Compal Acquires Toshiba's Mexican LCD-TV Factory

Taipei, July 25, 2011 (CENS)--Compal Electronics Inc., currently the world's No.1 contract supplier of laptop computers, recently announced its acquisition of a Toshiba TV-assembly factory in Mexico, a further sign of Compal's attempt to increase non-laptop revenue amid weakening laptop demands.

Industry executives estimated the transaction has cost Compal around NT$300-500 million (US$10.3-17.2 million at US$1: NT$29), a fairly low price given the fact that the facility's depreciation expense has been completed and Toshiba is eager to sell the factory. However, both companies have declined to release details of the deal.

Compal executives noted that the company made the acquisition to adjust itself to meet a globally changing LCD-TV market, Toshiba's corporate workout plan, and its extensive global strategy. Asset transfer is slated for completion by the end of this quarter.

Streamlining in-house production to cut down costs, Toshiba is eager to sell facilities that may become idle to its contract partners. Toshiba has been Compal's foremost contract buyer of LCD TVs, filling half of Compal's orders.

Compal is managing to increase revenue from non-laptop production at a time when laptop market has entered into lukewarm-growth phase. The company will reduce laptop production ratio to 85% of its revenue the end of this year from last year's 92%. In the meantime, it will increase LCD-TV operation to 10% from 8%, and tablet-PC operation to 5% from ground zero.

The company projects to ship eight million LCD TVs by the end of this year, up from last year's six million systems or so. As Toshiba plans to ship 15 million and 30 million LCD TVs this year and next worldwide, respectively, its orders will much help Compal make the goal. However, industry executives estimated the factory transaction may deal a blow to Compal's archrival at home, Wistron Corp.

Some industry executives view the deal as another sign of cooperation between Taiwan's and Japan's LCD manufacturers against South Korean heavyweights, namely Samsung and LG.