Global manufacturers have been shifting lower-end manufacturing to China due to its lower costs but it is also moving up the production chain, Flextronics' Asian managing director Peter Tan told the Straits Times.

Singapore-based Flextronics is the world's largest electronics contract manufacturer. Its clients include computer maker Hewlett-Packard and mobile phone companies Motorola and Sony Ericsson.

"The manufacturing that is high-end today will no longer be high-end tomorrow," said Tan, adding that Singapore has a window of only three to five years to move to a higher production level before China catches up.

Flextronics' customers get "itchy" after a few years and want to move production closer to end-user markets and raw material suppliers, Tan said.

China has eclipsed Malaysia as a manufacturing base for Flextronics, and now accounts for more than half of the company's output in Asia, he said.

As a result, Flextronics' future investments will be directed toward China, where it has more than 40 factories with 38,000 workers. In Singapore, it has about 1,700 staff in three plants.

Since the 1990s, electronics-dependent Singapore has been suffering from a hollowing-out of its manufacturing sector as production migrated to lower-cost countries like Malaysia and China.

Tan said Singapore still hosts Flextronics' largest design engineering team in Asia but even this could change as countries like India and China upgrade their capabilities, the newspaper reported.

SPACE.WIRE