Business

Saturday November 14, 2009

Motorola vendors upgrade production lines

By DAVID TAN


GEORGE TOWN: Motorola’s local small and medium vendors are upgrading their production lines in anticipation of rising orders for their products next year.

In Malaysia, the US technology giant works with 50 small and medium enterprises (SMEs) that serve as its suppliers.

Those planning new investment this year and next include Qdos Flexicircuits Sdn Bhd, a subsidiary of Suiwah Corp Bhd; NationGate Technology Sdn Bhd and Dufu Technology Corp Bhd.

According to Britain-based research house BPA Consulting Ltd, the mobile telecommunication devices segment alone is forecast this year to consume about US$4.6bil worth of flexi-circuits, compared with US$4bil in 2008.

Next year, this segment would absorb some US$5bil worth of flexi-circuits.

It also forecast that the shipment of mobile handsets would hit 1.2 billion units this year, unchanged from last year’s figure.

In 2010, however, worldwide shipment of mobile handsets is expected to rise to 1.4 billion units.

In response to the anticipated demand for flexi-circuits and mobile telecommunication devices, Qdos will expand its production of flexi-circuits.

Business development director P.C. Whong told StarBizWeek the company recently invested some RM3mil in automated optical inspection equipment and laser drill machine for its plant in Bayan Lepas.

Over the last three years, Qdos had invested more than RM20mil to upgrade the manufacturing facilities to meet the stringent requirements especially from the telecommunication and data storage industry.

“We expect to increase our monthly output by more than 15% next year from 50,000 sq m of flexi-circuits presently,” he said.

Between January and May this year, Qdos’ monthly output fell 30% but production had since recovered and was back to full swing, Whong said.

“The mobile telecommunication devices segment is just one market driving up orders for flexi-circuits.

“We are not even talking about the data storage, automotive, digital cameras and other types of consumer electronic products, that also consume flexi-circuits,” Whong said.

Qdos is now involved in six early supplier involvement projects with Motorola, aimed at preparing the vendors for the next generation of telecommunication products.

NationGate, based in Prai Industrial Estate, is investing about RM8mil this year to upgrade its equipment and production line.

“We are forecasting an increase of 5% to 10% in the demand for flexi-circuits next year.

“We are currently involved with Motorola in 12 of its new product introduction projects to produce future generation of flexi-circuits,” managing director Ooi Eng Leong said.

NationGate produces on average over a million flexi-circuits a month.

In the first half of the year, its monthly production was down by about 40% compared with the corresponding period in 2008.

Since July, its monthly flexi-circuits output had returned to pre-crisis level, Ooi said.

Ooi added that NationGate was also investing about RM10mil in a joint venture project using Australian technology to develop super capacitators, which were used in enhancing the power management system of telecommunication devices.

The super capacitators, scheduled for release into the market next year, would be supplied to telecommunication industries worldwide.

AB Technology Sdn Bhd, a Johor-based specialist manufacturer of magnesium covers and chassis for telecommunication devices and medical equipment, invested some RM35mil during the fiscal year ended June 30 for upgrading equipment and plant.

Director Kevin Pang said for 2010, the company was allocating between RM2mil and RM3mil to purchase equipment.

“We are forecasting a 50% improvement in sales next year. We also expect to ship out higher value-added casings and chassis next year that would increase revenue by 30% to 40%,” he said.

Pang said AB Technology was currently involved in more than 20 early supplier programmes with Motorola at the moment.

Meanwhile, Dufu plans next year to invest about 10% of its capital expenditure of about RM10mil to expand the business segment serving Motorola, against less than 5% allocated this year.

Dufu is involved in manufacturing casings and brackets for Motorola’s telecommunication infrastructure.

Group chief executive officer P.Y. Yong said since last year, Dufu had started taking part in designing the tooling parts used for the casings and brackets.

“Next year, we will take part in five or six of Motorola’s early supplier involvement projects related to developing future products for the company’s telecommunication infrastructure system,” he said.

Yong added that Dufu on average produced 500 to 1,000 sets of components monthly for Motorola.

“Despite the global economic crisis, the volume of monthly output has been maintained,” he said.

Since being appointed a vendor to Motorola three years ago, Dufu has invested about RM3mil for its telecommunication casing and bracket business segment.

Meanwhile, Motorola Malaysia managing director T.T. Yew said Motorola worked with 50 SMEs in Malaysia.

“They regularly take part in our joint product development, early supplier involvement, lean manufacturing transformation and new product introduction programmes to improve the supply chain standards,” he said.

Globally, Motorola outsources 33% of its manufacturing and assembly activities to its small and medium suppliers worldwide.

“We work with 27,000 SMI (small and medium industries) suppliers in 126 countries. So far Motorola has spent US$19.2bil on project development programmes for its SME vendors worldwide,” Yew added.

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