Qorvo (QRVO) Divests China Assets to Trim Capital Intensity
Qorvo Inc. QRVO recently entered into a definitive agreement with Luxshare Precision Industry Co., Ltd. to divest its assembly and test facilities located in Beijing and Dezhou, China. These facilities are primarily utilized for Qorvo’s highly integrated advanced cellular portfolio. The transaction of an undisclosed amount is expected to be completed by the first half of 2024 subject to regulatory approvals and mandatory closing conditions.
Luxshare is a global advanced contract manufacturer, offering seamless and flexible access to top-tier production capacity. Through this strategic divestment, Qorvo is aiming to leverage Luxshare's scalable and high-volume manufacturing expertise to enhance resilience within its supply chain network while maintaining premium quality standards.
The deal will support management’s efforts to reduce capital intensity in Qorvo’s business operations. Streamlining the manufacturing network will likely drive efficiency, free up investment commitment in this facility and provide greater flexibility in allocating resources. This initiative is aligned with Qorvo’s long-term gross margin objectives. Notably, Qorvo will continue to operate its manufacturing network in the United States, Costa Rica and Germany for assembly, packaging and testing.
Luxshare will take over the operations, assets and the existing workforce of the facilities. In accordance with a long-term supply agreement, it will assemble and test products for Qorvo and ensure smooth continuity of operations. Qorvo will retain its sales, engineering, and customer support teams in China to continue serving its customers.
Qorvo is expanding its opportunities across markets, customers and product categories while maintaining its commitment to technology leadership and productivity gains. The company offers the most complete product portfolio, targeting the highest growth segments of its market, including filters, switches and tuners. Qorvo is well-positioned to win some of the industry's highest growth opportunities by leveraging its diversified product portfolio, systems-level expertise, R&D and manufacturing scale and internal assembly and test capabilities.
The company has introduced highly integrated front-end solutions that simplify and accelerate the implementation of multimode, multi-band 4G smartphones and tablets. These new RF Fusion front-end solutions showcase the company's ability to help leading OEMs quickly launch their next-generation flagship devices.
The stock has gained 19.7% over the past year compared with the industry’s rise of 12.8%.
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Qorvo currently carries a Zacks Rank #2 (Buy).
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