電腦) and Quanta Computer Inc (廣達電腦).

The bulk of Inventec’s latest investment would be used to expand the capacity of its laptop manufacturing site in Taoyuan’s Dasi District (大溪), a public relations officer said by telephone.

Inventec president Maurice Wu (巫永財) told investors last month that the company planned to shift its entire US-bound laptop operation to Taiwan by the end of this year to circumvent Washington’s 15 percent tariffs.

Laptops were Inventec’s biggest source of revenue last quarter, contributing between 40 percent and 45 percent to total sales, the company’s financial statement showed.

Geographically, the US accounted for between 25 and 30 percent of Inventec’s laptop sales, the official said.

The company, which makes laptops primarily for HP Inc, began shipping products from Taiwan earlier this year, as the US plans to add computers to a 10 percent tariff list, which is to take effect on Dec. 15.

From this month, smartphones, servers, networking devices and other consumer electronics exported from China are subject to a 25 percent US levy.

Invectec plans to use its cash flow and profit generated at overseas subsidiaries to fund capital spending for this year and next year, it said.

The company has shifted almost all US-bound server production to another manufacturing site in Taoyuan’s Gueishan District (龜山) and is in the process of relocating production of smart devices from Shanghai and Nanchang in China to its Malaysian factories.

The company also makes AirPods for Apple Inc, and smartphones for Xiaomi Corp (小米) and Huawei Technology Inc (華為), with the US being one of its major export destinations.

Smart devices account for between 15 and 20 percent of the company’s revenue.

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