Lenovo and Compal Announce $300 Million Joint Venture

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The world’s No.3 PC maker, Lenovo, has entered into a $300 million joint venture with contract laptop PC maker Compal Electronics Inc., pushing their shares up sharply, according to media reports.

Lenovo and Compal Electronics, Inc. today announced an agreement to form a joint venture company that will build and operate a new manufacturing center in Hefei, China. After the news broke, “Lenovo rose as much as 8.5 percent in Hong Kong, while in Taiwan Compal rose 5.9 percent to a more than one-month high before pulling back slightly,” Reuters reported.

Company officials said Tuesday Lenovo and Compal will add production capacity “needed to sustain rapid growth that has seen the company become the PC industry’s fastest-growing major supplier for seven consecutive quarters, while strengthening its ability to deliver innovative products, faster, on a global scale.”

The two companies will invest $100 million upfront in the venture, followed by an additional $200 million in the next 18 months, according to a statement released by Lenovo.

The eastern China facility is scheduled to begin full-scale manufacturing by the end of 2012, at which time it will produce a range of Lenovo laptop and “All-in-One” desktop PCs. Lenovo will hold a 51 percent stake in the joint venture and Compal will hold 49 percent, according to Lenovo officials. 

Lenovo CEO Yang Yuanqing said the joint venture will help the company further optimize its manufacturing network, increase production capacity and “satisfy rapidly growing demand” for its offerings. 

“Based on our deep understanding of customer requirements, it will also help us provide innovative products to our customers in a faster and more efficient way, while enhancing our integrated innovation capability,” Yuanqing said in a statement. “As the fastest growing major PC company in the world, Lenovo is fully committed to the PC industry for the long term and we are very optimistic about its future, while making significant long-term investments in the mobile internet.  We have the right strategy, a successful business model and innovative products. These key elements of our core competitiveness will help us to continue winning.”

Lenovo, a global Fortune 500 company, has major research centers in Yamato, Japan; Beijing, Shanghai and Shenzhen, China; and Raleigh, North Carolina.

In other Lenovo news, TechZone360 reported that PokeTALK, in partnership with Lenovo, has launched a new Android app that pre-loads PokeTALK into the family of Lenovo Tablets allowing Lenovo app users to make international calls home and to mobile numbers in all countries.



Erin Harrison is Executive Editor, Strategic Initiatives, for TMC, where she oversees the company's strategic editorial initiatives, including the launch of several new print and online initiatives. She plays an active role in the print publications and TechZone360, covering IP communications, information technology and other related topics. To read more of Erin's articles, please visit her columnist page.

Edited by Jennifer Russell

Executive Editor, Strategic Initiatives

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