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Analysts to Discuss the CM IndustryNORTHBROOK, Ill. The IPC Association Connecting Electronics Industries announced that three analysts will provide a financial overview of the domestic and global contract manufacturing service industry in the keynote session Wall Street Speaks on the EMS Industry at the IPC SMEMA Council Electronics Assembly Process Exhibition and Conference (APEX). The session will take place March 15, 2000, from 8¨30 to 9¨30 a.m. at the Long Beach, Calif., Convention Center.

The session will be divided into three sections, each featuring one of the analysts¨

EMS¨ State of the Industry, featuring Keith Dunne, managing director, BancBoston Robertson Stephens

A Global Look at the EMS Industry, featuring Bill Cage, partner, J.C. Bradford and Co.

Tightening the Supply Chain¨ Software's Rising Role in EMS, featuring David Enzer, managing director, Everen Securities.

Wall Street's view of the [CM] industry has a profound effect on all [CMs], whether they are publicly traded or not," said Tony Hilvers, IPC vice president of industry programs. The presenters at this session are veteran analysts who have in-depth experience in the assembly industry and will share their insights with APEX attendees."

Flextronics Provides Intel for CompaqSAN JOSE, Calif. Flextronics International Ltd. was chosen by Compaq as a key supplier of Intel-based PCB assemblies for PC servers. Michael Marks, chairman and CEO of Flextronics, said, We are pleased that Compaq has again chosen Flextronics, further enhancing the relationship between our two companies. Compaq's action to outsource Intel-based PCB assemblies is evidence of the growing trend among major OEMs to utilize the extensive supply-chain management capabil-ities of leading [CMs] such as Flextronics International."

Stephen Martson, Compaq's vice president and chief procurement officer, stated We're pleased to be working closely with Flextronics International, and improve the efficiency of our overall supply chain. In our experience, Flextronics has demonstrated its ability to deliver flexible, full-service solutions."

New Facility to be BuiltCOLORADO SPRINGS, Colo. Skyline Electronics broke ground here to construct an expanded manufacturing facility. The new 50,000 sq. ft. plant is designed to serve the company's growing roster of high-tech customers in the Front Range region.

This plant will feature a factory layout designed for lean manufacturing," said Robert Mulnix, Skyline's general manager. By accommodating fast changeovers and variable volumes in a continuous flow mode of operation, Skyline's contract manufacturing services can integrate more closely with our OEM customers' own processes and improve their market responsiveness."

The internal configuration at the new facility is said to maximize flexibility by providing multiple lines of identical process equipment, which should minimize bottlenecks. The facility also will provide ready access to both customers and suppliers via its location near interstate highways and an airport.

Investing in DFMYAVNE, Israel Celestica made a multi-million dollar investment in Valor Computerized Systems tools to be implemented throughout Celestica's worldwide offices and facilities. The agreement includes the implementation of Valor's Trilogy 5000 engineering-data design for manufacture (DFM) and work preparation system, which is supported by the Valor Parts Library (VPL) component library service, as well as the Enterprise 3000 concurrent manufacturability and design verification system for all PCB design services departments.

Our substantial investment in Valor solutions reflects our belief that using Valor tools will allow us to better partner with our OEM customers and tighten our internal processes even more," said John Yealland, corporate engineering director, Celestica. Implementing DFM into the early stages of all engineering processes allows us to give rapid and early feedback regarding yield and cost factors. We can, in effect, establish a 'virtual prototyping' service to our clients [that] simultaneously minimizes internal lead times and maximizes capacity utilization."

CM Growth Rates Depend on SizeALAMEDA, Calif. The electronics contract manufacturing (CM) industry has been growing at an impressive rate, but this level of growth has varied widely depending on the size of the CM, according to a new report by Technology Forecasters Inc. The report forecasts an overall market growth from $60 billion in 1998 to $149.4 billion in 2003, for an average annual growth rate (AAGR) of 20 percent. Despite this overall rate, CMs can expect to see one of three different growth rates, depending on size¨ 35 percent for the largest companies (those that generated at least $500 million in revenues in 1998); 12 percent for mid-size CMs ($100 to $500 million); and 2.5 percent for the small (less than $100 million), on average (see chart).

The twelve CMs in the $500 million and larger group generated a total of $24.8 billion in 1998 revenues. The largest companies are growing much faster than the industry as a whole, with some of these companies far exceeding the 35 percent average for the large category," said Dr. Charles Mullin, director of high-tech consulting for Technology Forecasters. This growth is due to three factors¨ organic growth of the electronics industry in general; conversion of OEMs to the [CM] model; and having sufficient capital to acquire other [CMs] and OEM facilities, whereby entire manufacturing operations are transferred into the [CMs'] revenue stream."

Mid-sized and small CMs are growing more slowly, however. Thirty-seven mid-sized CMs with 1998 revenues ranging from $100 to $499 million grew an average of only 7 percent from 1997 to 1998. For the next several years, we expect the mid-sized [CMs] to grow at about 12 percent per year on average this is much slower than the 35 percent AAGR of the group of large companies, but is still double the growth rate for electronic equipment production," said Mullen.

Smaller companies are being challenged by the transition to turnkey services, offering competitive prices, and having multiple locations to be near OEM customers as well as the end customer. It's vital for these companies to create a profitable niche and to effectively communicate this niche to OEMs who need just that," commented Pamela Gordon, president of Technology Forecasters. Many may wish to consider merging with or being acquired by other [CMs] to achieve faster growth."

For more information on the report, Contract Manufacturing from a Global Perspective, contact Technology Forecasters at (510) 747-1900 or visit



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