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Sanmina-SCI closes Malaysian plant

During the webcast for latest fiscal report, EMS-provider Sanmina-SCI annouced the decision to close one of their PCB facilities in Malaysia, this due to the expansion of manufacturing in China.

Sanmina-SCI began their expansion of PCB manufacturing in China with a plant in Wuxi a couple of years ago. As of now, that plant is beginning to come online. Sanmina-SCI feels that from that location they would be able to compete on a global basis. “While we had sequential growth in the components business this quarter, after a thorough review, we’ve decided to close one of our printed circuit board facilities, which is in Malaysia. This was a difficult decision, but one that we believe positions us for better financial results in both the short and long term” stated CFO Bob Eulau during the webcast. The closing of the Malaysian plant and the transfer of equipment to the new plant in China is estimated to save Sanmina-SCI approximately USD 20 - 22 million, which would otherwise have had to be spent on capital equipment for the facilities. During the Q&A of the webcast, CEO Jure Sola and CFO Bob Eulau answered the question whether they would completely close the Malaysian facility or just a subset of that facility. “Well, we’re going to be leaving some technology engineering group there that will be working on some research and development. So basically for all the practical purposes, we’re not going to be manufacturing printed circuit board at that factory in the future. And so really, the whole focus here, Wamsi, is to this new expansion that we created in China. It’s a really high technology product, and based on a present demand and a future demand, we believe we can provide a better solution from China and in other parts of the company”, said CEO Jure Sola. “I think it’s also important that we continue to invest in this business substantially. So our capabilities today, even with transitioning Malaysia operation into China and other parts of the factories around the world, are a lot stronger. And we believe that the areas that we focus on, that this was the right solution for us going forward”, continued Sola. "Okay, just to clarify your Malaysia question, we continue to have an integrated manufacturing facility, or EMS type facility in Penang, Malaysia, and what we’re in the process of transitioning is our printed circuit board facility which is in Kuching, Malaysia", added Bob Eulau.
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October 23 2019 1:52 pm V14.6.1-2