IPhone Supplier Catcher to Sell China Units for $1.4 Billion
Catcher a key provider of metal frames for iPhones, has agreed to sell two businesses in China to Lens Technology Co.
(Bloomberg) -- Catcher Technology Co., a key provider of metal frames for iPhones, has agreed to sell two businesses in China to Lens Technology Co., joining a cohort of Taiwanese companies in diversifying away from the country and adding production capacities elsewhere amid worsening ties between Washington and Beijing.
Lens Tech will pay cash for the two units located in the eastern Chinese city of Taizhou and the transaction is expected to be completed before the end of this year pending government approval, Catcher said in a statement. The deal is tentatively priced at $1.43 billion and involves a plant that accounted for 40% of Catcher’s total sales in 2019, spokesman James Wu said at a briefing. The U.S.-China trade war and increasing price competition is facilitating supply chain consolidation, Wu added. Catcher still maintains some operations in China.
“Following iPhone assembler Pegatron’s acquisition of casing unit Casetek, Catcher is likely to lose its longtime partnership with Pegatron and lose market share within the Apple supply chain, so Catcher may be selling the plant to get some cash back,” GF Securities analyst Jeff Pu said, adding that the plant is responsible for assembling metal frames and glass backs of iPhones. “For Lens, buying this plant that provides preliminary assembly service may boost the company’s chance at winning iPhone and iPad assembly orders in the future.”
The U.S.-China rivalry has led to a growing bifurcation in the global tech industry, prompting firms to diversify their manufacturing bases away from China. Catcher’s move comes a month after fellow Taiwanese electronics assembler Wistron Corp. agreed to sell its iPhone production plant in China to Luxshare Precision Industry Co., paving the way for Apple Inc. to gain its first Chinese handset maker.
Even before the sale of its China plant, Wistron had said it will be able to raise manufacturing capacities outside of China to 50% in 2021, according to Chairman Simon Lin. Bigger rival Foxconn Technology Group has boosted its capacity outside China from 25% last June to 30% now, while Taoyuan-based Quanta Computer Inc. is also doubling the size of a new Taiwan plant, which will come online next year.
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