TOKYO – Flextronics will spend up to $500 million over the next 10 to 15 years to build its manufacturing infrastructure in India.

Flextronics’ president for Asia Pacific Peter Tan commented on expansion in Southeast Asia and China’s wage inflation during remarks at the Reuters Technology and Telecoms Summit in Tokyo.

 

Flextronics is aggressively adding capacity in Southeast Asia. It plans to spend 1 billion ringgit over the next 10 years to build an integrated 1.2 million sq. ft. industrial park in Malaysia. Another $30 million capacity expansion is earmarked over the next six months for its factory in Changzhou, China, where it builds telecom infrastructure equipment.

The EMS firm plans to spend $30 million to $50 million initially to set up a second factory in India, Reuters reported. The second factory site is in Tamil Nadu and, when finished, will make telecom equipment.

“We would like India to be another China, if possible, but that's going to take a lot of work as India does not have a lot of trained resources to work in factories," Tan said.

Flextronics already has a manufacturing plant in Bangalore and a logistics center in Chennai.

“If things work out well,” Tan said, the company would increase its investment to $300 million to $500 million over 10 to 15 years. That would match the company’s investment to date in China, Reuters reported.

Flextronics has more than 11 million sq. ft. of manufacturing space in Asia, 7.5 million of which is in China. Vietnam is "a long shot" alternative for manufacturing because of logistical difficulties. "We will continue to cautiously invest in China, and continue to use Malaysia, India and Vietnam as alternatives," Tan said, according to Reuters.

The company’s goal is to increase Asian sales by more than 20% to $9.02 billion for the fiscal year ending next March. Sales to the region account for about half of Flextronics’ revenue, with Europe making up 28% and the Americas 22%.

According to Reuters, Tan said the revaluation of the Chinese currency is adding to wage inflation. "The increase in our labor costs is much higher than in the other parts of the world we operate, not to mention that China has one of highest inflation rates globally.” He said that the revaluation has otherwise had little impact there.

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