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In effect, Marks sees his company becoming a one-stop, vertically integrated shop that provides everything from engineering and product design to manufacturing and distribution. "We are a variable-cost manufacturer," explains Marks. "We share the infrastructure among a bunch of customers, so when demand for one product dries up we can switch to something else and we don't get stuck with an idle factory." If the market for handheld computers takes a dive, for instance, the same assembly lines can be used to produce a product of similar size, like a cell phone. That's an efficiency not available to someone who only makes handhelds.
Flextronics got its start in Silicon Valley in 1969 as a "board stuffing" operation back in the days when computer circuit boards were soldered and assembled by hand. In 1990, as recession struck the U.S. and much of the world, Flextronics sold off all its U.S. operations and reincorporated in Singapore; from there it operated a few factories in Southeast Asia and southern China. Flextronics grew steadily through the '90s, leveraging its early presence in Malaysia and China into a solid share of the "enclosures" market--doing final assembly for cellular phones, personal computers and printers. But when the Asian economic crisis hit in 1997, Marks says, "I was all ready to sell it off to Sanmina or Solectron."
Then providence intervened. Swedish telecom giant Ericsson decided that it had become too costly to produce all its wireless switching equipment and, after researching Silicon Valley's contract manufacturers, awarded a $300 million deal to Flextronics (whose revenues at the time were only $400 million). "That launched us in Europe almost overnight," says Marks. "There was no other contract manufacturing going on there, so we were able to move very quickly with other acquisitions."
Last December Ericsson's top brass threw a 50th-birthday dinner for Marks at the tony Stallmastaregarden restaurant in Stockholm. While thanking his hosts and lauding their partnership, Marks launched into a bold new pitch: What Ericsson really ought to do, he said, was jettison all its mobile-phone operations. The next morning he made a formal proposal. Ten days later, Ericsson agreed to get out of the cell phone-manufacturing business. "It turns out that, increasingly, companies want not just a supplier but someone to run a part of their business for them," says Marks. "The Ericsson deal was our big breakthrough."
Flextronics' most sophisticated operations, which manufacture routers for Cisco and wireless base stations for Ericsson, are based in places like Silicon Valley and Sweden, where top talent is available. Its most labor-intensive operations are still in China, where Flextronics mostly makes comparatively simple electronic products, from PC parts for Dell and mouse assemblies for Microsoft to cell phones for Nokia, Motorola and Ericsson.
The company has a leg up in China, where it started relatively early, in the beginning of the 1990s. Revenues in China have grown to $2 billion. And Flextronics has expanded from two locations to a nationwide operation, with relatively simple cell-phone and PDA assemblers in the south and high-end engineering and manufacturing facilities in Shanghai and Beijing.