(Nikkei BP Group)
(No.1 High-Tech News Site in Japanese)
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| Ericsson Aims to Produce 5M Handphones, Despite Crisis
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July 31, 1998 (KUALA LUMPUR) -- Swedish telecommunications giant Telefonaktiebolaget
LM Ericsson aims to make 3-5 million units of mobile phones at its Malaysian
plant by the year 2000.
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Ericsson Mobile Communications (M) Sdn., Bhd. managing director Olle
Ulvenholm said the company hopes to achieve the target when a new plant
comes onstream by mid-1999.
Ulvenholm said the 500,000 sq. ft. plant, to be built and equipped at
a cost of 100 million ringgit (about US$25 million), will be adjacent
to the company's existing plant in Shah Alam.
"Despite the regional economic slowdown, the demand for mobile phones
is still strong. People still need to communicate," he said. Ulvenholm
said the performance of the existing plant had exceeded expectations
in terms of production quality, distribution and sales since it began
operations last November.
"By the end of this year, we will have shipped more than a million phones,"
he said. "Our customer base continues to expand in Asia Pacific countries
such as Australia, Hong Kong and Taiwan, and the business has grown
to encompass India, South Africa and Germany."
The plant was accorded "strategic pioneer status" by the government,
which is a 10-year, tax-free incentive. About 90 percent of the mobile
phones manufactured at the plant is exported. The plant is one of Ericsson's
eight mobile phone factories in the world. The others are in Brazil,
the United States, China and Europe.
Ericsson is the leading brand in the local digital cellular phone market
and holds a 30 percent share of the estimated two million mobile phone
subscribers. Ulvenholm said a new growing segment were women in their
20s, and he expects women to constitute half of the local market by
the year 2000.
Ulvenholm said the strength and competitiveness of the Malaysian electronics
industry for components and sub-assemblies was one of the main factors
in choosing the country to locate the plant.
"We now have concrete plans to introduce Malaysian third-party components
and parts, not only in the Shah Alam plant, but also in other countries,
including Sweden," he said.
Ulvenholm said Ericsson's group of companies in Malaysia was expected
to register between 1.5 billion and 2 billion ringgit in turnover this
year, of which between 500 million ringgit and 1 billion ringgit would
come from the export of mobile phones. "With the new factory in place,
these figures are expected to grow quite substantially," he added.
LM Ericsson recently reported a worldwide net sales rise of 14 percent
in the first six months of 1998 compared with the corresponding period
in 1997.
During the period, China strengthened its position as Ericsson's single
largest market, and sales to Asia increased by 6 percent. Excluding
China, however, sales to Asia declined by 27 percent.
(Julian Matthews, Asia BizTech Correspondent)
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