HONG KONG — Deswell Industries Inc. aggressively is expanding its manufacturing capabilities in China.
The national land management bureau granted a 50-year lease on 30 vacant acres in Dongguan, China, and issued a land-use permit allowing Deswell to develop state-of-the-art injection molding facilities.
Over five years, Deswell plans to relocate molding operations from a Dongguan plant and other operations 25 miles away in Shekou.
"This should cut our annual rental and labor cost by US$1.5 million to US$2 million, as compared to our current costs in Shekou," Richard Lau, chief executive officer, said in a news release. "Our intention is to triple the capacity of our plastics operation."
Development continues at the existing site.
"Our plastic injection plant in Dongguan began to provide the much-needed added capacity for the business we anticipate from existing customers," Lau said in a third-quarter report. "Our aggressive build-out impacted our operating margin during the quarter as the factory started to come on line, but we anticipate operating margins to improve as volume increases."
Deswell employs about 4,600, including 2,900 in the plastics division. The firm operates 250 injection molding presses, 14 double injection molding presses and 18 units for printed circuit-board assemblies using surface-mount interconnection technology.
Deswell makes plastic cases and parts, electronic devices and metallic products principally for telephones, telephone answering machines, audio equipment and computer peripherals.
Hong Kong-based Deswell reported profit of US$10.4 million on sales of US$64 million for the nine months ended Dec. 31. Deswell's stock trades on the Nasdaq national market.