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USI Intends to Acquire Europe’s Second Largest EMS Company to Exercise Modularization, Diversification and Globalization and Establish the Foundation for the Company's development in the next 20 years
(2019/12/31, Shanghai) Universal Scientific Industrial (Shanghai) Co., Ltd. (hereinafter referred to as "USI") (SSE:601231), a leading electronics designer and manufacturer, announced its intention to enter into an Equity Acquisition Agreement with the shareholders of Asteelflash, the second largest EMS company in Europe on 13rd, December. It is planned to acquire 100% equity of Asteelflash with 450 million US dollars.
About the acquisition, Jeffery Chen, Chairman of USI, said that Asteelflash and USI will indisputably complement each other in terms of manufacturing locations, targeted markets and customers, business models and technological capabilities. The close cooperation will make USI a larger platform, further enhance the knowledge of manufacturing, expand the global influence and have more resources for R&S in cutting edge technologies. Moreover, it can make USI more easily enter the high-growth end market of automobile, medical and industrial.
Grasp the New Developing Driving Force in Electronic Industry
“Under the trend of future industrial fragmentation, product diversification and service regionalization, the accelerated application of 5G, Internet of Things (IoT), AI, cutting-edge computing and other technologies entails flexible EMS manufacturers with global presence,” said Jeffrey Chen, Chairman of USI.
The global electronic manufacturing industry is changing its production model from “low-mix and high volume” to a more flexible model of “high-mix and low volume”.
The flourishing development of manufacturing from computer to cell phone makes Asia play an important role in global electronic manufacturing industry. While entering to the next new stage, USI will be difficult to sustain in the competition of global electronic manufacturing industry if it merely relies on computer and cell phone outsourcing manufacturing.
If USI wants to keep its crucial value in the industry chain in the new development of global electronic industry, it must keep up with the path of market development. “Modularization, diversification and globalization are inevitable.” Jeffery Chen emphasized. The acquisition of Asteelflash is an important step in exercisng USI's development strategy and establishing the foundation for the company's development in the next 20 years.
“USI and Asteelflash have many potential complements in terms of sales, global locations and market segments.” said Gilles Benhamou, CEO of Asteelflash.
Asteelflash focuses on delivering low to medium volumes to meet customers’ diversified needs, and there is little overlap between the 200 customers of Asteelflash and the customers of USI. The customer base of both will be more completed, and it can satisfy clients’ different needs. After the acquisition, the both manufacturing locations will be distributed in Asia, Europe, North America and Africa and provide customers more diverse and completed choices in terms of cost, speed of response, language and culture.
The acquisition of Asteelflash will significantly strengthen USI’s mix of manufacturing locations and capabilities across the globe, augment its globalized and highly-skilled workforce, secure its position in Europe and expand its customer base of EMS business.
Adhere to the Strategy of Modularization, Diversification and Globalization
USI conducts the strategy review annually—the review is intended to evaluate what changes are taking place in the global business landscape, where we need to develop and improve and how we should adjust our strategies. This is especially important for USI to stay ahead in the changeable industrial environment. Since 2018, USI has been expanding its global presence and defined the development strategies are “modularization, diversification and globalization".
First, modularization can effectively reduce the production costs and shorten the R&D cycle. Under the trend of miniaturization of electronic products, the advantage of modularization will further reflect.
With the development of electronic products in the future, the market has been increasing needs for portable and miniaturized products. Over the past decade, with extensive experience in product design and manufacturing capabilities in highly integrated miniaturized modules, USI is able to provide customers with comprehensive solutions of module technology and create new opportunities and high value-added services in the existing product supply chain.
Second, diversification means diversify the customer base and product offerings. USI needs to focus more on products related to automobile, medical and industrial. From the perspective of customer base, we need to attract key customers and introducing strategic customers.
At last, Globalization is not only “globalized presence”. Jeffery Chen believes that “regional production to meet global demand” will be the important direction for electronic industry in the future.
According to the strategy, USI has acquired production base in Poland, established joint ventures with Qualcomm in Brazil and with Sugon in mainland China, invested in PHI Fund, and engaged in the privatization of Memtech, a listed company in Singapore in the last two years.
“USI and Asteelflash have the common goal: increase the business and make a breakthrough. Asteelflash will play an important role in USI in the future, and we are expecting that USI can become a distinctive competitor and leader in the field of electronic manufacturing.” Jeffery Chen said.
USI (SSE: 601231), Universal Scientific Industrial (Shanghai) Co., Ltd., provides design, miniaturization, material sourcing, manufacturing, logistics, and after services of electronic devices/modules for brand owners. USI is a member of ASE Technology Holding (TWSE: 3711, NYSE: ASX) and has many years of experience in the electronics manufacturing services industry and leverages the industry-leading technology of ASE Group, which enables USI to offer customer diversified products in the sectors of wireless communication, computer and storage, consumer, industrial, and automotive electronics worldwide. USI has a sales service network in America, Europe, and Asia; and manufacturing sites in Mainland China, Taiwan, Mexico and Poland.