BYD's electronics arm to buy US firm's China unit for $2.2 billion
Updated: Jan 8, 2024
Chinese automaker BYD's electronics division has agreed to purchase the mobile electronics manufacturing business in China of US manufacturer Jabil Inc for 15.8 billion yuan ($2.2 billion).
The acquisition will expand BYD Electronic's customer base, product portfolio and smartphone components operations as it seeks to benefit from Jabil's potential growth in the sector.
Singapore-based Jabil Circuit, which makes printed circuit boards, recently set up a new unit encompassing its manufacturing operations in Chengdu and Wuxi, which will now be sold to the Chinese group. Shares in BYD Electronic initially fell up to 9% in Hong Kong but later recovered to close flat, while the broader market closed 1% higher. BYD's Hong Kong-listed stock closed up 0.7%.
Although now best known for electric vehicles, BYD started by selling electronic components. In 2007 it listed BYD Electronic on the Hong Kong Stock Exchange.
BE's major business has been supplying electronic components for consumer electronics like smartphones and laptops. This accounted for over 70% of its total 2022 revenue.
"For BYD, I think it's a reminder they do more than just dominate in EVs," said Tu Le, founder of consultancy Sino Auto Insights, adding they had a strong position in the mobile supply chain as an Apple supplier. Citi analysts believe the deal involves Jabil's Green Point metal casing facility in Wuxi and could see BE increase its share of Apple's casing supply.
BE will likely fund the purchase through loans and share issues, they added. BYD and BE did not say how they planned to finance the acquisition. BE and Jabil did not immediately respond to requests for further comment.
"While improving BE's market share, the acquisition will effectively synergise with BE's products, enhance overall competitiveness and ensure long-term sustainable development," BYD said, without providing further details.
If completed, the agreement would allow Jabil to "enhance our shareholder-centric capital framework, including extra share buybacks," said Chief Executive Kenny Wilson.
Jabil Circuit works with healthcare, telecoms, computing and storage companies to drive supply chain intelligence.
BYD first entered the car industry in 2003 when it bought Nanjing automaker Qin Chuan, which held a permit for car manufacturing.
BYD Electronic buying Jabil's China mobile electronics manufacturing for $2.2 billion
Expands BYD's consumer electronics business and supply to Apple
Jabil can focus more on EVs, renewable energy, healthcare etc
Source: REUTERS