News
As offshore outsourcing evolves from low value/low exposure projects to increasingly complex global projects involving core competencies, the cost and exposure of inadequate attention to security will increase significantly, Gartner Group said.
Gartner urges early dialog to address security and due diligence throughout the outsourcing life cycle. Although security issues will lengthen the sales cycles of global delivery, it will not stop enterprises from adopting global sourcing models.
Gartner presented its view on the real issues related to security, privacy and IP/confidentiality when going offshore at its IT Security Summit in London. "The security exposure that both clients and service providers have to deal with, as global sourcing becomes more strategic and complex, increases by orders of magnitude," said Partha Iyengar, research vice president, Gartner India. "Service providers are unable to provide standard security solutions because regulations, legislation and consequently risk vary vastly between industries and geographies."
Gartner said there is also tremendous hype and a lack of understanding of the issues surrounding security. The most significant security issues revolve around the protection of data in one manner or another. There are, however, other issues that are not well understood, vague and based on emotion rather than fact. "One of the most frequently voiced concerns is related to call centers where consumers are alarmed when dealing with people with unfamiliar accents in unknown or foreign locations," said Iyengar. "This understandably raises questions around people's personal data, but may nevertheless not present a real risk."
"Service providers and users need to look jointly at risk and work together to create an information protection framework to identify and spell out each of the concerns, determine their validity and make educated decisions about the risk they may or may not pose," said Iyengar. "Companies also need to be more transparent and inform customers of the security steps they take when going global to alleviate fears and avoid hype."
Asset Protection Issues
Understanding the relationship between business, security, IP and privacy is essential for enterprises in effectively managing business risks associated with corporate and individual privacy. Security deals with data, people and technology, privacy deals with data confidentiality and customers records, while IP concerns patents, copyrights and trade secrets.
"There is a significant 'cost of security', and it is not cost-effective to provide the same level of security to every aspect of a companies offshore exposure. Companies therefore need to understand which records and data they need to protect and why, and how much they should spend on this security," said Iyengar. "The most sensitive data can be found in personal, financial, medial, tax, employment and company financials records. Certain companies and vertical industries will have to classify data or determine the requirements for sharing data on project by project basis."
Iyengar highlighted that global delivery also includes a growing number of lines of service or application areas. These include applications development, IT infrastructure, contact centers and back-office BPO. Each of these could have vastly different requirements and exposure in terms of 'information protection' requirements and need to be understood and dealt with differently.
Evolving Regulations
The pace of new regulations is increasing for all industries and governments. The focus that countries have on privacy and data regulations is diverse and will evolve by country. "While the U.S. and Canada have strong regulations for personal data protection in the public sector and no comprehensive legislation for the private sector, the European Union, Japan and Brazil have data protection and privacy codes for the private sector," says Iyengar.
"Regulations will constrain or put additional requirements on the relationship between clients and service providers. At a minimum this could increase the cost of providing the services, and in the worst case it could prevent some work from being sent offshore. Enterprises need to understand all the nuances around these regulations to put an effective strategy in place."
Country risk status: How strong are the country's laws around security, including the existence of standards around this. Equally (or more) important, what is the track record of the country and its people in the adherence/enforcement of these standards and laws.
Privacy protection: Is there an environment and inherent 'culture' that supports and promotes data and personal privacy. Is data security taken seriously and are adequate protection measures in placing in general that are followed. Is there sufficient awareness of the need to protect confidentiality in data?
Government interception risks: Issues like government interception of sensitive confidential information as well as guidelines for the use of or access to effective encryption algorithms in the country (some countries are restricted in this) are important.
IP risks: Across IT and many other industries, protection of IP is taking center-stage. Given the vast diversity in laws and regulations around this issue globally, one cannot assume that all countries provide the same level of protection, both from the perspective of existence of laws to their actual enforcement.
Employee/labor laws: How employer / employee friendly are the laws in each of these countries, and what are the ramifications from a labor perspective of doing business here.
Contractual/legal risks: Any non-conformance/breaches on any of these issues could end up in a contract dispute in a court of law. In some countries, justice is delayed to such an extent that it is truly denied. Understanding the risks of contractual and legal system maturity and speed (or lack thereof), can allow greater diligence during the contracting process.
"Generally, the maturity of legal frameworks, regulations and business approach mean that countries considered to be 'developed countries', such as Ireland, Canada and New Zealand provide a more secure environment," said Iyengar. "However, the trade-off is that companies will not be able to make the same cost savings as for example India or Russia. Recognising that the risk versus cost trade-off will increasingly drive sourcing location decisions, India is aggressively addressing issues around security."
Gartner's recommendations include:
- Tackle security issues very directly and early in the sourcing strategy development phase. Then review throughout the life of the outsourcing deal through evaluation and selection, contract development and sourcing management.
- Develop a detailed dialog with your service provider and ensure you understand their approach and track record in delivering robust security. Do not cede overall control and responsibility for management of security onto the provider. This control should remain in-house, including responsibility of some of the auditing mechanisms.
- Work with the service provider to create and deliver an information protection framework to identify and spell out each of the concerns, determine their validity and make educated decisions about the risk they may or may not pose, and how much should be spent on mitigating that particular risk.
Universal Slashes Placement Equipment Prices
Binghamton, NY -- Universal Instruments has announced a worldwide, across the board price reduction for its high-speed chip and flexible fine pitch equipment platforms, effective immediately.
According to a press release, the company hopes the global price consistency will simplify the purchasing process for multinational customers.
New prices for the platforms include:
Genesis FFP, a twin beam modular chip placer combined with high-speed FFP capability, from $239k to $259k;
Genesis HSC with twin beams and two Lightning heads for speeds up to 54,000cph for $299k;
AdVantis FFP, a single-beam chip placer with FFP capability, for $125k;
AdVantis HSC with a Lightning head for speeds up to 30,000cph for $150k.
Universal credits its policy of driving out costs from its processes -- including mandates to design out cost during product development cycles, supply chain optimization with global sourcing and a broadened manufacturing base - for its ability to offer the new pricing scheme.
SAN JOSE, Oct. 4 -- EDA revenue rose 4% in the June quarter versus one year ago, reaching $993 million, the EDA Consortium said today. The rise wasn't enough to convince one chief executive of a leading EDA company that the industry was performing up to par, however.
"Despite very modest growth in the EDA industry, there are no indications of overall strength," Wally Rhines, chairman of the EDA Consortium and chairman and CEO of Mentor Graphics, in a statement. "Growth in services versus last year is positive but the sequential decline is not."
For the quarter, computer-aided engineering revenues were $474 million, up 4% year-on-year. License and maintenance grew 2% year-on-year. Services was up 11% to $70 million. IC physical design and verification sales fell $3 million, to $282 million.
PCB and MCM layout revenues were $84 million, down 1% from Q2 2003.
The semiconductor intellectual property (SIP) revenue rose 28%, to $84 million. The sector was helped by greater SIP participation in EDAC's data collection.
Revenues in North America and Europe increased 4% each, to $523 million and $180 million, respectively. Japan was down 5%, to $176 million. Rest-of-world, which includes China and India, was up 19%, to $115 million.
The sector employed 20,000 in Q2, up 6% vs. a year ago and a new high since EDAC began tracking employment data four years ago.
"I think the great advantage of this material is that it provides a very wide process window, which gives us tremendous flexibility," says Vahid Goudarzi, a distinguished member of the technical staff at Motorola. "From printing to reflow, we really stressed the material and it was able to meet our very rigorous technical requirements."
Multicore LF320 requires a minimum peak reflow of 229°C, about 11°C lower than standard lead-free pastes. (Higher Dt assembly designs can be reflowed in air at up to 260°C.) The difference provides a safety margin when reflowing temperature-sensitive components. According to Henkel, the paste prints at a speed range of 25-100 mms-1 (6"s-1), wets on a range of surface finishes, and has been formulated to provide high resistance to slump and solderballing.
LF320 is classified as a ROMO per J-STD-004 and meets or exceeds Bellcore GR-78-CORE tests for electromigration.
The material has been optimized for reflow in air on a range of PCB assembly applications and reflow profiles may be extended with nitrogen, Henkel said in a press statement.
Good call: Henkel's Chris Korth (left) and Cary Vocelka (right) receive the good news from Vahid Goudarzi of Motorola.
"Expansion into Mexico supports our strategy to deliver globally," Kester vice president of marketing and business development David Torp said in a press statement. Torp noted the years-long migration of assembly operations into China, Mexico and Eastern Europe.
Kester plans additional plants in Suzhou, China, in 2005, and Plauen-Neuensatz, Germany, which has been operational since June.
BOSTON, Sept. 30 -- Some of the greatest technology minds gathered this week in Boston to discuss innovation, yet the talk continually turned to something much more mundane: standards.
Noted luminaries ranging from a senior R&D executive at IBM to the man credited with creating the Worldwide Web agreed that standards and innovation go hand-in-hand, and that more attention needs to be paid to ensuring standards for new technologies are open.
Speaking to an audience of about 500 at the Emerging Technologies conference at MIT, Sir Tim Berners-Lee, the inventor of the Web, said it's "very important" that stakeholders protect the Web from being "tripped up by software patents." And Paul Horn, senior VP of IBM Research, called open standards "critical for speedy innovation at a company, in an ecosystem, in the country."
Horn decried those who seek IP protection, at the cost of slowing innovation. "Success in R&D requires rapid flow of innovation into the marketplace. Time to market is critical." Universities that elbow aside businesses seeking to partner on R&D because of worries over IP rights strain new products, too, he said.
Berners-Lee noted that patent licensing royalties form a barrier for companies that develop new technology. "You could never find out what patent could possibly apply to what technology," he said.
Berners-Lee now directs the World Wide Web Consortium (W3C), an open forum of companies and organizations that develop Web standards. W3C advocates a royalty-free standards policy for patent licensing.
Most of the technology discussion over the two-day event centered on software advancements - and, as in the case of standards, potential hurdles. While there was talk of nanotechnology and outsourcing - with speakers brushing aside concerns over regional job loss as a natural result of bringing lower cost product to market, what the conference didn't cover in depth was potential new manufacturing techniques.
Solectron's Q4 Loss Narrows
10-01-2004
by Mike Buetow
MILPITAS, CA, Sept. 28 -- Solectron Corp. saw its fiscal fourth-quarter loss narrow on a strong increase in sales. The company reported a loss of $2.4 million on sales of $3 billion for the quarter ended Aug. 31.
Last year, the EMS maker reported a loss of $179 million on revenue of $2.44 billion. Excluding items, earnings from continuing operations were 4 cents a share in the latest period, reversing a loss of 6 cents a share, and in line with analysts' expectations and company guidance.
Solectron guided for November quarter earnings, before items, of 4 to 6 cents a share on sales of $2.9 billion to $3.1 billion.
Solectron chief executive Michael Cannon said company strength in the markets for networking equipment and set-top boxes, offset by weakness in computing, storage, wireline infrastructure and third-generation cellphones.
For the year, the company reported a loss of $168.9 million on revenue of $11.6 billion. In the same period last year, it reported a loss of $3.45 million on revenue of $9.83 billion.
SAN JOSE, Oct. 1 - Flextronics was the world's largest EMS firm in 2003, with revenues of $13.8 billion, Reed Research Group said today.
Solectron was number two at 11.1 billion, followed by Sanmina-SCI($10.8 billion), Celestica ($6.7 billion) and Jabil Circuit ($5.2 billion).
The rest of the top 10 were: Finland-based Elcoteq ($2.8 billion), Venture of Singapore ($1.9 billion), Benchmark Electronics ($1.8 billion), Taiwan's Universal Scientific Industrial ($1.2 billion) and Plexus (841 million).
No. 11 Manufacturers' Services Ltd. ($825 million) has since merged with Celestica. The complete list of the top 100 can be linked to at: www.reed-electronics.com/eb-mag/article/CA447588?nid=2017&rid=231544418.
Sales increased 34.2% from last August, in line with historical patterns.
"Semiconductor producers and their customers have reacted with unprecedented speed to recent reports of excess chip inventories," said SIA president George Scalise, in a press statement. "In previous market cycles, it has generally taken several quarters for the supply chain to take corrective action. When the first reports of excess inventory accumulation surfaced in the second quarter, both producers and customers moved quickly to adjust.
A pair of research groups, VLSI Research and iSuppli, are now reporting that chip inventories are declining, Scalise said.
Capital spending at IC makers is about 23% of sales, in line with historical patterns, SIA said. "At this time, we do not believe overcapacity will be a major concern in 2005," SIA said.
SIA reiterated its forecast of 28% growth for 2004. Its 2005 industry forecast will be released Nov. 3.
Sales of PCs and equipment for networking and telecommunications contributed to semiconductor growth in August. Sales of microprocessors increased 3.5% sequentially, reflecting PC sales patterns of the back-to-school season.
Chip sales were up modestly in all geographic regions. In Asia-Pacific, sales increased just 0.1% sequentially, reflecting the impact of inventory adjustment actions taken by OEMs, SIA said.
NEW YORK, Oct. 1 -- Flextronics is poised to gain market share from competitors Sanmina-SCI and Solectron, says an analyst who met with the EMS maker yesterday.
Thanks to a combination of the lowest-cost footprint and the most robust design offering in the industry, Flextronics is evolving into a design and component manufacturer that also offers EMS services, wrote Chris Whitmore, an analyst with Deutsche Bank's Equity Research group. In fact, wrote Whitemore, Flextronics "suggested that it could give away the assembly business for free if customers opted to use its competitively priced components."
"We remain confident in Flextronics` long-term vision and strategic direction," Whitmore wrote. He said Flextronics' vertical strategy and low-cost assets is "driving its customers' costs lower --faster than anyone else in the industry."
In other news from the analyst day, Flextronics said it is in the process of consolidating roughly $1.3 billion of business from other EMS suppliers into its existing manufacturing facilities, to the detriment of Sanmina-SCI and Solectron, according to DB.
NORTHBROOK, IL, Aug. 27 -- August orders for rigid circuit boards rose 8.7% while demand for flex circuits showed signs of weakness, according to the latest 90-day moving average of North American manufacturers.
"Both rigid and flex shipments are rebounding from the recession and are showing strong growth, but flex is growing at a faster rate than rigid," IPC said in a press release.
For all board types, shipments rose 33.6% and bookings were up 9.8% vs. a year ago, said IPC, which administers the monthly poll. The figures may include some sales of products built offshore and brokered by the surveyed companies.
The August book-to-bill ratio was 1.05 for rigid, up 0.06 points sequentially. The B2B for flex circuits fell precipitously, from 1.57 last month to 0.98 in August.
The book-to-bill for all board types rose fell 0.06 points to 1.04.
The ratio is calculated by averaging the number of orders booked over the past three months and dividing by the average sales billed during the same period. A ratio of 1.04 means that for every $100 in shipments, $104 worth of PCBs were booked. An increasing ratio is generally considered a sign of a market poised to rise.
Year-to-date shipments are up 34.7% and bookings are up 38%. Combined August shipments rose 13.8% sequentially, while bookings fell 0.3%.
August rigid shipments were up 21.9% and bookings 8.7% over last year. Year-to-date, rigid shipments are up 25.1% and bookings are up 21.1%. Among those surveyed, rigid shipments rose 15.2% sequentially and bookings were 7.6% higher.
August flex shipments were up 75.2% yet bookings slumped, falling 19.3% vs. last year. Year-to-date, flex shipments are up 77.4% and bookings 100.7%. Sequentially, flex shipments rose 8.5% and bookings dropped 27.1%.
Flex sales, which include some value-added services, make up about 17% of total PCB sales in the IPC poll.
The data come from a sample of North American rigid and flexible PCB manufacturers.
Come November, Cookson will raise IPA flux prices 70 cents per gallon, in response to the volatility of petrochemical prices on the world market. The company said that isopropyl alcohol prices have risen 78% since June 2003
"Faced with this significant rise in petrochemical-based solvent prices, we were forced to announce this limited price increase on alcohol-based flux products," said Mitch Holtzer, global product manager-flux products.
Cookson said the decision would not affect pricing for its water-based VOC-free flux line.
ATLANTA, GA, Sept. 23 — More than 50 exhibiting companies will display and demonstrate their products, services and technologies for the PCB design industry during the ninth annual PCB Design Conference East 2004.
Scheduled for October 4-8 at the Radisson Hotel in Manchester, NH, the event includes a two-day exhibition and a five-day conference of technical courses centered around the theme: "Education for Your Most Pressing Design Challenges: Including Lead-Free, Embedded Components, High Speed and PCB Design Fundamentals."
Special events that are free to registered attendees include "The Impact of Lead-Free on PCB Design" keynote address by Joseph Fjelstad, a co-founder of Silicon Valley startup SiliconPipe and Tessera's first fellow; an opening night reception in the exhibit hall; and the Brew-ha-ha Party at Jillian's in downtown Manchester, featuring food, drink and music by the Porch Dawgs (an infamous blues band made up of musically-inclined PCB industry professionals).
The following products and/or services are among the many to be featured at the show:
· Calumet Electronics Corp. (Booth 302) will feature lead-free surface coatings, including an electroless nickel/immersion gold (KAT Process) alternative to HASL and Presa RGA-14, an immersion silver process.
· ChipData's (Booth 120) PkgXpert 2.5 helps electronic OEMs and contract manufacturers to streamline the board manufacturing process by creating a specification-driven, standardized package geometry library that can be shared and regenerated whenever specifications change.
· Dynamic Details (Booth 119) will feature Stacked Microvia Technology (SMV), which improves routing density and design flexibility.
· Intercept Technology (Booth 101) will demonstrate and announce the release of Pantheon v5.0, Mozaix v2.1 and INDX v2.1.
· Polar Instruments (Booth 105) will feature the enhanced stackup builder SB200a v2.0, which now interfaces to the industry standard Si800m impedance solver to offer brilliant stackup graphics plus stack, drill and impedance data in a variety of file and print formats. A free reader allows users to easily share this high quality stackup presentation with anyone.
· Sovereign Circuits (Booth 214) will feature the addition of immersion silver finish to their product offerings.
· T-Tech (Booth 201) will feature QC Trace Cam, an integrated inspection system specifically for applications requiring magnified inspection area. Easy to install, QC Trace Cam allows real-time viewing of traces.
· Zuken USA (Booth 202) will feature CADSTAR 7, a PCB Desktop Solution that delivers a powerful price/performance package for PC-based PCB design. Zuken USA also will feature CR-5000, which incorporates the latest technology requirements (embedded components, RF design and design re-use) within a constrained design process methodology.
Terms of the all-cash transaction were not disclosed. The deal is expected to close within 30 days.
The transaction includes the assets and employees of Power Systems.
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