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Communications Drives CM Industry
December 31, 1969 |Estimated reading time: 1 minute
SAN ANTONIO - As dependence on communication electronics increases, end-user applications are expected to sustain dynamic growth in the CM industry. According to new strategic research from Frost & Sullivan, the market generated $11.83 billion in 1999, and a robust rate is forecasted through 2006.
Telecom firms that traditionally have not outsourced services are realizing that to remain competitive, they need to delegate their manufacturing operations. OEMs have decided that focusing on core competencies, such as marketing or R&D, will have a beneficial impact on their business, and many have already divested themselves of substantial amounts of manufacturing functions. "For [CMs], OEM acquisitions are a quick and efficient way to increase manufacturing capacity and generate new business," said Frost & Sullivan analyst Adam Fries.
CMs focus on managing information flows by implementing information technology (IT) systems and advancing their supply chain capabilities. Optimizing the supply chain will give companies new ways to reduce expenditures. Because the industry currently operates under thin net margins, perpetual efficiency is key to remaining competitive, as datacom and telecom OEMs are expected to continue to push prices downward and demand additional services.
Effective IT systems and supply chains are forecast to help CMs distinguish themselves from competitors. However, as the industry becomes increasingly competitive, differentiation is becoming harder for CMs, according to the research.
For more information on the report, North American Electronics Manufacturing Service Providers Industry for the Communications Sector, visit www.frost.com.
In related news, Frost & Sullivan presented the 2000 Marketing Engineering Awards to companies that have worked to make a positive contribution to the CM industry. The 2000 Market Engineering Competitive Strategy Award was presented to Solectron, while the 2000 Market Engineering Customer Service Leadership Award went to Celestica.