August 6, 2003
Furukawa Electric is beginning to manufacture, in addition to reflow ovens which are already in production, thermal products such as heat-pipes and heat-sinks, in the Huazhong District in China where the world's PC manufacturers are concentrating in. To this end, the company increases the capital of Furukawa Electronics (Suzhou) Co., Ltd. (Location: Suzhou, Jiangsu; hereafter called Furukawa Electronics Suzhou) in China jointly with Asia Vital Components Co., Ltd. (hereafter called AVC) in this September.
1. Backgrounds and Objectives
The world's manufacturing bases for PCs are concentrating in China, expanding their scale especially in the Huazhong District represented by Shanghai, Suzhou and Konsan. For example, Quanta (the world's No. 1 OEM manufacturer of PCs) has moved into Shanghai, and Compal (No. 2 manufacturer) into Konsan, making the Huazhong District the world's largest manufacturing base for notebook PCs.
Furukawa Electric has long paid attention to the possibilities of the District, so that, as the first step, the company established Furukawa Electronics Suzhou in May 2002 to begin manufacturing industrial equipment such as reflow oven and the like. This time, supported by the customers' requirement for local production of thermal products, the company decided to increase the capital thereby expanding Furukawa Electronics Suzhou ahead of schedule, considering it's high time for embarking local production to promote the just-in-time (JIT) production as well as cost reduction.
2. Outline and Future Aspects
The capital increase will be carried out jointly with AVC (Furukawa Electric's affiliated company in Taiwan), whereby Furukawa Electric will invest 630 thousand U.S. dollars (35 %) and AVC 1,170 thousand U.S. dollars (65 %) totaling 1,800 thousand U.S. dollars, thus increasing the current capital of 600 thousand U.S. dollars to 2,400 thousand U.S. dollars.
Whereas the capital increase is carried out jointly with AVC, as is the case with the establishment of Furukawa Electronics Suzhou, to take into account such factors as the business customs specific to China, flow of materials and business engagement together with personnel and general management, Furukawa Electric will be responsible for the total management.
The current plant with limited space will be transferred to a new site in the Suzhou Industrial Park enlarging the building area from 1,474 m2 to 3,800 m2, and full-fledged production is scheduled to begin in this September. The sales are expected to be 7 million U.S. dollars for 2003 and more than 25 million U.S. dollars for 2004.
In future, Furukawa Electric will give Furukawa Electronics Suzhou the role of a principal base in China for manufacturing various electronics products including chip antennas for mobile phones, thereby planning to expand business activities in collaboration with other bases in the Huabei and Huanan Districts. The company also plans to construct an efficient supply chain management (SCM) system, taking advantage of the logistics networks supported by Furukawa Logistics Corporation.
3. Remarks
- Furukawa Electronics (Suzhou) Co., Ltd.
Location: Suzhou, Jiangsu; President: Atsushi Kitanoya (absentee director); Major shareholders: AVC: 65 %, Furukawa Electric: 35 %; Establishment: December 2002, as a base for electronics business in China - Asia Vital Components Co., Ltd.
Location: Kaohsiung, Taiwan; President: Spencer Shen; Major shareholder: Furukawa Electric: 29 % (invested 2 billion yen in 2000); Business performance in 2002: Sales: 4,382 million Taiwan dollars (About 15 billion yen), Profit: 410 million Taiwan dollars (About 1,400 million yen); The top maker of fan coolers for PCs in Taiwan; Listed on the Taiwan Stock Exchange in September, 2002