BYD Electronic International Co Ltd, a subsidiary of Chinese electric vehicle maker BYD Co Ltd, announced on Monday that it has agreed to acquire the mobile electronics manufacturing business in China of U.S.-based Jabil Inc for 15.8 billion yuan ($2.2 billion).

The acquisition will help BYD Electronic expand its customer base, product portfolio and its smartphone components business, as it aims to tap into Jabil’s growth potential in the sector.

Jabil, a global provider of electronic solutions, has transferred its product-manufacturing businesses in Chengdu and Wuxi to a newly established unit, which will be sold to BYD Electronic.

BYD Electronic’s shares in Hong Kong initially dropped by 9% on Monday morning, but recovered later and rose by 0.5% in the afternoon, outperforming the broader market that gained 1.5%. The parent company BYD’s shares also increased by 0.9%.

BYD Electronic was listed on the Hong Kong Stock Exchange in 2007 as a spin-off from BYD, which started as an electronic components supplier. The main business of BYD Electronic is to provide electronic components for consumer electronics products such as smartphones and laptops, which accounted for more than 70% of its total revenue in 2022.

BYD said in a filing that the acquisition will enhance its market share and competitiveness of its products, and ensure its long-term sustainable development.

Jabil’s CEO Kenny Wilson said in a statement that the deal will enable Jabil to improve its capital framework and increase its share buybacks. He also said that Jabil will focus on investing in other end-markets such as electric vehicles, renewable energy, healthcare, AI cloud data centers, and others.

Jabil offers electronic solutions to various industries such as healthcare, telecommunications, computing and storage, with a goal to improve supply-chain intelligence, according to its website.

BYD entered the car industry in 2003 by acquiring Nanjing-based car maker Qin Chuan, which had a permit for car manufacturing. It launched its first car model in 2006, Reuters reported.

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