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EMS/ODM Growth Slow Compared to 2004
October 5, 2005 |Estimated reading time: Less than a minute
ALAMEDA, Calif. Growth within the electronics and outsourcing markets is slowing, but top-line growth should continue in most segments, claimed Technology Forecasters Inc (TFI) analyst Matt Chanoff, during TFI's annual Five Year Forecast at the Quarterly Forum in Toronto. Two areas that could affect the global gross domestic product (GDP) negatively over the next five years include high energy costs and the possible deflation of the housing market, added Chanoff. Overall revenue growth is slated for 13%, a drop from 20% in 2004, claims TFI. Growth is expected to vary from 11% to 18% depending on user segment. Study results were reported by global region, outsourcing business model (EMS and OEM) and end-user segment.
TFI's forecast presents cases demonstrating the impact a collapse in housing prices or skyrocketing oil costs may have on the electronics industry. "Last spring at the Q3 event in Redmond, we discussed the structural oversupply of outsourcing that has led to significant declines in profitability for both EMS and ODM companies," said Chanoff. Although net margins are lower for the EMS group as a whole than they are for ODMs, profits have been shrinking faster for the ODMs." For more information on TFI's Five Year Forecast, visit www.techforecasters.com.