News
HP spends an estimated $43 billion each year --- the largest in the world -- on supply chain procurement. The company seeks ongoing supply chain cost reductions of the $1 billion to $1.3 billion annually through 2007, DB wrote, the bulk expected to come from lower procurement costs.
HP, which sources 88% of its' spend with its top 40 suppliers, has plans to shrink its supplier base even more. In doing so, the firm will retake control of various purchasing that the company had previously outsourced to EMS firms, DB wrote.
HP is demanding its EMS firms compete on their manufacturing capabilities, rather than procurement. "While HP implemented this process over a year ago to get better clarity into its costs (and eliminate the CMs' profit from material cost arbitrage), we believe HP is accelerating this move and continuing to pressure pricing at the EMS level," DB analyst Chris Whitmore wrote.
Furthermore, the company is pushing toward greater standardization across its hardware platform, reducing the number of parts it uses.
PARIS, Dec. 13 -- LG Electronics last week opened an R&D center here and will staff it with more than 100 researchers, part of its strategy to crack the top 3 of the handset industry market by 2006.
At the center, LG will work on multimedia features for its next-generation (4G) GSM and WCDMA phones. The company will also use the location to enhance its links with major European service providers like Vodafone, Hutchison, T-Mobile and Orange .
LG also has R&D centers in San Diego, Beijing, Bangalore and Moscow.
In a statement, James Kim, president for European Headquarters, said, "[T]he establishment of R&D center in Europe has created an environment in which we can efficiently respond to R&D issues in the region. We will position our research center as the R&D hub penetrating European mobile phone market by increasing the number of researchers by more than 100-plus people next year."
Merix will buy Data Circuit Systems Inc., a provider of quickturn board fabrication services, for a total purchase price of $43 million, consisting of $41 million in cash and a $2 million note. The move effectively triples Merix's customer base.
For its fiscal year ended Sept. 30, Data Circuit Systems had net income of $2.3 million on sales of $27.7 million. The firm posted an EBITDA of $5.8 million.
In a press statement, Merix chairman and chief executive Mark Hollinger said, "Merix has been focused on growing and enhancing its quickturn business for some time. While we have made significant progress in this endeavor, this combination enhances our market opportunity by providing added scale, tripling our customer base, diversifying our end markets, adding experienced rep firms to complement our direct sales force, and augmenting our quickturn service offering to include 24 hour turnaround."
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