Audio electronics maker Merry Electronics Co (美律) on Thursday said it plans to invest US$12.24 million in a Vietnam-based joint venture with a Chinese supplier to help customers avoid heavy tariffs levied by the US on Chinese goods.
Merry, which makes speakers for Apple Inc’s iPhones, would hold a 51 percent stake in the business, while China’s Luxshare Precision Industry Co (立訊精密) would claim the remaining 49 percent through its subsidiary, United Tao Electronics Co Ltd (聯滔電子).
The joint venture, temporarily named Merry Luxshare (Vietnam), would have US$24 million in starting capital, Merry said.
The US$40 million venture was formed in response to US clients’ demand to move production out of China by expanding overseas manufacturing facilities, the company said in a filing with the Taiwan Stock Exchange.
Merry said that it chose Vietnam because of its advantageous tax policies and proximity to China, which keeps transport costs low.
Moving to Vietnam also helps Merry establish a stronger supply chain in the Southeast Asian region, it said, pointing to existing facilities in nearby Thailand.
In October last year, Merry president Allen Huang (黃朝豊) told investors at an earnings conference that the company was increasing shipments from its Thailand plant, which mainly carries out US orders.
The US market makes up about 50 percent of the company’s total audio components sales, the Central News Agency reported on Thursday.
Huang has said he aims for the Thailand plant to contribute about 20 percent of overall sales this year, compared with 1 to 2 percent last year.
Meanwhile, Merry said that it would leave upcoming production in Vietnam for Luxshare to oversee and manage, while Merry would be in charge of client services and sales.
The Vietnam plant would mainly produce Apple’s Airpods as the US company’s top supplier Inventec Corp (英業達) has reached full production capacity at its plants in China and Malaysia, the Chinese-language Apple Daily reported yesterday.
Selling nearly 60 million units last year, Apple had earlier asked suppliers to ramp up production to 45 million units in the first half of the year to meet the robust market demand, the Nikkei Asian Review reported earlier this month.
Meeting that volume might prove difficult, as an outbreak of COVID-19 in China has stalled production of essential components and disrupted shipment schedules, the Nikkei Asian Review said.
In a separate Taiwan Stock Exchange filing on Thursday, Merry said its board of directors approved a cash dividend distribution of NT$7.7095 per common share, representing a payout ratio of 61.63 percent based on the company’s earnings per share of NT$12.51 last year.
Last year, Merry saw net profits jump 23.79 percent to NT$2.55 billion (US$84.1 million), from NT$2.06 billion in 2018.
The company is to seek approval of last year’ s earnings report and cash dividend distribution at its annual shareholder’s meeting on June 19.
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