Chinese automaker BYD announced on Monday that its electronics division has reached an agreement with U.S.-based manufacturer Jabil Inc. to purchase its mobile electronics manufacturing business in China for $2.2 billion.
This acquisition is poised to provide several benefits to BYD Electronic (BE), including an expansion of its customer base, diversification of its product portfolio, and an enhancement of its smartphone components sector. The company aims to tap into the growth potential evident in Jabil’s operations in this industry.
Jabil Circuit, headquartered in Singapore and specializing in printed circuit boards, recently established a unit to absorb its product-manufacturing enterprises in Chengdu and Wuxi. This unit will now be sold to the Chinese corporation.
While BYD is most recognized for its electric vehicle business today, its origins lie in the sale of electronic components. In 2007, BYD listed its BE unit on the Hong Kong Stock Exchange.
A primary focus of BE’s operations has been the sale of electronic components for consumer electronics, including smartphones and laptops. This segment constitutes a significant portion of BYD Electronic’s revenue, accounting for over 70% in 2022.
Tu Le, Founder of Sino Auto Insights consultancy, pointed out that this move underscores BYD’s capabilities beyond the electric vehicle sector. Le highlighted that BYD holds a prominent position in the mobile supply chain and supplies components to Apple Inc.
According to analysts at Citi, the deal is believed to encompass Jabil’s Green Point metal casing operations in Wuxi. This acquisition could potentially enable BE to secure a larger market share in Apple’s casing supply chain.
The acquisition will likely require BE to raise funds through loans and equity issuance. The financing specifics have not been disclosed by BYD or BE.