Kontron AG Founds Joint Venture With Taiwan's Quanta Computer

Kontron AG, one of the world's leading manufacturers of embedded computer systems, is founding a joint-venture with the Taiwanese company Quanta Computer Inc., Taipei, one of the world's largest manufacturer of laptops. As announced by the Executive Board of Kontron, the Taiwanese listed company and his affiliates are acquiring a 21 percent stake in Kontron Asia Inc., Taipei. Kontron Asia Inc. is the production organization of the Kontron Group which included its production plant in Penang, Malaysia. Both parties have signed a relevant purchase agreement. The closing of the transaction is expected during the course of March.

Kontron AG will retain both the operating management of, and a voting right majority in, the enterprise. Both Kontron and Quanta expect to benefit equally from the advantages the partnership offers. Kontron AG's main objective is to optimize its manufacturing costs for embedded computers using Quanta's purchasing and production conditions to achieve the cost leadership in purchasing and production in the embedded market place. Quanta will benefit from diversifying its production capacities in the industrial market.

With over 40,000 employees globally, Quanta produces around 30 percent of worldwide laptops per year, and generated total revenue of over EUR 16 billion in 2007, according to Kontron. "Volumes are constantly rising in the high-growth embedded computer market, particularly for applications in the POI/POS, cash machine, infotainment, and gaming areas. The new joint venture between Quanta and Kontron now allows Kontron AG to offer volumes of 100,000 embedded computer systems per year on a competitive basis," commented Kontron CEO, Ulrich Gehrmann.

Kontron launched a reorganization of its sales structures in Asia as recently as the fourth quarter of 2007, entailing the installation of centrally managed sales, with the aim of achieving higher EBIT margins in this region. Kontron AG's target is to raise the EBIT margin by up to two percentage points over the next three years through improved purchasing terms and further optimization of production costs. Kontron AG aims to relocate additional production volume to Asia over the next few years; the aim is for 75 percent of all of Kontron's embedded computers to be manufactured in the joint venture by 2010. Processes such as final configuration and the installation of software, however, which are highly know-how critical, will continue to be performed at the European and American Kontron companies. The company will present detailed figures for the 2007 financial year at its year-end results press conference in Munich on March 26, 2008.

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