Flextronics lines up India foray

NEW DELHI: Singapore-based contract manufacturing company Flextronics Corporation plans to test waters in India. The company, which has been doing contract manufacturing for PC in other parts of the world, including for Dell in China, plans to get chip from its JV partner SemIndia and manufacture computers in SEZ at Chennai. The contract manufacturing market for PCs in India is estimated at $20bn.

The company is currently negotiating with domestic vendors for branding the PC. While negotiations are on, sources said that Patni Computer Systems and Sahara computers have chosen Flextronics as their contract manufacturer. Zenith and Millennium are also in talks with the company. The venture is likely to start by the end of August.

“We are setting up mechanical facility, tooling capability and sheet metal facility. We will assemble the PCs and manufacture the body and the mouldings for the PC and the laptops. We are looking at SemIndia as the long term source for the chips and domestic vendors for branding,” a Flextronics executive told ET.

The total capacity of the company’s SEZ is expected to be about 40,000-50,000 units (of computers) per month. The company will charge a fixed fee for each of PC. “While the entire raw materials will be provided by the vendor, Flextronics will charge about Rs 800-1,000 per PC as fee from each vendor depending on the configuration,” said the source.

The central government has a 26% stake in the SemIndia-AMD consortium. According to experts, the SemIndia-Flextronics partnership is expected to push the government’s agenda to increase PC penetration in the country. Currently, the PC penetration in the country is about 14 per 1,000 and is targeted at 65 per 1000 by ’10.