Flextronics enters notebook PC sector

TAIPEI, TAIWAN: Electronics giant Flextronics is planning to more than double its notebook PC capacity by 2010, in a major push that would pit it against established contract PC makers such as Quanta and Compal.

The firm aims to raise capacity at its notebook PC operations, based in the Chinese cities of Zhuhai and Wujiang, to 20 million units annually, from 8-10 million now, Peter Ju, a general manager at Flextronics told Reuters on Monday.

Flextronics also expects double-digit revenue and shipment growth from its notebook PC operations this year, as it diversifies away from its previous focus on heavy equipment and mobile phone manufacturing.

Already a supplier to top brands including HP, Acer and Dell, the Singapore-based company also expects its notebook PC unit to post a net profit margin similar to other players in the industry, said Sean Burke, Flextronics' head of its computing unit, in an interview.

"We all operate on very thin margins and we just have to get that to work," Burke said.

Flextronics recorded a loss of $239 million in the quarter ending March with a negative profit margin, compared with net profit margins of over 2.5 percent at specialist notebook PC contract manufacturers Quanta and Compal.

Taking On Big Players

Burke declined to comment on how much Flextronics earned from its notebook PC segment, but its computing unit, which also makes server computers, recorded revenue of $5.2 billion for the fiscal year ending March 2009.

"We've always had a PC manufacturing unit, but we're still a small player here and there's a focus right now on growing rather than talking about how big we're going to get," Burke said.

Flextronics also said the company would add 1,500 engineers to its FLEXComputing Taiwan unit, looking to grab a piece of a fast-growing global notebook PC market expected to pass traditional desktop PCs this year in unit sales.

The move follows Flextronics's acquisition of PC contract manufacturer Arima Computer last year.

Investors have been largely bullish on Flextronic's prospects this year, with its share price having climbed over 77 percent so far this year, better than an 11 percent advance on the benchmark Nasdaq index. Flextronics' shares ended 1.2 percent lower on Friday.