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Wingtech Technology, one of Apple's suppliers in China, plans to divest its consumer-electronics contract manufacturing business and focus on semiconductors due to "changes in the geopolitical environment", weeks after it was added to a trade blacklist by the US.
The Shanghai-listed company has agreed to sell nine wholly owned subsidiaries in relation to its product integration business - covering the production of smartphones, tablets, laptops and other electronics devices - to the parent company of Luxshare Precision Industry, another Chinese Apple supplier, Wingtech said in a filing on Monday.
The move was "based on changes in the geopolitical environment and the business development needs of the company", Wingtech said.
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Wingtech was the world's third-largest smartphone original design manufacturer in 2023, accounting for 20.6 per cent of the total outsourced handset volume, according to Counterpoint Research.
The Chinese firm's smartphone shipments grew 7 per cent that year, thanks to new orders from Xiaomi, Samsung Electronics and Huawei Technologies spin-off Honor, Counterpoint said.
After the divestment, Wingtech would sharpen its focus on the chip business, with the aim of becoming one of the top players in the global power-semiconductor industry, the company said.
The Jiaxing, Zhejiang-based firm was among 140 Chinese organisations added to the Entity List by the US Commerce Department's Bureau of Industry and Security in December. The regulations sought to address US national security concerns by curbing China's ability to develop advanced semiconductors.
Founded in 2006, Wingtech rose to become one of the biggest mobile-phone contract manufacturers in China. It moved into the semiconductor business in 2019 with the acquisition of Dutch firm Nexperia.
Nexperia said in December that restrictions on Wingtech's access to US technology do not apply to the Dutch subsidiary, but it would comply with the US rules in interactions with its Chinese parent.
Wingtech said its newly announced sale would not involve its semiconductor business. The company signed an intention agreement with Luxshare, and the actual transaction would be subject to the terms proposed by both parties, as well as legal procedures, Wingtech said.
Electronics manufacturing has been a main source of revenue for Wingtech, having generated 44.3 billion yuan (US$6 billion) in sales in 2023, up 12 per cent from 2022, according to its annual report. It accounted for 72 per cent of Wingtech's revenue of 61.2 billion yuan for the year.