Wistron announced it would pay Western Digital $28.74 million to acquire one of its Malaysian-based factories, reported DigiTimes. The Petaling Jaya located facility will be used by the original design manufacturer’s (ODM) Malaysian subsidiary once the deal goes through.
The corporation acquired the Southeast Asian plant as part of a larger initiative to expand its share of the Internet of Things (IoT) device market.
The transaction will also further the storage device company’s long-term interests.
Why Wistron Wants to Make More IoT Devices
Wistron wants to become a leader in the IoT space to bolster its future sales.
At present, the company is best known as one of the manufacturers Apple contracts to make its iPhones. But the corporation did not generate nearly $30 billion in revenue last year because this is its only business interest. It earns its money by fabricating a range of notebooks, desktop computers, storage devices, server systems, and networking products.
As a major technology industry player, the firm understands that IoT is a sector primed for significant expansion. This summer, ResearchandMarkets reported the public’s increasing hunger for smart devices would push the segment’s value to $525.4 billion by 2025. Wistron wants a large piece of that pie, and it is willing to invest serious capital to get it.
The Taiwanese ODM plans to invest $45 million in its Malaysian subsidiary to build out its production capacity. Once the transaction closes, the company will dedicate its Petaling Jaya plant to making IoT offerings.
Wistron also has plans to reposition its manufacturing capability outside of mainland China. Simon Lin, the firm’s chairman, wants 50 percent of his factories located outside the region by the end of next year. According to The Edge Markets, the ODM’s new IoT plant will begin operations in the first half of 2021.
Why Western Digital Sold Its Petaling Jaya Factory
Western Digital likely sold its Petaling Jaya production complex to Wistron as part of its long-term business reorganization.
Before selling off its Malaysian factory, the company used it to manufacture hard disk drives (HDDs). But the storage provider shuttered the plant in 2018 amid mounting softness of the HDD market. The facility, launched in 1973, became less than essential in recent years as NAND flash memory and solid-state drives (SSDs) have supplanted the older technology.
In September, the corporation revealed it would create separate SSD and HDD divisions to expedite product development. By selling its unused factory to Wistron, the firm will have more funding to pursue its roadmap.
As it furthers both of long-term goals, Wistron and Western Digital’s asset transfer represents a positive step for both companies.