The electronics contract manufacturer confirmed Monday that it would relocate most of its production capabilities here to lower-cost countries such as Malaysia and China as "times are bad."
"Singapore will become a competency center which focuses on design and technical development services such as tooling fabrication, test and hardware development and value engineering," a Flextronics Asia Pacific spokesperson said.
The spokesperson could not elaborate on the relocation timeframe and the customers which will be affected. However, she noted that Microsoft and Ericsson remains untouched.
Microsoft engaged Flextronics to manufacture its Xbox video game consoles, which is expected to pit against market leader Sony's PlayStation 2. The Xbox is Microsoft's high-profile bid to enter the lucrative video game market and expand beyond its PC software business.
Flextronics said in January that it would establish facilities in Mexico and Hungary to manufacture the consoles.
When contacted, Microsoft Asia Pacific Operations Center managing director Patrick Lung pledged that its partnership with Flextronics is "still in place and going well."
"Xbox consoles will not be manufactured in Asia initially, and as such, there is no impact at all," Lung said via email.
Flextronics also handles Microsoft's Xbox game software (DVD version) production in Singapore, Lung said, adding that the project will not be affected.
In January, Flextronics also said that it would manage Ericsson's mobile phone manufacturing operations in Brazil, Malaysia, Sweden (Linköping and Pilängen), the UK (Carlton and Scunthorpe) and the US (Lynchburg/Virginia).
It was reported that the take over (of Ericsson's seven phone-making sites and 4,200 employees) could possibly be worth US$300 million to US$800 million.
On how the downsizing will affect Ericsson, the Flextronics spokesperson said: "Singapore does not manufacture any telecommunications products."
In Asia, Flextronics has 1.26 million sq feet of facilities situated in Singapore; Johor and Melaka (Malaysia); Indonesia; Beijing, Shanghai, Tianjin and Xixiang (China).
The contract manufacturer declined to reveal how much floor space would be cut with the relocation of the Singapore facility. The local plant currently serves the computer peripherals, network and industrial equipment industries.
Flextronics also declined to reveal how many of its 890 staff here will be retrenched, saying "detail on manpower management is still underway."