Celestica Joins Leading CEMs,Increases Presence

Posted on December 1, 1999 
Filed Under Julian, Nikkei Electronics Asia

Celestica Inc, the third largest contract electronic manufacturer (CEM) is investing in its first plant in Malaysia at the Kulim Hi-Tech Park in the northern state of Kedah.

Its entry marks a milestone for Malaysia which has secured the top six CEMs in the world as listed by industry trackers, Technology Forecasters Inc, namely SCI Systems Inc, Solectron Corp, Flextronics International Ltd, Jabil Circuit Inc and NatSteel Electronics Ltd.

Celestica spokesperson Pam Goddard said the company is investing US$26 million for the first phase of the plant which includes the purchase of a 4,645m2 plant. “We are very excited about the potential in Malaysia and firmly committed to growing here to meet our customer’s needs,” she said.

The new plant is set to begin production in December and is projecting an annual output of three million units of electronic components for its workstation, server, personal computer (PC) and communications markets.

It will hire 1,000 staff for phase one of the plant. Phase two of the plant will involve a much larger investment and may include expansion into an adjacent and existing manufacturing facility.

“Celestica recently completed significant expansions in its facilities in Thailand, Hong Kong and China, Malaysia represents the next step in the company?s strategic plan for Asia as it is a new market,” she said.

“Celestica thoroughly evaluated Malaysia and the result was very positive. The overriding factor was the quality of the people we saw here. Without the ability to hire and train an outstanding workforce, Celestica would not be able to build a profitable and successful business,” she said.

CEMs Take Hold

Contract manufacturers have been flexing their muscles with expansions, acquisitions and hiring sprees in Malaysia and the region in recent months.

In August, Flextronics broke ground for a US$30 million new plant to complement an existing one in Johore. The 11,150m2 plant will have 12 high-speed production lines for surface mount printed circuit board assembly (PCBA) and is set to come onstream in April 2000.

In September, Solectron picked up additional manufacturing capacity and design capability in Penang when it acquired SMART Modular Technologies Inc’s global operations for US$2 billion. Another leading player MCMS Inc quadrupled its manufacturing space when it moved into its new 10,960m2 plant, also in Penang in September.

Technology Forecasters said CEMs completed 60 acquisitions of plants between 1996 and 1998 worldwide as more multinational original equipment manufacturers (OEM) divested and outsourced their commodity manufacturing needs.

This year has been a buoyant one for the industry with every major player picking up significant contracts.

They project worldwide electronic manufacturing services revenue will grow from US$89.6 billion in 1998 to US$178 billion in 2001, representing a 25% compounded annual growth rate.

The bulk of revenues are in communications, networking, computers and computer peripheral products.

Analysts say CEMs are expected to enter the new millennium as an established link in the OEM supply chain with global presences and a broad range of services from prototyping to full-box assemblies and design capability.

Published in Nikkei Electronics Asia, Dec 01, 1999
by Julian Matthews, Malaysian correspondent

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