WITH a 'very encouraging' first-half performance under its belt, components manufacturer Seksun Corporation is gearing up its China operations in the next few months to meet strong demand from major customers like Seagate.

Seksun, as the sole supplier of top covers for Seagate's hard disk drives produced in China, is well-placed to clinch more orders when the American company doubles its output early next year.

'This will be a rosy year for us,' said Henry Lee, managing director of Seksun Technology (Suzhou) when he briefed the Singapore media and analysts about its China operations which have been relocated to a new, bigger factory in Suzhou. He was referring to the huge volume of business expected from Seagate in China.

Seksun group chairman Felix Ong and Suzhou city officials were present at the opening of the S$10 million factory yesterday. Seagate's plant in Wuxi, which produces hard disk drives, is expected to double its output to 160,000 pieces a day in about six months.

Wuxi and Suzhou are about an hour's drive from each other.

Mainboard-listed Seksun, which invested in a plant here so as to be close to its major customer Seagate, is also eyeing future orders from other hard disk drive manufacturers like Maxtor and Western Digital, which are believed to be keen to set up new plants in the Suzhou/Wuxi area.

The latter two are expected to set up their plants over the next two years.

Seksun, whose share price has been enjoying a rally, made a net profit of $10.9 million for 2001, an increase of 67 per cent from the previous year. For the first six months of last year, it made $4.08 million.

Having the China plant also gives Seksun more flexibility in securing orders from different hard disk drive customers who may not want their main component supplier to produce components for a rival at the same plant.

'For instance, we can always produce for Western Digital in our Malaysia plant if Seagate does not feel comfortable with us doing the same component in China.'

China is one of the fastest-growing markets for hard disk drives, with 18 million pieces in use last year.

It is tipped to grow by between 21 and 25 million pieces this year.

In his speech, Mr Ong said: 'Our China operations are expected to contribute about 30 per cent of group turnover within the next two years which would be roughly equal to the forecast contribution to revenue from our Singapore operations.' Seksun Technology (Suzhou), which accounted for 16 per cent of the group turnover last year, is expected to be listed on a stock exchange in China in the next 18 to 24 months.

Unlike most other Singapore firms which set up shop in China, Seksun's operations here have been profitable since its first year in 1999.

Over the last three years, its workforce has grown from 18 to about 430 workers now.