News
ALAMEDA, CA, Jan. 14 - Technology Forecasters Inc. forecast that last year's double-digit growth for the EMS and ODM industry will continue into 2005.
In its latest report, the market research group forecasts average growth rates over the next five years of 15% for EMS, 20% for ODMs, and 16% for all outsourcing.
Overall drivers for healthier growth include the fact that EMS companies, led by Flextronics, are making a major commitment to the ODM model to maintain customers. "There are more opportunities for cooperation between ODM and EMS companies," said vice president Eric Miscoll. "As ODMs brand their products and push into the OEM space, there's less competition between the ODM and EMS business models, because they send their manufacturing to EMS."
TFI also reported:
- As RoHS and WEEE regulations take effect, OEMs and EMS companies are reviewing bills of materials for compliance. "It's a good time to take a look at a wide range of design for manufacturing issues, while ‘the patient is on the operating table," recommends president Pamela Gordon Gordon. "Additional cost savings will come not only from more efficient designs, but also from pruning product lines before the compliance deadlines."
- The firm's Beijing-based analyst Mark Natkin's says local technology standards are being promoted by the Chinese government to help create a sense of national unity. "Even failed standards help achieve this goal, so expect this trend to continue," he says.
The firm's next quarterly market meeting takes place March 9-10 in Guadalajara and features comparisons between manufacturing in Mexico. Also to be covered: outsourcing lessons learned in computers, environmental compliance in low‑cost regions and a panel discussion on the current status of manufacturing in Mexico.
by Mike Buetow
KUALA LUMPUR, Jan 14 - Solectron Corp.
will close one of its four factories here in May and pay a reported
$1.6 million to the 750 displaced staff, a local newspaper reported
today.
The Business Times reported
Solectron said the Johor plant was no longer viable due to customers'
changing needs. Most of the business will be transferred to other sites
in the region," Joe Tang, south Asia operations vice president, was
quoted as saying.
Solectron employs more than 7,000 workers at its four manufacturing plants here.
Analysts feel the nation's electronics manufacturers are migrating to lower cost regions, the Business Times said.
SAN FRANCISCO -- A leading analyst today maintained its cautious outlook for providers of electronics manufacturing services.
Deutsche Bank said recent reports from major OEMs that outsource manufacturing indicate tepid and in some cases negative growth ahead for EMS firms.
In hardware sales, IBM, a leading outsourcer, reported a 1% year-on-year increase in the fourth quarter due to slowness in its mainframes, storage and PC businesses, down from 9% sequentially. Motorola and Juniper fell on a year-on-year basis.
Handset shipments improved as Motorola and SonyEricsson beat quarterly forecasts, although the average selling prices were lower than expectations, DB said.
WEST CHICAGO -- The outlook for sales of connectors remains unchanged: growth of 6 to 8%, according to a leading industry research firm.
However, Bishop & Associates says peak demand in the first half of 2004 raises the bar for those numbers to be reached.
Sales growth in 2005 "will require good demand foer electronics products.... Frankly we are a little concerned," the company said in a recent report.
Order growth has slowed, having declined in October and November. The November book-to-bill -- the most recent month for which data are available, was 1.0, below the year-to-date average of 1.02.
"We envision a scenario in which the first half of 2005 will be flat to the first half of 2004," Bishop said. "If 2005 starts slowly, we believe full year growth in 2005 will be difficult to achieve."
Through November, orders were up 22.2% for the year. November orders slipped 2% sequentially.
Shipments were up 22.9%, the 25th straight month of year-on-year gains.
MINNEAPOLIS - The SMTA seeks papers for its November International Wafer-Level Packaging Congress and Exhibition.The event takes place Nov. 3-4 in San Jose.
Called the IWLPC, the event focuses on leading-edge IC packaging and test technologies with special emphasis on 3D stacked packaging.
The event is also sponsored by Chip Scale Review.
TEMPE, AZ - Three-Five Systems will consolidate its U.S. electronics manufacturing and corporate functions into one location and is exploring possible contraction overseas as well, the company said today. The moves are being made to reduce overhead and excess factory capacity.
TFS, which supplies EMS services, will close its plant in Tempe early this year and move all operations to its Redmond, WA, site. The company did not indicate how many employees would be affected.
The company also said CFO Jeffrey D. Buchanan will resign to remain in Tempe. The firm named James E. Jurgens as interim chief financial officer.
The company also announced that it is exploring opportunities to consolidate its operations in Manila, Philippines. TFS is "working closely" with its principal customer in Manila while also exploring the potential sale of the factory.
TFS lost $47 million on $164 million in sales during the 12 months ended last September.
In a written statement, president and CEO Jack Saltich said, "[S]treamlining operations and driving costs to their lowest possible level are imperative to remaining competitive. While profitability will only be accomplished through a combination of revenue growth and the changes I am announcing today, these actions are a necessary step in that direction."
On Dec. 31, in a move that forecast TFS' announcement, the company sold the building in Tempe that housed its headquarters.
The consolidation is expected be completed during the second half of 2005. TFS currently performs low-volume EMS, prototype and medical manufacturing operations in Redmond.
Several U.S. sales, marketing and engineering support centers will remain intact.
Jurgens was chief financial officer at Ziatech Corp., a privately held developer of embedded computers for telecom applications, which was purchased by Intel in 2001. TFS said other commitments preclude Jurgens from taking the position on a permanent basis.
