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Flextronics goes to China

Updated - Xbox manufacturer leaves Hungary

Xbox manufacturer Flextronics is planning to move production of Microsoft's console from Hungary to China, it emerged today, although work will continue at the company's other Xbox factory in Guadalajara, Mexico. Despite highly disappointing sales in the Far East to date, there are apparently already plans to open a second Xbox plant in Asia in the future, presumably to take advantage of cheap labour in the region. "We are confident that through the local supply base and our substantial buying power we can help Microsoft reduce product costs and assist in meeting the growing worldwide demand for Xbox", Flextronics CEO Michael Marks told the press. Meanwhile Microsoft's Xbox hardware supremo Todd Holmdahl insisted that the move will "result in significant cost efficiencies". Whether or not this includes the cost of shipping the consoles half way around the world to Europe instead of moving them down the motorway from Hungary isn't clear. More details of the move emerged from Reuters yesterday, with Holmdahl telling the news agency that "from the start .. we knew we wanted to be in China at some point, but we were also on a very tight development schedule", debunking suggestions that the move was spurred on by a need to reduce production costs in light of recent price cuts. "As we move into the next phase of the program, cost and efficiency are very important and we are going to execute on our plans to move to China." The bad news for European retailers is that it will apparently take anything up to five weeks to transport Xboxes to Europe in future, presumably on a slow boat from China. Microsoft don't see this as a problem though, with Holmdahl telling Reuters that the company can "more accurately gauge demand" in Europe now, making it less important to have a local supply of the console. Well, that's one way of putting it. Related Feature - The Empire Strikes Back

Source - GameFaction / Reuters

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