Cisco opens Asia manufacturing plant in S'pore
The announcement was made at the official opening of the company's new premises at Capital Tower Thursday morning.
Besides being responsible for the testing, development, logistics and overall operation of Cisco's manufacturing business in Asia, the locally-based center will also manage Cisco's electronics manufacturing services partners in the region, the company said in a statement.
Previously, all manufacturing decisions were made out of the network equipment maker's headquarters at San Jose, California.
"Asia is expected to play an increased role in the company's global manufacturing system in order to lower costs and shorten customer lead times," Cisco noted.
Indeed, the ability to directly fulfill (produce and ship) orders for customers in Asia and Europe from its Asian manufacturing plants was a major impetus for the move.
Cost, ease of doing business, geographic location, and proximity to suppliers and customers were other reasons, said Cisco Asia Pacific president Gordon Astles.
Currently, about 2 percent of Cisco's Asia business is being met by its Asian contract manufacturers--namely, Venture Manufacturing in Singapore; Solectron, Jabil, MCMS and Inventec in Malaysia; Foxconn Electronics in China; and Celestica in Thailand, noted Cisco managing director for Asia Manufacturing Operations Stanley Lim.
Last year, Asia Pacific sales, including Japan, contributed to about 18 percent of Cisco's global sales, said Astles.
According to him, roughly US$2 billion a year is spent in Asia Pacific for components and manufacturing services--a "significant portion of Cisco's overall spending".
Not all demand in Asia will be met by the region's contract manufacturers, however. In some cases, Cisco may prefer to maintain its more complex production in the US, explained Lim.
The region is currently responsible for Cisco's entire production of Internet Protocol (IP) telephones, wireless Local Area Network (LAN) products and cable and Digital Subscriber Line (DSL) modems.