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News

SAN JOSE – The MicroElectronics Packaging and Test Engineering Council (MEPTEC) released the program for its Nov. 13 symposium “Packaging Developments and Innovations: From System Design to Integrated Delivery” in San Jose.

Glenn Daves, director of packaging technology at Freescale Semiconductors will keynote, discussing aligning packaging developments with the market.

Sessions include advanced packages and processes; packaging to board assembly trends; microelectronics substrate fabrication and assembly innovation, and design tools and co-design solutions.

To register, visit www.meptec.org.

SAN JOSE –Flextronics today said its second-quarter net sales were $8.9 billion, up 59% year-over-year.

TORONTO – Celestica Inc. reported third-quarter revenue was $2.03 billion, down 2.4% year-over-year, in line with company guidance.

Net earnings were $32.1 million, down nearly 38% compared to the same quarter last year.

DUSSELDORF, GERMANY – LogiChem, the chemical industry's annual supply chain management conference, will take place Mar. 31 – Apr. 3 at the Hilton Dusseldorf.

The conference, now in its eighth year, addresses the current shortage of transport and storage capacity, demand planning, collaboration, growing markets such as Russia, and presents shipper case studies.

To register, visit www.logichemeurope.com.

NEW YORK – Dover Corp. announced third-quarter earnings from continuing operations of $190.3 million, up 5% year-over-year, in $2 billion in revenues.

LEUVEN, BELGIUM – National Association of Manufacturers president John Engler today called for in-depth study of a “Transatlantic Free Trade Area” between either the European Union and the US, or the EU and the North American Free Trade Agreement nations.

SAN JOSE – The top 10 EMS firms showed collective first-half growth of 4.3%, down from 20% last year, and the forecast, if not dire, is dimmer than before.

In a 2008 wrap-up about the economic status of the electronics industry, iSuppli Corp. today said EMS/ODM firms have been hit hard by macroeconomic concerns and drops in demand. The environment has led the firm to lower its growth outlook for the sector to 8.2% CAGR.

The subprime mortage resets peak during the second quarter, coupled with problems at Fannie Mae and Freddie Mac, loom large over economy, iSuppli noted. Said Adam Pick, principal analyst, EMS/ODM services, “In a recession, the Dow drops 48 to 49%, so it could still get worse.”

There’s no question the broader economic situation is being felt at the EMS/ODM level. ODM shipments are dropping tremendously this year. The No. 1 company, Compal Communications, a supplier to Motorola, Nokia and LG, has seen shipments drop 33.3% from last year. No. 2 Quanta dropped 7.5%, while Qisda is down a whopping 50%. TPV dipped 14.3%, and Asus is down 6.1%.

“ODMs are definitely getting hit,” Pick said. “Revenues are down; shipments are down; forecasts are down.”

The big question now is, Of the EMS companies and ODMs, who’s going to survive? And are there any likely bankruptcies? According to a new report by iSuppli, most firms are okay. However, without naming names, Pick suggested some firms could be in trouble during a recession. The iSuppli report, “Recession Hits EMS/ODMs,” is due out Nov. 7.

On the flip side, some CEOs are saying a recession is good for contract manufacturers because OEMs are rethinking their strategies, and Flextronics is positioned to be a prime beneficiary of a new wave outsourcing.

“Is the rubber-band effect fact or fiction?” asked Pick. “The rubber-band effect was material during the last recession. But today is not 2001.”

Jeffrey Wu, senior analyst, EMS/ODM services, pointed to the recent postponement of a major joint EMS/ODM investment. That deal, between Foxconn and HP in St. Petersburg, Russia, would have invested $50 million in a new 32,000 sq. meter site capable of producing 40,000 PCs per month. The opening was scheduled for early 2009, and its postponement shows even the largest EMS provider is now “feeling the hurt.”

“Weaker demand is having impact on OEMs and EMS providers alike,” Pick said.

iSuppli predicts one of two scenarios: Electronics will grow, but at a slower rate, or the market contracts. The latter, Pick said, “is what we fear the most.”

For OEMs, he advised, it’s time to reduce outsource production and prepare for EMS/ODM consolidation. OEMs also need to ask how they can best reduce capacity. “This is reminiscent of post 2001,” he said.

For EMS firms, he mentioned the seasonality of the first half of the year as a problem. “It’s time for EMS to back off.” While margins are actually stabilizing and restructurings are slowing, according to Pick, “consolidation is a definite need to know.”

“The Foxconn effect is pretty much over,” he added. Its revenues at the beginning of the decade were $3 billion and grew to $50 billion last year, but “Foxconn has hit some hiccups. Their stock was down 63% in the last 18 months.”

The biggest hiccup, however, has been Benchmark, whose sales are down 10% sequentially. Sanmina’s sales have beat expectations, and Celestica is seeing a turnaround in Europe and Mexico, while its “ROI continues to go up and up,” said Pick.

For ODMs, the global trend toward mobile computing has been good for growth. The top 10 firms were up 21.3% last quarter, said Pick. Inventec, for instance, has seen a 28% spike in revenue on higher HP and Toshiba orders. Nevertheless, Quanta has had issues with R&D, labor and material, while Compal has struggled with contraction.

SEOUL -- LG Electronics will invest $168 million to convert a plasma display production line to two solar cell lines, the company said today.

The company earmarked a PDP line in its Gumi, Korea, facilities for the switch, which will begin next month and is slated for completion by 2010.

TORONTO -- Adeptron Technologies has reported its second large outsourcing deal in two weeks, this one to supply electronics manufacturing services worth more than $4 million per year to an undisclosed Canadian OEM.

Full turnkey product support and manufacturing services are scheduled to begin in the fourth quarter, Adeptron said.

KAUNAS, LITHUANIA -- UAB Kitron, a subsidiary of Kitron ASA, has received new orders worth $13.4 million for a marine related product, with deliveries scheduled to take place in the first-half 2009.

"We are pleased to see that deliveries to these projects in 2009 are expected to be substantially greater than in 2008,” said Mindaugas Sestokas, managing director of UAB Kitron, in a press release.

Kitron, a large Norwegian EMS firm, currently has more than 350 employees at the site. Worldwide, the company has more than 1,300 employees and revenues over $250 million.

NAMPA, ID -- MPC Computers on Oct. 16 cut about 22% of its workforce from its Nampa and North Sioux City, SD, facilities, the company said.

About 39% (78 positions) of the reductions layoffs came in Nampa and 49% (98) in North Sioux City, with the rest related to field sales and other locations. In all, the company laid off 200 workers, bringing its workforce at the two sites to 693.

TAIPEI -- Asustek Computer is forecasting a 77% jump in notebook production next year on higher demand for low-cost laptops.

The company hopes to ship some 20 million units next year. If so, it would make Asustek one of the world's four largest laptop makers, behind Dell, HP and Acer.