Asustek spins out its manufacturing business

Taiwanese major electronics manufacturer Asustek is to divest itself of its contract manufacturing wing.

The company will create a new company called Pegatron Investment Holdings Company – it will issue a bunch of shares, with 25 percent held by Asustek and the remainder assigned to Asustek’s shareholders.

The idea is not new in Taiwan. Acer performed a similar trick some years back when it span off its manufacturing unit as Wistron.

Asustek has a large number of product lines – it will now concentrate on promoting its own brand identity. It’s not clear whether Pegatron will offer its manufacturing services to other Taiwanese companies or will be an Asustek only supplier.

By removing its manufacturing wing, Asustek is likely to drop its own capitalization by as much as 85 percent.