Gigabyte Technology Co (技嘉), the world’s second-largest motherboard maker, yesterday confirmed that it plans to suspend the operations of two subsidiaries, due to continued losses and the competitive handset industry over the past few years.
“It is part of our corporate restructuring plan... The board of directors will accelerate the discussion and make an official announcement in the next few days,” Gigabyte investor relations division director K.J. Sun (孫國仁) said by telephone.
Sun’s remarks followed a report by Chinese-language newspaper Digitimes that said Gigabyte would shut down GSmart Mobile Taiwan (集嘉) and Gigazone International Co Ltd (曜嘉科技), which are both fully owned subsidiaries.
Gigabyte established GSmart with paid-in capital of NT$1.2 billion (US$37.1 million at the current exchange rate) in 2010 to expand the parent company’s reach by developing its own handset brand.
The subsidiary later transformed its business model to the manufacture of smartphones for other handset brands, such as Motorola Inc.
Gigazone was formed in 2006 with paid-in capital of NT$140 million to develop PC peripherals, Ministry of Economic Affairs data showed.
However, the two companies have been in the red over the past few years due to intensified competition in the smartphone market and the declining PC industry.
The combined net loses of the two companies totaled about NT$100 million last year, and Gigabyte expected net loses to reach a similar level this year, Sun said.
The two firms employ about 100 people and Gigabyte will encourage them to transfer to the company’s other business units, such as motherboards, gaming notebook computers and servers, Sun said.
“We don’t plan to lay off any employees. We want them to transfer to other Gigabyte units,” Sun said.
The suspension of operations and relocation of employees should largely reduce the two firms’ net losses next year, he said, adding that they accounted for less than 1 percent of Gigabyte’s NT$14.88 billion in revenue last quarter.
Gigabyte’s cumulative net income totaled NT$1.78 billion in the first three quarters of this year, an increase of 11.49 percent from NT$1.59 billion in the same period last year, according to a company filing with the Taiwan Stock Exchange.
Gigabyte shares yesterday dropped 5.22 percent to NT$43.55 in Taipei trading, underperforming the TAIEX, which gained 1.01 percent.
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