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Written by Mike Buetow
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Friday, 25 March 2005 04:09 |
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SAN FRANCISCO -- Sony Corp.'s
new chief executive is expected to launch a major push toward
outsourcing electronics manufacturing to Tier 1 providers, a group of
analysts say.
The Japanese electronics giant already
outsources production of cell
phones (to Flextronics), PS2 video game consoles (to Hon Hai) and laptop PCs (Asustek Computer). However,
the company performs most of its own manufacturing -- and even
produces its own screen printers, placement machines and AOI.
But earlier
this month Sony named Howard Stringer as its new CEO, signaling changes
may be coming. As an outsider, Stringer may be more likely to push for
outsourcing than his predecessors at Sony, a company notorious for a
"do-it-ourselves" approach.
Research firm IDC said Sony is most likely to expand outsourcing to the large
companies with which it already does business. Sony is more than halfway through a three-year restructuring plan in
which it aims to cut fixed costs by $3.15 billion by streamlining
operations and cutting jobs, but profit margins remain razor-thin.
Separately, a Piper Jaffray analyst estimated that if
Sony outsourced all its electronics manufacturing last quarter, it
would have added $14.5 billion to the EMS sector.
Analysts feel operations in China are the likely beneficiary of any
grand scale Sony outsourcing in the future. And there are no guarantees
that Sony's current suppliers will gain the most.
"We're watching the emergence of these large vertically integrated
companies in China that make everything from plastic moldings to
finished laptops," Gartner analyst Martin Reynolds told Reuters news service. "These large
Chinese manufacturers are going to squeeze companies like Flextronics."
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Last Updated on Thursday, 31 March 2005 09:00 |
