Trends & Observations - Nov '05

* A seminar profiling global EMS provider strengths, challenges, competitive tactics, value propositions. (Dec. 8). IBM is sponsoring the event instructed by Venture Outsource president Mark Zetter. Companies profiled include Benchmark, Celestica, Elcoteq, Flextronics, Foxconn, Jabil, Nam Tai, Sanmina-SCI, and Solectron. Attendees will learn how these top providers differ, which providers may be best for certain OEM outsource programs, and more. http://ventureoutsource.com/docs/webinar/globalems.html

* Overall EMS industry inventories increased in Q3. This is not out of line leading into the holiday season. Flextronics and Celestica saw the biggest inventory builds.

* Despite what others in industry may be communicating, VO believes excess capacity is still an industry-wide issue. Many EMS providers are still taking large charges due to restructuring operations. Some providers continue to accept business at-a-loss in hopes of improving internal efficiencies to drive down costs. This is resulting in many providers being caught off-guard with unsustainable long-term ‘transfer price' issues.

* Printed circuit board manufacturers are reporting slightly higher layer averages for their customers with some vendors averaging 15 to 17 layers/board. This indicates that improvements with board functionality and reduced footprints both continue to be influenced by product end-market demands. On a relative note, vendors are indicating, on average, overall increased demand in the handheld; military, industrial, and communications markets.

* The China handset market grew roughly 37% year-on-year this past September. This is ~ 2x the global rate. On a relative note, Flextronics has lost some share of its Sony-Ericsson business.

VentureOutsource.com, November 2005