LeEco’s current scenario of cash woes aren’t a mystery anymore. Starting from its stalling expansion plans to cutting down on its work strength, the Chinese technology conglomerate is doing every little thing it could do to attain financial stability. After planning to sell off recently acquired Yahoo plot in the Silicon Valley, LeEco is now rumored to have sold 2.15% of its stake to Taiwan-based Compal Electronics.
LeEco is reported to have sold the stake in its subsidiary Leshi Internet Information and Technology Corp. to Compal for a value of 700 million Yuan ($102 million/Rs 660 Crore). Leshi Zhixin, the subsidiary of LeEco is mainly responsible for building its smart internet TVs.
Compal has been manufacturing PCs for companies like Acer, Lenovo and HP.
Compal Electronics has been associated with LeEco for quite some time now. For the uninitiated, the Taiwan-based company is one of the largest PC manufacturers in the world and works with firms like Acer, Lenovo and HP. The Taiwanese ODM, in fact, recently acquired the license to mass manufacture Apple’s iPhones and iPads in China. Even recently, LeEco and Compal had together flagged off the former’s first manufacturing plant in India.
Talking about the acquisition to Reuters, Yuanta Research analyst Vincent Chen said, “It’s much rarer to see a vendor invest in a customer, as it’s usually the other way around. But Compal’s not stupid, and there is likely some kind of guarantee from Leshi like for more orders,” Chen added. “I think it’s also based on a belief that Leshi can go on and survive, for this to make sense. For any non-believer, this move wouldn’t make sense, but it’s hard to judge.”
LeEco’s smart internet TVs are one of the best performing consumer electronics in the Chinese conglomerate’s portfolio. It is not only doing exceedingly well in China, but the TVs have in fact made a name for itself in India due to its impeccable value for money. Even after cutting down on its work strength by almost 85% percent in India, LeEco recently announced its Super4 range of smart TVs in India. It’s also worth noting that LeEco has heavily invested in its TV business already. Last year only, the Chinese firm invested in US TV maker Vizio to make use of its own software in its future smart TVs.
With that said, Compal Electronics isn’t the first supplier to invest in LeEco. Just a month back, in February this year, electronics manufacturer Truly International, pumped in 720 million Yuan ($105 million/Rs 678 Crore) in the Leshi subsidiary of the Chinese technology conglomerate.