ASUS Manufacturing Business to Become Pegatron Investment Holdings

Much like Acer did back in 2001, when it formed the independent manufacturing division called Winstron, ASUS may have plans to spin out its manufacturing business. This move may have been inspired by Acer's success, which recently surpassed Dell in the area of total PC shipments during 2009.

The plan would be for the Taiwanese company ASUS to turn Pegatron, the contract manufacturing wing in question, into a distinct entity. This would reduce Asustek's capitalization by up to 85%. In order to achieve this split, ASUS will issue an amount of shares in order to provide the new business with a strong-enough foundation for further growth. 25 percent of the shares will be held by Asustek, with the other 75 percent distributed among the shareholders.

Besides the obvious benefits drawn from the drastically reduced capitalization, ASUS will likely be able to focus mainly on promoting its own brand identity, increasing its presence on the worldwide market and within the IT industry itself. Pegatron will manage its own finances and will no longer be included in its former sire's budget plans, effectively reducing the financial responsibility of the Taiwanese hardware developer and allowing ASUS to focus its capital more effectively.

It is not clear whether the newly formed Pegatron Investment Holdings will offer manufacturing services exclusively to ASUS or if it will also perform services for other Taiwanese hardware developers. The new entity might start out its life with a less-than-desirable development, though, namely a lawsuit against a certain Singaporean company that has recently been accused of Misappropriation of Business Ideas by TechCrunch. If Pegatron's intellectual property is found to have been illegally given to Fusion Garage's new ODM, the new manufacturer might have to start its early days in court.

Still, this spin-out might prove fruitful for ASUS in the long run and, provided Pegatron succeeds in adapting to the current industry, the future may see ASUS as an even stronger presence among the world's hardware makers.