Pegatron to Add NT$1.5 Billion to Investment in North America

Contract electronics manufacturer Pegatron Corp. (4938-TW) is looking ahead to the second quarter after a slow start to the season and constraints from outside the industry. The company has lowered its outlook for notebook shipments from a 25-30% QoQ increase to a 5-10% QoQ decrease in light of China’s strict border controls. 

In addition, the board of directors approved on Thursday (May 12) an additional investment of US$5.061 million (NT$1.511 billion) to expand production bases in North America. 

Pegatron expects notebook shipments to decline 5-10% QoQ in Q2, a significant downward revision from the previous estimate of 25-30% QoQ growth, mainly reflecting the tight controls in East China. 

As for desktop motherboards, Pegatron maintains its outlook for a 30-35% QoQ decline, while the non-laptop business will also show a QoQ decline. 

As for the status of the China plant, Pegatron’s Kunshan plant has reportedly resumed work, while the Shanghai plant needs further instructions from the local government before resuming work. Further global capacity deployment is not excluded, the company said. 

Pegatron also announced an increase in its North American production base expansion budget, adding another US$50.61 million (NT$1.511 billion) to the US$164 million (NT$4.896 billion) budget already approved last November. 

In total, the company will spend approximately US$214 million (NT$6.388 billion) to expand its production base in North America to support the demand of U.S. carmakers. 

Pegatron explained that the new investment budget is mainly due to the rapid changes in the overall environment, considering factors such as the increase in site area and the rise in cost of materials, resulting in an increased budget. 

Pegatron also increased its 100%-owned subsidiary, Pegatron Electronics Inc., by approximately US$40 million (about NT$1.145 billion) that day, as part of its North American investment plan. 

In addition to the mass production in Indonesia last year, the Vietnam plant is also expected to enter mass production in the first half of this year, while the India plant has started to enter the trial production stage.