Circuits Assembly Online Magazine - Features

SAN DIEGO, Nov. 24 — West Tech Inc. will represent KIC's full line of automated thermal management tools and systems for reflow, wave, cure and semiconductor thermal processes in Colorado and Utah.

The agreement was announced by the companies today. Other details were not disclosed.

TORONTO, Nov. 24 -- Celestica named John Boucher chief supply chain and procurement officer, responsible for global supply chain strategy and execution, including strategic procurement and commodity management activities.

Boucher will also lead the EMS company's Lean Manufacturing initiatives.

Boucher was head of manufacturing for Celestica in North and South America.

Prior to joining Celestica in March, Boucher was corporate vice president of global supply chain management for MSL, which Celestica acquired. He also worked for Circuit Test Inc. and Digital Equipment Corp.

FRAMINGHAM, MA., Nov. 24 - Factory revenue in the worldwide server market grew at 5.5% year over year to $11.5 billion in the third quarter, the sixth consecutive quarter of growth. Units shipped rose 18.7%, said research firm IDC.
Revenue from so-called volume high-end servers grew 18.2% and continues to drive the server market. Midrange enterprise server sales declined 10.2%, the third straight quarterly decline. High-end enterprise servers grew 1.9%, the forth consecutive quarter of growth.

"IT spending remained strong overall in the third quarter as customers continued to refresh and expand their IT infrastructures," said Matt Eastwood, program director of global enterprise server solutions at IDC. "Although customers continue to target data center simplification initiatives, investment in strategic IT initiatives - including new workloads - are also growing significantly once again."

IBM retained the top spot worldwide with 31.7% market share, up 6.3%. HP, the shipments leader, was second in revenues (26.8% share), up 2.9%. Sun and Dell were third at 10.2% and 10.1%, respectively. Dell grew 14.1% year-over-year while Sun was flat at 0.1%.

Top 5 OEMs, Worldwide Server Systems Factory Revenue (millions)

IBM   $3,659   31.7%
Hewlett-Packard $3,094 26.8%
Sun   $1,176 10.2%
Dell    $1,170 10.1%
Fujitsu/Fujitsu Siemens   $714 6.2%
Others   $1,733 15%

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NEW YORK, Nov. 24 -- Top tier electronics manufacturing services providers need to adopt a small business mindset if they are remain viable and profitable companies, says a report issued today by a major consulting firm.
McKinsey & Co. said today that although contract assemblers can leverage economies-of-scale and have generated tremendous value for their customers, "they have proved less adept at capturing value for themselves" and further restructuring awaits unless the sector adopts better habits.

In the McKinsey Quarterly, published today, the firm asserted, "Fierce competition, the economic downturn and an outdated pricing model have combined to produce razor-thin or nonexistent margins for most of the industry's top-tier players. The takeaway EMS players must learn to stand up to their powerful OEM customers, just as suppliers in the automotive industry have done. They can no longer afford to offer generous terms simply to fill up their factories.

"A bright future awaits these companies only if they adopt a small-business mind-set by charging for every service they provide on the OEMs' behalf and by closely monitoring their pricing and collection processes," McKinsey wrote.

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HONG KONG, Nov. 11 -- VTech Holdings Ltd. today announced higher revenues but lower profits for its fiscal 2005 first-half, ended Sept. 30. Revenue rose 13.1% to $457.1 million but profits fell 51.1% to $8.5 million, $3.3 million for a one-time settlement of indemnification claims.

VTech attributed the drop to underperformance in the North American telecommunication market.

VTech, which designs and builds consumer products and performs contract manufacturing, said business revenue from the North American market fell 10.7% to $251.4 million versus last year. Sales to businesses makes up 82.7% of VTech's telecom revenue. Overall telecom sales rose 1.7% to $304 million.

Sales of electronic learning products rebounded sharply, up 66.8% to $95.1 million. Sales in North America were up 129.4% to $31.2 million, while sales in Europe grew 40.3% to $56.1 million.

Revenues from EMS services were up 20.6% to $58 million. Profits were stable, despite pressure on margins from higher raw materials prices. Growth was especially strong in Europe and Japan, which accounted for 46.7% and 20%, respectively, of the firm's EMS services. North America's share declined slightly to 29.1%. Switching mode power supplies and professional audio equipment accounted for 32.2% and 26%, respectively, followed by home appliances at 18.3% and wireless products at 12.1%.

VTech guided for improved telecom sales in the second half, but lower year-on-year profits. "The second half of the financial year 2005 will remain challenging for VTech," said Allan Wong, chairman and group CEO.

VTech said sales growth is expected in Europe, where it has gained a major new ODM customer.

Contract manufacturing services are expected to see further revenue growth and stable profitability as the worldwide EMS market continues to rebound. VTech said it will seek reduced costs through more local sources of supply.

NEWARK, NY -- IEC Electronics Corp. reported net income of $62,000 on revenue of $7.7 million for its fourth quarter ended Sept. 30. Both figures were down from last year, when IEC reported net income of $575,000 ($260,000 in non-operating income) on revenue of $9.1 million.