Western Digital May Move Singapore Work to Malaysia
Western Digital Corp., the world’s third-largest computer disk-drive maker, may move 70% of its manufacturing operations from Singapore to neighboring Malaysia by September, dealing a blow to the island state’s electronics industry, Singapore’s Business Times reported.
The Irvine-based company’s factory in eastern Singapore is expected to retain the production of high-end drives, which made up less than 5% of the 5.1 million drives it made in the March quarter. Up to 1,500 of the approximately 4,000 workers may lose their jobs, the newspaper said, citing unidentified sources.
Company officials declined to comment on the report.
The move suggests that Singapore may have to do more to cut the cost of doing business if it needs to keep business. The island’s costs from labor, land and operational expenses remain higher than its neighbors, making it a less attractive place for manufacturers.
“This is a long-term structural problem, and cost will still be the main reason,” said Pranab Kumar Sarmah, an analyst at Daiwa Institute of Research in Singapore.
Disk-drive makers have farmed out production to Singapore manufacturers such as NatSteel Electronics Ltd. and Brilliant Manufacturing Ltd. They have in turn set up shop in Malaysia to support their customers as they move their operations there. Brilliant--which relies on Western Digital for almost half of its sales--recently set up a manufacturing site in Malaysia.
Earlier this year, Western Digital closed a western Singapore plant and fired 900 workers, writing off $31 million in its fiscal third quarter, the company said.
Singapore makes about half the world’s disk drives and is the key manufacturing base for companies such as Seagate Technology Inc. and Maxtor Corp.
The cut in production by Western Digital will mean a decline of 5.4% for the island’s disk-drive exports, and a 0.8% drop in exports of Singapore-made products, Sarmah estimated. However, he expects that to be offset by increased production by companies such as Maxtor, which just set up a new manufacturing site on the island.
