Asustek Computer plans to spin off its design and manufacturing service subsidiary Pegatron on the 1st of June, 2010. The company decided to speed up the procedure of initial public offering (IPO) of Pegatron in order to minimize the uncertainties and facilitate the Pegatron IPO process.
As reported previously, Pegatron will issue two billion new shares to a number of shareholders. Asustek Computer and all shareholders of the company as consideration, among which it is expected that the company will receive 25% of the equity and all shareholders of the company will in total receive 75% of the equity in Pegatron Holding in proportion to their shareholdings in the company.
After the 1st of June, 2010, Pegatron will be formally independent company and will produce mainboards and other computers or components for Asustek solely on contract basis. In practice, this means that Asus will cease to own manufacturing capacities and will concentrate on selling its branded devices. There are no doubts though that Asus will remain one of the top suppliers of motherboards in the world.
Asus does have very strong brand recognition in many countries around the world, especially among computer enthusiasts, and has been withdrawing from actual manufacturing for quite some time now. In fact, it is the very same route that Acer Group took many years ago by spinning off its manufacturing division – now known as Wistron – and concentrating on marketing of branded device. Acer Group is now, after acquisition of Gateway, Packard Bell and some other suppliers, the world’s second largest maker of personal computers.
It remains to be seen what exactly happens with Asus-branded mainboards, graphics cards and other devices businesses. Some expect Asus to start targeting broader market segments, other believe that it will concentrate on notebooks, netbooks and various other types of mobile electronics. In the meantime, rumours emerged that Pegatron Holding itself wants to reposition Asrock, currently low-cost supplier of motherboards that belongs to Asus, and enter premium market segments.