Philips agreed on December 28, 2006, to sell the manufacturing operations of its Automotive Playback Modules (APM) business to Taiwan-based Lite-On IT Corporation. The deal centered on the Győr, Hungary, plant; APM’s development and commercial functions were to move into a new joint venture, Philips & Lite-On Digital Solutions (PLDS). BenQ exited the existing Philips & BenQ Digital Storage venture as Lite-On replaced it.
What Philips sold—and what it retained
The sale covered APM’s manufacturing operations, not the entire business. APM developed, manufactured, and supplied CD and DVD playback modules to companies that made automotive entertainment systems. The manufacturing operation was mainly in Győr, Hungary. Philips did not disclose the purchase price in its announcement. Philips’ December 28, 2006 announcement
APM’s research and development, marketing and sales, and product management were primarily based in Wetzlar, Germany. Those functions were to transfer to a new joint venture rather than be included in the manufacturing sale. Philips’ announcement; European Commission decision, February 2007
| Part of the business | Location or role | Planned outcome |
|---|---|---|
| Manufacturing operations | Mainly Győr, Hungary | Sold to Lite-On IT |
| Research and development, marketing and sales, product management | Primarily Wetzlar, Germany | Transferred to the new Philips & Lite-On Digital Solutions joint venture |
A 2007 CDRInfo report put the consideration for the Győr car CD/DVD manufacturing operations at $55–56 million and reported about 1,600 employees at the operation. Those are trade-press figures; Philips’ announcement did not disclose a price. CDRInfo, 2007
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Why Philips sold the Győr operation
Philips characterized APM as a non-core activity within its Corporate Investments portfolio. It said the transaction was part of a wider effort to concentrate on Healthcare, Lifestyle, and Technology. The company explained its stated rationale this way: “This transaction represents another step Philips is taking to focus on its Healthcare, Lifestyle and Technology activities supported by the strength of the Philips brand.” Royal Philips Electronics, December 28, 2006
What changed at Philips & BenQ Digital Storage
The remaining APM activities were to join the existing Philips & BenQ Digital Storage (PBDS) venture. Lite-On replaced BenQ as Philips’ partner, and the venture was to be renamed Philips & Lite-On Digital Solutions (PLDS). BenQ therefore exited the venture as Lite-On entered; Philips remained a partner. Philips’ announcement; CDRInfo, 2007
PLDS was intended to develop, market, and sell DVD burners and optical drives for the automotive market. Manufacturing was to be outsourced to Lite-On IT and other third parties. This arrangement separated product and commercial activities from factory operations rather than keeping all functions under one manufacturing business. Philips’ announcement; European Commission decision, February 2007
CDRInfo separately reported that Lite-On paid BenQ $7.96 million for BenQ’s 49% stake in the joint venture. That reported payment concerned BenQ’s venture stake, not the undisclosed price Philips announced for the Győr manufacturing operations. CDRInfo, 2007
When the deal was expected to close
Philips announced the agreement on December 28, 2006, and expected it to close in March 2007, subject to customary regulatory approvals and other conditions. In February 2007, the European Commission cleared Lite-On’s entry, concluding that the transaction would not significantly impede effective competition and that customers would continue to have alternative sources of supply. Philips’ announcement; European Commission decision, February 2007
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