Taiwan-based Passive System Alliance (PSA) Group plans to build a new production base in Chongqing, China in order to cope with changes of the labor costs and movement of industry chain in China. Fellow companies under the group, including Global Brands Manufacture (GBM), Walsin Technology (WTC) and Prosperity Dielectrics, will also move into the new production base.

Chongqing will become the latest production base for the group thanks to the strong support from the local government, said Peter Chu, CEO of the administrative department of the PSA Group.

Average monthly salary of factory workers in the Kunshan area was hiked by 18.75% to CNY1,140 (US$173) in January, which could reduce gross margin by one percentage point, Chu said, noting that wages in the Dongguan area will be increased also by 17-18% in February.

Copper price was also hiked 10% in February to over US$10,000 per ton in the global market and is expected to continue to swing up due to strong demand, Chu asserted.

To cope with rising labor and raw material costs, GBM plans to hike its PCB prices over 5% and EMS prices by 8-15% soon, Chu noted.

The group's PCB capacity is expected to expand 50-60% by 2012 as compared to its current capacity, Chu revealed.