Elcoteq to acquire handset ODM Arima Communications, say sources

Europe-based EMS service supplier Elcoteq plans to acquire one of Taiwan's top handset makers, Arima Communications, according to industry sources.

The sources claimed that Elcoteq and Arima have reached the final stages of acquisition talks, and an announcement can be expected soon, once terms have been finalized.

The deal would mark the first time for a Taiwan-based handset ODM to be acquired by a foreign EMS provider, but would also re-highlight an industry trend which is seeing the EMS and ODM sectors join forces in order to improve competitiveness in the handset market.

Taiwan-based handset ODM Chi Mei Communications, in 2005, was acquired by Foxconn International Holding (FIH), a Hong Kong-listed handset maker under the Taiwan-based EMS giant Foxconn (Hon Hai Precision Industry).

The sources commented that Compal Communications will be the last major handset ODM left in Taiwan if Arima merges with Elcoteq. Compal in recent quarters has come under strong pressure due to persistently poor performance at its major client Motorola.

Elcoteq is a major manufacturing partner of Nokia, but has worked chiefly as an EMS provider and so is eager to raise its ODM strength, the sources commented. Arima has an R&D team of 500-600 staff based in both Taiwan and China, and its major clients include Sony Ericsson and LG Electronics (LGE).

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