Pegatron Corp (和碩) yesterday said that its board of directors has approved an investment of US$164 million for manufacturing equipment and facilities in North America to handle a growing demand from electric vehicle (EV) makers in the US.
The company made the announcement during an investors’ conference call yesterday.
Although it has been reported for months that the Apple supply-chain manufacturer would expand its automotive business to a US-based facility to better serve Tesla Inc, the announcement was Pegatron’s first official confirmation of such an investment.
Photo: CNA
Pegatron chief executive officer Liao Syh-jang (廖賜政) said that the new facilities are to serve three customers, and that a “second phase of expansion” is in the plannng stages, to be announced next year pending approval by the company’s board.
“Automotive electronics is an important business for Pegatron going forward,” Liao said. “We have listened to our customers and brought production closer to where they are. Hopefully, as EV makers ramp up production, our significant investment will help us build trust with our customers.”
Liao declined to specify the location of the planned expansion, saying only that the “new facilities will be somewhere that can reach every part of the US in a day.”
The new plants are to manufacture EV control unit-related components, Liao said.
“We will not be making motors or drive-train-related products, but control unit-related products, which is among the most critical and highly proprietary parts of an EV,” Liao said.
The size and stability of the EV market in North America convinced Pegatron to make the investment, Liao added.
“The US public sector will be buying a lot of EVs. It’s a good opportunity for Pegatron,” Liao said. “The market will be large and it is predictable.”
In addition to EV components, Liao said that the facilities could be used to manufacture other products for the US market.
“EV components are demanding to make because they need to resist high and low temperatures,” Liao said. “We have made a hefty investment, but once our facility is up to EV standards, it will be capable of making other kinds of components without issues.”
Last quarter, after non-operating income declined 81 percent year-on-year to NT$635 million (US$22.81 million), Pegatron posted net profit of NT$2.67 billion, down 61 percent from NT$6.82 billion a year earlier and down 50.2 percent from NT$5.34 billion a quarter earlier, a company filing with the Taiwan Stock Exchange showed.
Earnings per share fell to NT$1 last quarter, from NT$2.61 in the third quarter of last year and NT$2.01 in the second quarter.
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