Compal affiliates move phone unit

Compal Electronics Inc (仁寶電腦), the nation's second-largest contract manufacturer of notebook computers, yesterday announced that it is integrating its handset division into a cellphone-manufacturing affiliate, Compal Communications Inc (華寶通訊), as part of the company's restructuring plan.

Compal Electronics said it will receive 85 million new shares of Compal Communications for its handset division with a net book value at around NT$1.45 billion (US$46.1 million), the company said in a statement yesterday.

That will boost Compal Electronics' holdings in Compal Communications to 57.7 percent from 49.3 percent, the company said.

"The transaction will lift Compal Electronics' net margin," said the computer manufacturer, which, like its peers, is battling a constantly declining gross margin.

The deal will take effect on Jan. 1 next year.

Compal Communications is expected to ship a total of 29.1 million mobile phones this year after absorbing its parent company's handset unit, Compal Electronics said.

Earlier this month, the world's No.2 cellphone vendor, Motorola Inc, said it would farm out orders of handsets with a wholesale price of less than US$40 each to Compal Communications, which forecast total shipments of over 20 million units for this year.

The merger will widen the product portfolio of Compal Communications, which is good at making GSM phones, while Compal Electronics' handset division has been focusing on the manufacture of 3G handsets, phones running CDMA technology and pocket PCs, according to the statement.

source: Taipei Times