* Conversations with industry providers, and their OEM customers, indicate the European EMS sector is experiencing a greater than expected macro-economic slowdown impacting top-line growth for many industry provider locations in the region.
* With two industry environmental compliance issues just around the corner, RoHS (Restriction of Hazardous Substances) and WEEE (Waste Electrical and Electronic Equipment), VO believes many smaller OEMs may choose not to bring internal manufacturing processes into compliance resulting in a significant increase in outsourcing activity leading into, and through, calendar ’06-Q1 when the initiatives are to take hold. VO believes some industry analysts and forecasters may be failing to calculate this potential outsourcing boom into their projections which could translate to billions of additional dollars.
* End-demand in the technology sector for desktops, notebooks, and certain handset models is turning out to be better than expected resulting in improved penetration in emerging markets and a shorter replacement life in some instances. This can translate to favorable circumstances for outsource providers with regards to the upcoming back-to-school and holiday season.
* There is an evolving trend among the tier-1 EMS providers dividing into two base camps. Providers working on improving their margins and providers working on both margins and top-line revenues.
* On a global scale, healthy end-market demand in communications and IT infrastructure, and consumer electronics demand in the USA and Asia have largely offset present weakness of similar demand in Europe.
VentureOutsource.com, August 2005
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