Flextronics International Ltd. is likely to increase its material and component procurements by about 25 percent a year, reflecting a similar growth percentage in sales volume for the past two years, according to Peter Ho, the company's chief procurement officer worldwide.
The Singapore-based company buys about US$28 billion in components a year, Ho told attendees of the Global-Asia Trade Exchange 2007 conference, held Oct. 10 in Singapore.
Of that total, the company spends about US$2.5 billion a year sourcing plastic-based components, Ho said after his speech.
Low-cost structure, robust production, skilled labor, critical mass and domestic market - as well as the government's incentives - make China a main materials source for Flextronics, Ho said in his keynote address.
Overall, Flextronics sources only about 25 percent of its component requirements from Asia, despite having 50 percent of its production at Asian operations, Ho said.
He pointed out that Asia lags behind in producing a full complement of semiconductors and mechanical parts.
Nevertheless, China remains one of the main sources for materials, accounting for 10-15 percent of the total purchasing done by Flextronics, Ho said.
India and Southeast Asia account for about 10 percent of the materials sourced by the company, which has spread its operations to 35 countries. Flextronics' more than 200,000 employees produce mobile, computing, consumer digital, infrastructure, industrial, auto and medical equipment.
Ho said high-end, value-added components are sourced from Western markets, with mechanicals coming from Eastern Europe.
Flextronics' procurement of plastics components for printers and copiers could grow 5-10 percent a year during the next 36 months, Ho said.
Flextronics has some 13,000 suppliers around the world and annual sales of US$33 billion.