Trends & Observations - May '05

* Venture Outsource (VO) has published an article on India's EMS industry in the May online and print issues of Circuits Assembly magazine. The article, titled "Steps to Develop and Promote Indian EMS" highlights essential activities and opportunities the firm believes India must continue to seek to become a successful destination source for EMS. VO proposes India focus on four target areas: international and regional EMS organizations, Indian government, private sector, and universities and technology/research centers.

* Various end-market segments providing revenue to the electronics contract manufacturing industry are showing continued signs of weakness. In addition to weak wireline communications infrastructure demand, IT hardware still remains unhealthy.

* Demand in the wireless infrastructure and handset space is doing well. On this note, Nokia and Sony-Ericsson both recently reported better than expected wireless infrastructure revenue. Hon Hai's wireless subsidiary, FIH, should benefit nicely from Nokia's growing market share. Our sources indicate most handset manufacturers still want to keep the majority of their manufacturing in-house.

* Lean manufacturing continues to attract a lot of attention for all of the right reasons. Lean manufacturing is about making ‘value' flow to the customer. The prerequisite is building an understanding of what ‘value' and ‘flow' is between supply chain partners. Training and communication are both key elements to a successful lean program. Venture Outsource's experience has found that companies subscribing to, and successfully executing, lean implementation can realize as much as 14 points higher ROE and 89 days shorter total cash cycle time including payables, inventory, and receivables than their non-lean competitors. Eric Olsen, Ph.D., former worldwide lean-practices educator for Hewlett Packard and senior consultant with Venture Outsource works with the firm's clients to help companies reduce operational cycle times and improve organizational financial performance.

* Outsourcing in China remains a popular discussion topic. Venture Outsource Group recently participated in a free, online and live, Webinar on outsourcing electronics in China that was attended by technology professionals from more than 25 countries.

VentureOutsource.com, May 2005