Malaysia-based U.S. tech firms see sales up
Mon Jun 27, 2005
By Liau Y-Sing
KUALA LUMPUR (Reuters) - Sales by U.S. electronics firms based in Malaysia will rise 10.3 percent to 82.2 billion ringgit ($21.6 billion) this year, but surging crude oil prices may depress demand, an industry body said on Monday.
Electronics are the mainstay of Malaysia's $104 billion economy, with sales of hard disk drive parts, televisions, radios and wires making up half of total exports.
Malaysian American Electronics Industry (MAEI), whose members produce nearly a third of Malaysian electronics exports, said sales grew 18.4 percent to 74.5 billion ringgit last year.
"This growth has been an ongoing trend since the industry's recovery in 2002 and is likely to continue in 2005," MAEI said in a statement. "Sectors contributing to the industry's growth included an increase in the usage of the Internet and demand for mobile and wireless devices."
MAEI -- which groups tech firms such as Intel Corp., Motorola , Western Digital and Dell -- said 2005 sales would be supported by increased design and development activities and by some manufacturers moving operations to Malaysia from Europe and the United States.
MAEI's growth forecast tops a 6 percent rise in global chip sales predicted by the Semiconductor Industry Association.
MAEI Chairman Wong Siew Hai told a briefing that global demand was growing at a slower pace due to a moderation in the economies of Malaysia's trading partners, and galloping oil prices could affect MAEI's forecasts.
MAEI members export most of their goods, mainly to the U.S.
BOOST IN SEMICONDUCTORS
Sales of semiconductors will climb 17.6 percent to 34.1 billion ringgit in 2005, after rising 11.5 percent last year, Wong said. Sales of other electronic goods will grow 6 percent to 48.1 billion ringgit, versus 23.3 percent growth in 2004.
MAEI members are expected to trim spending on fixed-asset capital investment to 1.5 billion ringgit from 2.4 billion last year, Wong said. Spending on design and development will rise 72 percent to 1.16 billion ringgit.
Wong said Malaysian tech firms were growing more competitive, as the wage gap between Malaysian and Chinese producers narrows.
For example, a junior engineer in Malaysia is paid 41,800 ringgit a year, less than 2 percent more than a Chinese peer.
Foreign direct investment in Malaysian manufacturing fell 16 percent last year, partly because some firms opted to invest in lower cost bases such as China.
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