As previously hinted, Lenovo has confirmed it is to begin building x86 servers and other datacentre products in Europe, which it says will halve delivery times for local customers.
Under a partnership with Flextronics, x86 servers for EMEA clients that were previously built in Shenzhen in China will now be produced in Sarvar in Hungary, starting this summer.
Wilfredo Sotolongo, EMEA vice president and general manager Data Center Group at Lenovo, told CRN that he expects the Hungarian plant to assemble EMEA's full allocation of up to 250,000 x86 servers annually once production is fully ramped up.
Assembly of Lenovo's full range of storage and networking for datacentre environments will also now be carried out at the plant, which already produces Lenovo PCs and ThinkServers.
The move will boost service levels for clients, with delivery times being cut from two weeks to one, as well as saving on transportation costs, Sotolongo claimed.
"We wanted to improve the time it takes to get our solutions into [clients'] hands," he told CRN. "When you have a local presence, you have options that you don't when most of your manufacturing is overseas.
"The second motivation, which was an unexpected one, was that we think we can do it without increasing costs. Even though most people think of manufacturing overseas as a lower-cost option, there are lower-cost options here in Europe that we can leverage, and this is one of those scenarios – we suspect we may actually even be able to improve costs in this scenario."
The Sarvar plant recently manufactured and shipped its five millionth Lenovo PC in EMEA. The new line for datacentre equipment will be formally opened in the next 30 to 45 days, Sotolongo said.
Lenovo inherited the Shenzhen factory where production for its EMEA x86 servers currently occurs through its 2014 IBM System x acquisition.
Until relatively recently, IBM built some of those servers in eastern Europe, meaning the Hungarian move means that Lenovo is – in effect – bringing production back to Europe.
Despite reports that rising labour costs in China could make it a less desirable location for tech manufacturers, Sotolongo (pictured) said Lenovo's move was driven more by transport and logistical considerations.
"Datacentre equipment is very big and very heavy, and very costly to move," he said.
"So the benefit here comes primarily from the logistics, not the manufacturing. If you manufacture in Hungary, you can put things in trucks, which is more cost-effective than an aeroplane."
Within a year, almost all of the approximately 250,000 x86 servers Lenovo builds for the EMEA market will be made in the Hungarian plant, Sotolongo said, adding that Lenovo enjoys a 10 per cent slice of the EMEA x86 market.
"We are doing this so they can dedicate [the Shenzhen] factory more and more to local requirements," he said. "We have factories in China, Brazil, Mexico and the US and we are trying to align to local factories."
Moving product closer to home will allow UK partners more flexibility in how they manage inventory and will also improve the after-sale service they can offer, Sotolongo claimed.
"Parts for service will also be local so they won't have to go back to either the US or China for any parts," he said.
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