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Article

Lenovo & Compal Form Joint Venture

They’re going to open a new manufacturing center in Hefei, a town in eastern China

China's Lenovo and Taiwan ODM Compal Electronics are going to form a joint venture that Lenovo, which hopes to dislodge Dell as the world's second-largest PC vendor this year, expects will expand its PC production capacity.

They're going to open a new manufacturing center in Hefei, a town in eastern China.

The pact, the first joint venture between a PC brand and a contract manufacturer, calls for the pair to invest $100 million to start, followed by an additional $200 million in the next 18 months depending on business conditions and capacity expansion.

Lenovo will own 51% of the joint venture and Compal the remaining 49%. Lenovo could eventually buy Compal out.

The Hefei facility is scheduled to begin full-scale manufacturing by the end of 2012 producing a range of Lenovo laptops and "All-in-One" desktop PCs using the engineering and manufacturing skills of both companies.

Lenovo already outsources some production to Compal, but then so does Acer and Dell so Compal is taking a chance but then China is now the largest PC market in the world, having overtaken the US in the second quarter.

Earlier this year, Lenovo began a PC joint venture in Japan with NEC and later acquired Medion, a German PC maker.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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