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ANGELTON, TX – Benchmark Electronics president Gayla Delly told analysts the telecom,
industrial controls and medical sectors are bright spots for the EMS company,
but a customer shift to lower-priced computers is hurting revenues.
For the June quarter, Benchmark saw sequential strength in
industrial controls (up 13%), medical (up 7%) and telecommunications (up 4%).
Computing fell 6% – out of step with typical seasonality – and test and
instrumentation slid 12%.
However, the company also saw a trend to lower ASP solutions
in the computing sector. “[We] saw some programs with robust demand in terms of
units even though we saw lower revenue numbers,” Delly said in a July 24
conference call. More than 50% of the company’s sales come from computing.
“In the current environment you expect this trend to
continue. We are maintaining our strong customer base and we have not lost
business from our customers. What we do see is that some computing customers
are trending a portion of their new solutions toward the low end.”
Based on past sales, Benchmark expected computing demand to
be stronger in the second quarter. “We were surprised with weaker demand for
the product we're serving in the computer sectors,” CEO Cary Fu added.
“Telecom, industrial controls and medical [are] continuing
to see strong performance and growth opportunities,” Delly said. But the
overall semiconductor test industry is down over 40% year-over-year, she added.
“That one I don't think is healthy. I think that one definitely needs a shot in
the arm.”
A new facility in China will come online late in the third
quarter or early in the fourth, the company noted. Despite the murky macro
economic environment, the company does not expect to shutter any plants. “We do
not have any restructuring plans in place and don't see the need to adjust our
footprint. I think we've got a very solid footprint,” Delly said.
Fu and Delly also
addressed the migration of certain programs back to the US from Asia. While
noting rising labor and logistic costs in Asia, demand for
certain products is “definitely shifting” from the US to Asia, Fu said, citing
semiconductor test equipment as an example. “You have been seeing two different
forces in the marketplace. One is the product we serve in the US or Europe. If
they're heavy, they're very expensive to move around. They tend to be moved
back to either Asia or to the US as well as Europe.
But for product [where there is] increased demand in Asia,
we still see those products stay in Asia.”
For other programs, there has been movement, Delly said. “You
are seeing the decision being made for certain products to get closer to the
end-customer base, because when they look at total cost of ownership, it makes
sense to reduce freight and travel costs,” Delly said.
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