Microsoft and Flextronics are to establish a manufacturing and assembly operation for the Xbox video game system in China later this year.
The companies also stated that the console manufacturing operation in Hungary would be relocated to Doumen, China. In addition to the Xbox operations at Flextronics’ Guadalajara, Mexico, facility and the new operations in China, Microsoft will add another facility in Asia in the future.
According to Todd Holmdahl, General Manager of Xbox Hardware at Microsoft, the cost savings associated with the Doumen facility are derived principally from reduced overhead costs and the facility’s location in the same region in which many of the Xbox components are manufactured.
In its Doumen facility, Flextronics will provide manufacturing services for Xbox that include printed circuit board fabrication, injection moulding, sheet-metal stamping, circuit board assembly, final box build and testing.
The move, a cost cutting measure, comes as Japanese games console contender Nintendo announced that it had cut the price of its game console – the Gamecube – to $149 in the US. Microsoft’s X Box and Sony’s Playstation 2 are currently priced at $199.