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ECONOMY

Turkey’s geography lures Japanese electronics contractor Kaga

  • December 27, 2021
  • , Nikkei Asia , 1:15 a.m.
  • English Press

RYOSUKE EGUCHI, Nikkei staff writer

 

TOKYO — Japanese semiconductor trading house Kaga Electronics will build a new Turkish factory, shifting a portion of the production of printed circuit boards from China and Southeast Asia.

 

The company already manufactures parts for air conditioners on a contract basis in Duzce, Turkey, but the facility is running at full capacity. The new plant will produce the circuit boards and assemble parts on them as the customer requests.

 

The new plant is expected to come online in 2022 and to be consolidated with the existing facility.

 

Kaga hopes to leverage Turkey’s strategic location and expand orders from the Middle East and Europe. It will help diversify the company’s production away from Asia, where supply chain disruptions have become a risk.

The investment will be millions of dollars, with production capacity to be raised gradually, according to company sources.

 

Previously, the company had produced the circuit boards in Asia and assembled parts closer to the customers. But faced with difficulties securing maritime shipping and supply chain disruption in Asia, clients had asked Kaga to consolidate its production line and increase predictability in lead time.

 

Turkey is home to many manufacturers that cater to the Middle Eastern and European markets. Kaga hopes to leverage its new production base to win orders related to auto-related parts as well.

 

Kaga’s Turkey operations amount to around 1 billion yen ($8.7 million) in sales. The company hopes to triple that scale in three or four years.

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