Industry Pulse - Jun '05

* MiTac International expects to double its PDA shipments in '05 to 2 million units. The company's PDA business accounts for approximately 25% of sales. The increase is partially driven by increased ODM orders from European distributors.

* DDi, the largest PCB quick-turn supplier (<10 days) in North America recently reported its mid-term business (11 to 20 day lead-time) strengthened. The company also confirmed its capacity utilization rate at 55% is far below its industry peers.

* Foxconn has said it will acquire two desktop PC facilities from HP. The factories are located in Australia and India and are expected to provide both design and manufacturing services.

* Siemens' struggling handset business has formed a partnership with Taiwanese ODM BenQ. BenQ has been moving toward providing its own brand of phones while moving away from the ODM model.

* A contract manufacturer's cash conversion cycle (C3) can be a good measure of how well a provider is managing his business. Essentially, C3 is the amount of time it takes a provider (in days) to place an order with vendors to pipeline materials in-house, build-up the materials into finished-goods-inventory (FGI), ship the FGI to the customer, collect on accounts receivable for FGI shipped, and close his accounts payable with his vendors. The lower the number of days it takes to do this the better. In ideal situations, a provider's accounts receivable period is less than his accounts payable - enabling him to virtually make money from someone else's money. Flextronics leads tier-1 providers in this metric with an impressive 19 days. Other providers executing well in this area include Jabil (23 days), Sanmina-SCI (32), and Celestica (37).

VentureOutsource.com, June 2005