Compal Electronics and Lenovo will establish a joint venture, Lienpal (Hefei), in Hefei, northern China, to produce mainly notebooks and all-in-one (AIO) PCs specifically for Lenovo, with initial monthly shipments of 300,000-500,000 units, according to Compal.

The joint venture will have initial capital of US$100 of which Compal and Lenovo will share 49% and 51%, respectively, and is planned to add capital of US$2 million over the next 18 months subject to business conditions and capacity expansion, according to Lenovo. The joint venture will complete establishment of its manufacturing facilities and kick off production by the end of 2012, expanding Lenovo's global manufacturing network consisting of in-house factories and outsourced partners such as Compal, the company said.

Lenovo focuses in-house production in China and Southeast Asia on desktops, and has Compal, Quanta Computer and Wistron undertake ODM production of notebooks and AIO PCs, according to industry sources. As Acer is the largest of Compal's ODM clients, and is competing with Lenovo to be the second-largest global vendor of notebooks, Compal's joint venture with Lenovo will arouse concerns, the sources said.