China automaker BYD said on Monday its electronics unit has struck a deal with U.S.-based manufacturer Jabil Inc to buy its mobility business in China for 15.8 billion yuan ($2.2 billion).
The deal will expand BYD Electronic’s (BE) customer base, product portfolio and its smartphone components business as it looks to capture Jabil’s potential growth in the sector.
Jabil Circuit, which is based in Singapore and manufactures printed circuit boards, established a unit this month with product manufacturing business in Chengdu and Wuxi, which will now be sold to the Chinese group.
Shares in BYD Electronic fell as much as 9 per cent in Hong Kong on Monday but reversed losses and were up 1.4 per cent by the midday break. The Hong Kong-listed stock of its parent BYD was up 2.2 per cent.
Although now best-known for its electric vehicle business, BYD started out by selling electronic components. In 2007, BYD listed its BE unit on the Hong Kong Stock Exchange.
BE’s major business has been selling electronic components for consumer electronics products such as smartphones and laptops. This was one of three key business segments for BYD Electronic, accounting for more than 70 per cent of its total revenue in 2022.
“For BYD, I think it’s a reminder that they do more than just dominate in EVs,” said Tu Le, founder of Sino Auto Insights, adding that they were higher up in the mobile supply chain and were a supplier to Apple.
“While improving BE’s market share of products, the acquisition will effectively synergize with BE’s existing products, enhance the overall competitiveness, ensure long-term sustainable development,” BYD said in an exchange filing, without divulging any further details about the acquisition.
Jabil in a statement said if the deal is completed, the definitive agreement would enable it to “enhance our shareholder-centric capital framework, including incremental share buybacks”, chief executive Kenny Wilson said.
The deal will allow Jabil to further invest in “electric vehicles, renewable energy, healthcare, AI cloud data centers, and other end-markets,” Wilson added.
Jabil Circuit works with companies in healthcare, telecommunications, computing and storage, with an aim to drive supply chain intelligence, according to its website.
BYD first entered the car industry in 2003 when it acquired Nanjing-based automaker Qin Chuan, which held a permit for car manufacturing. It launched its first car model three years later.