HEFEI, China – September 27, 2011: Lenovo (HKSE: 992) (ADR: LNVGY) 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. In combining with Compal, one of the world’s leading original design manufacturers (ODMs), Lenovo 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 US$100 million initially, followed by an additional $200 million in the next 18 months subject to business conditions and capacity expansion, to start up the new company and construct the facility. Lenovo will hold a 51 percent stake in the joint venture and Compal 49 percent.
The Hefei 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. The joint venture will operate as a stand-alone supplier, providing Lenovo exclusively with finished systems for sale around the world. It will integrate both companies’ advanced engineering and manufacturing expertise with the objective of more rapidly delivering innovative technologies that surpass customers’ requirements for design, performance and functionality, while meeting their budgets.
The Hefei facility will extend Lenovo’s efficient global manufacturing network, which leverages a mix of in-house factories and outsourcing partners, including Compal, to deliver all products worldwide. The joint venture will serve a portion of Lenovo’s expected future growth, while existing in-house facilities and Original Design Manufacturer relationships also support expansion.
“This joint venture will help us further optimize our manufacturing network, increase production capacity and satisfy rapidly growing demand for our 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.” Lenovo CEO Yang Yuanqing said. “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. ”
The agreement with Compal is the latest move by Lenovo to sustain the rapid growth that has enabled the company to outperform its top five industry rivals for nearly two years. Earlier this year, Lenovo began a PC joint venture with NEC in Japan and later acquired Medion, a major personal technology company based in Germany.