(JW Insights) Aug 28 -- Chinese automaker BYD said on August 28 that its electronics unit has struck a deal with U.S.-based manufacturer Jabil Inc to buy its mobile electronics manufacturing business in China for RMB15.8 billion ($2.2 billion), reported Reuters.
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.
Singapore-based Jabil Circuit, which manufactures printed circuit boards, established a unit this month that absorbed its product-manufacturing businesses in Chengdu and Wuxi, which will now be sold to the Chinese group.
Although now best known for its electric vehicle business, BYD started out by selling electronic components. In 2007, it 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% 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 consultancy Sino Auto Insights, adding that they were higher up in the mobile supply chain and were a supplier to Apple.
Citi analysts said in a note that they believed the deal involved Jabil's Green Point metal casing operations in Wuxi, and that it could see BE further penetrating into Apple's casing supply with higher market share.
"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.
If the deal is completed, the definitive agreement would enable Jabil to "enhance our shareholder-centric capital framework, including incremental share buybacks", Chief Executive Kenny Wilson said in a statement.
The deal would allow Jabil to further invest in "electric vehicles, renewable energy, healthcare, AI cloud data centers, and other end-markets," Wilson added, according to the Reuters report.