A Cambodian subsidiary of Thai electronics manufacturing services company SVI Plc is moving closer to commencing construction on a factory on the outskirts of Phnom Penh that will manufacture electronics equipment for export to the US and Europe, a company representative said yesterday.
SVI (AEC) Co Ltd will construct the 6,000-square-metre electronics component plant in Phnom Penh SEZ. The company signed a 50-year lease for a 67,000-square-metre plot in the industrial park in July 2015.
“We will start with one factory, but there is room for two or three more,” said Phichet Kanogsirima, senior director of materials management at SVI Plc. “We still have big room for expansion.”
He said the Cambodian government recently approved the lease certificates, however the company’s board of directors has still not signed off on the construction budget or timeline.
SVI Plc provides electronics manufacturing services to original equipment manufacturers (OEMs) through its factories in Thailand and Europe.
The SET-listed company reported 8.1 billion baht ($228 million) consolidated revenue in 2015, a marginal decline from the previous year due to a fire at one of the company’s facilities in Thailand in November 2014 that disrupted production.
In January, SVI (Austria) GbmH, a subsidiary of SVI Plc, acquired European rival Seidel Electronics Group for an undisclosed amount. The buy-out gave SVI access to Seidel’s design and manufacturing facilities in Austria and Eastern Europe, and improved its logistics platform.
Robert Sawyer, vice president of business development for SVI (Austria) GmbH, said the company is already beginning to realise the synergies of the acquisition.
“We already have several major European customers who have been having SVI produce for them in Thailand for years who have launched new products starting up production in our new Eastern European factories,” he said.
“In the other direction, we have several of the biggest former Seidel customers who have already audited our Thailand site and approved it for production for their Asian demand, and some of those are keenly interested in our coming Cambodian location, in particular for high-volume mechatronic assembly.”
Sawyer said one of the key factors for customers interested in the Cambodia facility was its eligibility under the Generalised System of Preferences (GSP) for products destined for the US market, especially now that the Trans-Pacific Partnership (TPP) treaty is in doubt.
“While Thailand was not party to TPP, Malaysia and several other ASEAN [competitors] were, so this is a good development for Cambodia as a strategic location from which to serve the US,” he said.
Analysts from Bangkok-based Bualuang Securities Plc said in an investor note issued in June that SVI’s new factory in Cambodia would benefit from low-cost labour and trade preferences, including duty-free access to the US market under the GSP.
“Operating profit margin should be higher than that of Thailand,” they said, adding that the factory’s completion was expected to push SVI’s performance into a “high-growth mode”.