Circuits Assembly - December 2008 - (Page 8) NEWS In Brief Digi-Key Corp. (digikey.com) has expanded its line of Tyco Electronics Raychem Circuit Protection Products to include PolyZen Zener diodes. SMTC (smtc.com) cut 276 full-time staff and approximately 100 temporary staff, mainly in Mexico, as it moved production to the company’s facility in China. A-Laser (a-laser.com), a provider of laser-cutting services, has expanded its hours of operations to meet demands of just-in-time manufacturers. The firm is now running three shifts to enable 24-hr. capacity. A-Laser is a division of FCT Assembly. Sunburst Electronics (sunburstelectronics.com) is in the final stages of gaining ISO 13485 certification, a quality management standard for medical device manufacturing. The company plans to extend its medical device industry reach as a result. Indium Corp. (indium.com) named EMC3 Group (emc3group.com) its sales channel partner in Florida. Ellsworth Corp. (ellsworth.com) opened a wholly owned subsidiary, Ellsworth Latin America Adesivos LTDA, in Sao Paulo, Brazil, to provide adhesives, sealants, coatings, encapsulants, tapes, and dispensing and curing equipment to Latin America. Manufactured Assemblies Corp. (mac-cable.com), a provider of EMS and other products and services, will build a 40,000 sq. ft. office and production facility in Vandalia, OH, with the planned opening early next year. MAC, which has operations in Dayton, OH, and suburban Atlanta, has 55 employees. The company plans to hire up to 25 more over the next three years, according to reports. Cobar Europe (cobar.com) appointed Prosem Technology India (prosemtechnology.com) its representative in India. ACD (acd.biz) has selected Optimal Electronics’ (optelco.com) Optel MES software. Industry Edited by Chelsey Drysdale Recession Spells End of Foxconn Effect, Analyst Says SAN JOSE – The top 10 EMS firms showed collective first-half growth of 4.3%, down from 20% last year, and the forecast, if not dire, is dimmer than before. In an economic wrap-up of the electronics industry, iSuppli Corp. in October said EMS/ODM firms have been hit hard by macroeconomic concerns and drops in demand. The environment has led the firm to lower its growth outlook for the sector to 8.2% CAGR. The subprime mortage resets peak during the second quarter, coupled with problems at Fannie Mae and Freddie Mac, loom large over economy, iSuppli noted. Said Adam Pick, principal analyst, EMS/ODM services, “In a recession, the Dow [Jones] drops 48 to 49%, so it could still get worse.” There’s no question the broader economic situation is being felt at the EMS/ODM level. ODM shipments are dropping tremendously this year. The No. 1 company, Compal Communications, a supplier to Motorola, Nokia and LG, has seen shipments drop 33.3% from last year. No. 2 Quanta has dropped 7.5%, while Qisda is down a whopping 50%. TPV has dipped 14.3%, and Asus is down 6.1%. “ODMs are definitely getting hit,” Pick said. “Revenues are down; shipments are down; forecasts are down.” The big question now is, Which of the EMS companies and ODMs will survive? Are there any likely bankruptcies? According to a new report by iSuppli, most firms are OK. However, without naming names, Pick suggested some firms could be in trouble during a recession. (The report, “Recession Hits EMS/ODMs,” was due out Nov. 7.) On the flip side, some CEOs are saying a recession is good for contract manufacturers because OEMs are rethinking their strategies, and Flextronics is positioned to be a prime beneficiary of a new wave of outsourcing. iSuppli thinks otherwise. “Is the rubber-band effect fact or fiction?” asked Pick. “The rubber-band effect was material during the last recession. But today is not 2001.” Jeffrey Wu, senior analyst, EMS/ODM services, pointed to the recent postponement of a major joint EMS/ODM investment in Russia. That deal, between Foxconn and HP, would have invested $50 million in a new 400,000 sq. ft. site in St. Petersburg, capable of producing 40,000 PCs per month. The opening was scheduled for early 2009, and its postponement shows even the largest EMS provider is now “feeling the hurt.” Said Pick, “Weaker demand is having impact on OEMs and EMS providers alike.” iSuppli predicts one of two scenarios: Electronics will either grow at a slower rate or contract altogether. Pick advises OEMs to reduce outsourced production and prepare for supplier consolidation. OEMs also need to ask how they can best reduce capacity. “This is reminiscent of post 2001,” he said. For EMS firms, he mentioned the seasonality of the first half of the year as a problem. “It’s time for EMS to back off.” While margins are actually stabilizing and restructurings are slowing, according to Pick, “consolidation is a definite need to know.” “The Foxconn effect is pretty much over,” he added. Its revenues at the beginning of the decade were $3 billion and grew to $50 billion last year, but “Foxconn has hit some hiccups. Their stock was down 63% in the last 18 months.” Feeling the biggest hiccup, however, has been Benchmark, whose sales are down 10% sequentially. SanminaSCI’s sales have beat expectations, and Celestica is seeing a turnaround in Europe and Mexico, while its “ROI continues to go up and up,” said Pick. For ODMs, the global trend toward mobile computing has been good for growth. The top 10 firms were up 21.3% last quarter, said Pick. Inventec, for instance, has seen a 28% spike in revenue on higher HP and Toshiba orders. Nevertheless, Quanta has had issues with R&D, labor and material, while Compal has struggled with contraction. – Chelsey Drysdale New IIT Factory Could Double Capabilities POST FALLS, ID – Integrated Ideas & Technologies Inc. (integratedideas.com) recently completed construction and moved into a 23,000 sq. ft. manufacturing facility. The new facility is expected to help the SMT stencil and metal fabrication Integrated Ideas, all in one place. circuitsassembly.com 8 Circuits Assembly DECEMBER 2008 http://www.digikey.com http://www.smtc.com http://www.a-laser.com http://www.sunburstelectronics.com http://www.sunburstelectronics.com http://www.indium.com http://www.emc3group.com http://www.ellsworth.com http://www.mac-cable.com http://www.cobar.com http://www.prosemtechnology.com http://www.prosemtechnology.com http://www.integratedideas.com http://www.acd.biz http://www.optelco.com http://www.circuitsassembly.com
For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.