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News from Asia-Pacific

Sanmina-SCI to Make IBM PCs in Penang

In a bid to cut cost and enhance logistics efficiency, IBM Corp has relocated part of its desktop PC manufacturing activities from Shenzhen, China to Penang, Malaysia.

The move signals a reversal of fortune for Penang, Malaysia's "Silicon Island", which in recent years has faced serious loss of fresh foreign investment for its mainstay electronic components manufacturing to the burgeoning Chinese economy.

IBM joins other manufacturers such as Dell Computer Corp, Intel Corp, and Advanced Micro Devices Inc that continue to invest in Penang, while hedging their bets with operations in China.

IBM has commissioned the manufacture of its NetVista series of desktop PCs in Malaysia to electronic manufacturing services (EMS) provider Sanmina-SCI Corp. The deal is an extension of a global three-year, US$5 billion outsourcing agreement signed between the two companies in 2002.

Sanmina-SCI will produce "Made-in-Malaysia" IBM PCs at its US$26m plant in Bukit Tengah Industrial Park in Prai, Penang, which has a production capacity of 200,000 units per year. The plant will ship direct to Singapore, Indonesia, Thailand, the Philippines and Vietnam. The Shenzhen facility, meanwhile, will continue to service China and other north Asian markets.

Strategic Move

The first 200 IBM NetVista computers rolled out in October 2002 and were shipped to Singapore. Another 300 PCs have been donated to local government-initiated rural Internet centers and 100 non-profit child centers nationwide.

"Apart from a faster delivery cycle in the region owing to market proximity," said IBM Malaysia's managing director Voon Seng Chuan, "our PCs now can be rolled out to local customers too, from the plant itself, because of an integrated supply chain."

Voon added that the locally manufactured NetVistas, comprising the M Series, the A Series and the X Series, will be sold locally at competitive rates.

IDC Corp has forecast the market value of desktop PCs at about US$2.013 billion for Malaysia, Indonesia, Philippines, Singapore, and Thailand collectively.

Voon said factors that influenced the shift to Penang were its strategic location, stable and secure socio-political environment, strong government support and solid infrastructure. He added that the state's skilled manpower and mature support industry were also strong plus factors.

Sanmina-SCI set up operations in Penang in 1997 and also provides other services such as printed circuit board assembly, system integration, back-end assembly and engineering services. It has a workforce of about 500 staff and plans to hire 200-300 more within the next six months.

by Anita Devasahayam

(January 2003 Issue, Nikkei Electronics Asia)

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