Sanmina to open first plant in India

Mia Shanley

SINGAPORE: Sanmina-SCI Corp., the world's No. 2 contract electronics manufacturer, plans to open its first plant in India within 12 months to meet fast-rising global demand, a top company official told Reuters.

He also said Sanmina was experiencing strong demand for high-end consumer electronics and medical equipment, and that the company hoped to grow South Asia Pacific sales by 10 percent to about $700 million in its next fiscal year.

"India today is like China in the late nineties," CT Chua, senior vice president of South Asia Pacific Operations, told Reuters in an interview.

"Buying power has risen, so demand for goods is going up. We have the potential to find new customers in India and access local consumption. Just look at the cell phone growth in India."

Headquartered in California, Sanmina has manufacturing facilities in more than 20 countries and churns out products for top names like IBM, Hewlett-Packard Co., Nortel, Nokia, Echostar and others.

"We want to have something big. To start, the (Indian) plant would be comparable with China. It would be scalable and we would expand the plant as and when needed," Chua said.

With a market capitalisation of $2.1 billion, the firm operates a plant near Shanghai that focuses on high-volume production of printed circuit boards and cables.

Chua declined to reveal the cost of the India investment, but said the company was considering three sites in southern India and would likely strike a deal in the next three to four weeks. The new plant, likely on a greenfield site, would produce mostly printed circuit boards to support high demand growth in telecoms and consumer electronics, he said.

Other contract electronics manufacturers such as Flextronics and Solectron have also been moving manufacturing plants to countries with low labour costs.

Singapore's Flextronics, the world's top contract electronics maker, said earlier this month it planned to invest an initial $30 to $50 million to set up a second factory in India to make telecoms equipment.

STRONG DEMAND, MORE JOBS

Chua, who oversees production in Singapore, Indonesia, Malaysia, Thailand and Australia, said the company was experiencing strong demand for high-end consumer products such as global positioning systems (GPS).

He added that there was also strong growth in medical products, notably ultra-sound scanners, MRI equipment and CT scanners.

"Electronics demand for the full year is going to be strong. Our bookings are good. Quarter-on-quarter demand growth for the last four quarters has been 25 percent," Chua said.

Medical equipment, which currently accounts for 30 percent of the company's production at its Singapore plant, would grow to account for 40 to 50 percent of production here within two years.

The company also plans to boost its Singapore workforce by 10 percent in 2006 from the current 1,000, he said.

The new jobs will be a boon for the city-state, which has struggled to maintain a competitive edge over low-cost China in electronics manufacturing.

"Many of our customers want to make their products in Singapore because of its strong intellectual property protection," Chua said, adding that Singapore was also strong on logistics.

"Revenue generated out of Singapore is still higher than Malaysia or Thailand," he said.

The company is due to release earnings for the financial year to September 2005 next month. It has posted losses in the last three financial years but has narrowed its losses each year.