Lenovo, Compal snuggle up to build notebook plant

Lenovo has moved to beef up its manufacturing base by forming a joint venture with Chinese ODM Compal Electronics to build notebooks and all-in-one desktops.

Under the terms of the initial $100m (£63.7m) investment from the firms, Lenovo will own a 51 per cent stake and Compal the remainder. Another $200m may be invested by the pair dependent on the business climate and capacity expansion.

The start-up company is scheduled to begin production on a Hefei-based fab in China by the end of 2012 to act an exclusive supplier of PCs to Lenovo to speed its time to market for kit.

Lenovo CEO Yang Yuanqing said his company was "committed" to the PC industry, something that all of HP's major rivals have talked up since former CEO Leo Apotheker revealed it was reviewing future ownership of its PC biz.

For Compal, the joint venture means it will try to tap into demand for PCs in mainland China with the biggest selling brand in the country.

This is the latest strategic move from Lenovo, which plans to become the second largest PC player on the planet by the end of the year - it currently stands in third position. It has already set up an alliance with NEC in Japan and is acquiring German PC maker Medion.

Lenovo also recently tapped up former Acer CEO Gianfranco Lanci as a consultant to oversee the integration of Medion and help to steer its global consumer operation. ®