Asustek to Divide into Three Companies

Asustek to Divide into Three Companies

Taiwan’s Asustek, a leading PC manufacturer and well-known contract manufacturer of both PCs and consumer electronics, has announced that it will split itself into three companies in a move to separate its own brand-name business from its contract manufacturing businesses. “We think this will boost our competitiveness in each area,” said Asustek chairman Jonney Shih at a news event in Taipei.

Under the proposed split, Asustek would carry on the company’s brand manufacturing, including the company’s well-regarded (if occasionally over-flashy) Asus notebook and desktop computer lines. The company will spin off its contract PC manufacturing operations into a new company called Unihan Technology Corp., while its non-PC manufacturing activities (including casings) will be handled by the new Pegatron Technology Corporation.

Splitting the businesses lets Asus avoid conflicts of interest which arise from simultaneously manufacturing products under its own brand while manufacturing products for competitors. The three-way split isn’t the first for a Taiwanese manufacturer: Acer split itself in three several years ago, keeping its PC busines (currently number three worldwide) while moving its contract manufacturing business to Winstron Corp., and spinning off mobile technologies and displays to a company which may have a familiar name: BenQ.

Pending regulatory approval, the split will take place on January 1, 2008. Pegatron will be the largest of the three split companies, with annual revenues estimated to be between $9 and $10 billion. The remaining Asustek will be the second largest, with revenues estimated at about $7.5 billion, and Unihan getting the smallest slice of the pie, with revenues of about $4.5 billion.

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