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Manila Economic and Cultural Office

Manila Economic and Cultural Office Philippine Representative Office in Taiwan

Philippines Chosen as New Manufacturing Hub by Taiwan Firm

Posted: 7/13/2018 12:00 AM

By Arra B. FranciaReporter

TAIWAN-BASED firm New Kinpo Group (NKG) is positioning the Philippines as its next main manufacturing hub in Southeast Asia, while preparing its local unit for an initial public offering (IPO) to expand its capacity.

In a statement issued Thursday, NKG’s Cal-Comp Technology (Philippines), Inc. said it is scheduled to build two new manufacturing facilities in the country, purchase new equipment, and invest in research and development (R&D) for new products.

Cal-Comp Technology expects to fund this expansion through a P6.77-billion IPO recently filed with the Securities and Exchange Commission. The company targets to sell up to 378.07 million shares to the public before yearend.

The aggressive expansion is part of NKG’s plan to shift its production capabilities to the Philippines from China. 

“China will move towards higher level R&D, so its manufacturing component will slowly be transitioned to the Philippines. This IPO will allow us to raise the funds needed to support the said transition and help the Philippines enhance its manufacturing and R&D strengths,” NKG Chief Executive Officer Simon Shen was quoted as saying in a statement.

A total of P1.88 billion raised from the IPO will be used to construct and develop phases 2 and 4 of its First Philippine Industrial Park, Inc. (FPIP) manufacturing complex in Sto. Tomas, Batangas. This will give the company an additional 48,000 square meters (sq.m.) of space for manufacturing.

The site currently houses a facility of Cal-Comp Technology’s subsidiary, Kinpo Electronics (Philippines), Inc. (KPPH).

The company also plans to build additional facilities in KPPH’s Lima Technology Center site in Lipa, Batangas.

The NKG unit will further allot P1.26 billion for its entry into additional land leases with FPIP for a land area spanning 300,000 sq.m.

Alongside the facility expansion, Cal-Comp Technology will be acquiring new assembly equipment and machinery worth P844 million, such as surface mount technology, assembly lines for storage, home appliance, and calculator products. The budget also includes upgrading existing equipment to increase their production capacity.

Around P800 million will be spent for Cal-Comp Technology’s investments in R&D for it to introduce new products in the next four to five years. Some P243 million has been programmed for capital expenditure requirements, including the purchase of miscellaneous equipment and computer software for production operations.

The remaining P900 million from the IPO proceeds will be used to repay short-term loans of KPPH from Metropolitan Bank & Trust Co. and Cathay United Bank, which were initially used as working capital.

“We are ramping up investments in the Philippines because we believe in the country’s economic potential. With an increasingly tech-grounded world, we intend to expand Filipinos’ access to technologically advanced products, equipment, and training,” Mr. Shen said.

The company, which provides global electronic manufacturing services and original design manufacturing, will be launching its own branded products in the Philippine market this year.

Its multiple product lines include external hard disk drivers, televisions, laser printers, smart home appliances, AI humanoid robots, and 3D printers, among others.

Story and Photo from BusinessWorld ---