To cope with rising computer shipments, Singapore-based Flextronics International Ltd is considering setting up new facilities in western China, with Chongqing one possible location.
The move means Flextronics could follow in the footsteps of Taiwanese rivals Quanta Computer Inc (廣達電腦), Hon Hai Precision Industry Co (鴻海精密) and Inventec Corp (英業達) to set up facilities in Chongqing to vie for orders from Hewlett-Packard Co, the world’s top PC brand, which also has a factory there.
“We are considering several locations in western China,” Sean Burke, president of Flextronics computer market segment, told a media gathering yesterday.
The company had meetings with the Chongqing government, which is aggressively pushing the location as a new notebook manufacturing base, he said.
Chongqing offers attractiveness such as lower labor costs and an ample workforce, compared with higher salaries and utility fees in eastern cities, Burke added.
Flextronics currently produces servers and desktops in China’s Zhuhai city in Guangdong Province and manufactures laptop computers in Suzhou, Jiangsu Province.
The facilities expansion comes amid Flextronics’ goal to double revenues of its notebook business this year.
The company, which has a less than 2 percent share of the world’s notebook production market, saw notebook revenues hit US$1 billion last year.
Doubling revenues would indicate more than double shipments because of declining average selling prices for laptop computers, Burke said.
The company said that its geographic scale — with facilities located around the globe — would help it win more projects this year.
“There is a big outsourcing opportunity to contract makers as brand companies are restructuring after the financial crisis to save costs,” said Robert Cheng (鄭勝榮), equity research director with Credit Suisse, adding that global PC vendors are dedicating resources on brand-building and marketing while increasing outsourcing to other makers.
Bigger rival Compal Electronics Inc (仁寶電腦) expects to ship 45 million to 48 million notebooks this year, up from 37.9 million units last year. Quanta, which shipped 35.9 million notebooks last year, forecast 40 percent growth this year to hit 50 million units.
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