Wistron Corp’s (緯創) board of directors has agreed to expand the company’s server production capacity at home and abroad, as well as sell its mobile phone business in China’s Kunshan in January, the company said last week.
The contract electronics maker — whose products include handsets, servers, laptops, PCs, tablets, video game consoles and LCD modules — has been expanding its non-Chinese production capacity over the past year, including in Taiwan, India, Malaysia, Vietnam and even in Texas, amid US-China trade tensions and geopolitical uncertainties.
The company’s board on Thursday approved a proposal to invest US$28 million in Wistron InfoComm Technology (Texas) Corp to add server production capacity at its Mexican plant to support exports to the US, according to company regulatory filings.
Photo: David Chang, EPA-EFE
The board also agreed to lease a plant owned by solar module supplier United Renewable Energy Co (聯合再生能源) in Hsinchu County’s Hukou Township (湖口) for NT$13.02 million (US$451,347) per month as Wistron aims to expand its server assembly capacity in Taiwan, regulatory filings showed.
As for its handset business, the company has reached a deal with China’s Luxshare Group (立訊集團) to sell its Kunshan plant for 3.3 billion yuan (US$499.52 million) and the board on Thursday agreed to close the deal on Jan. 1, while increasing investment in India, the filings showed.
“Wistron will invest more resources in profitable businesses after the disposal of its handset segment,” Yuanta Securities Investment Consulting Co (元大投顧) analysts led by Harvey Kao (高啟瑋) said in a note on Friday. “As the company will lean more on its server business going forward, we expect the contribution from server sales to rise from 27 percent this year to more than 35 percent next year.”
Its server business would become a key sales driver for Wistron next year, as the company’s notebook computer and LCD module businesses are likely to see flat sales compared with this year, while the PC segment would likely see mild market share gains, driven by more order wins from US clients, Yuanta said.
Wistron on Thursday reported third-quarter net profit of NT$2.78 billion, up 61.67 percent from a year earlier, while earnings per share rose from NT$0.61 to NT$1.
Gross margin increased to 5.37 percent, from 5 percent, thanks to a favorable product mix and contribution from its cloud computing equipment subsidiary Wiwynn Corp (緯穎科技).
Foreign-exchange gains of NT$240 million from effective hedging also lent support to margin performance.
In the first three quarters, net profit totaled NT$6.36 billion, or earnings per share of NT$2.26, and gross margin came in at 5.38 percent, the company said.
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