SAN JOSE -- Sanmina-SCI's defense sales have stabilized following a drop last year and the EMS company is "optimistic" that the military growth engine will start to rev up later this year.

The defense business remains "very profitable," added CFO Bob Eulau, in a presentation to investors on a JP Morgan-sponsored technology conference call.

On the medical side, Sanmina-SCI is hopeful for modest second-half gains. "We see medical as a steady area ... maybe slightly up in the second half." The contract electronics manufacturer is concentrating on larger products such as CT scan machines, MRIs and X-ray machines, where it can offer design, fabrication, assembly and box build. "It’s a segment in which we can do more vertical integration," Eulau said.

An end-market with perhaps greater potential is industrial, where there’s been less outsourcing than in other areas. "We think there’s a lot of opportunity as traditional industrial companies look at what they can do from an outsourcing standpoint," he said.

Sluggishness in communications over the past two quarters, driven by bay stations or cellular wireless access, is expected to improve this quarter and to be significantly better in the second half, Eulau said. Softness in optical is also getting better, he added.

Multimedia, which fell 15% in the last quarter on lower demand for set top boxes, is expected to continue to decline. However, the company remains "very bullish" on storage, where it currently serves orders about 40 different customers.

The EMS company also plans to expand its printed circuit board fabrication operations in China and its EMS operations in India, where it will add a building in Chennai in support of a particular customer.

By region, Sanmina-SCI's sales break down to 20% in the US, 20% in Mexico, 25% to 30% in China, and 20% in the rest of Asia.

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