Electronics Production | March 10, 2009
“Foxconn Effect” fades as Top10 EMS-providers’ revenue shrinks in 2008
After years of single-handedly powering the robust growth of the global Electronics Manufacturing Services (EMS) business, Foxconn, AKA Hon Hai Precision Industry achieved only a marginal revenue increase in 2008, causing the top-tier EMS market to contract, according to preliminary market-share results from iSuppli.
The collective revenue for the world’s Top-10 EMS providers in 2008 amounted to $129.9 billion, down 2.8% from $133.6 billion in 2007, according to iSuppli’s preliminary estimate. This represents a major downturn compared to growth of 19.2% in 2007 and 20.3% in 2006. It also marks the first time since 2002 that the Top-10 EMS providers saw their aggregate revenue decline on an annual basis. “The EMS industry has moved well beyond the inflection point and has been decelerating for some time” noted Adam Pick, principal analyst, EMS & ODM services, for iSuppli. “The data coming out of the industry has been indicating a state of slowdown for the last 12 months.” Taiwan’s Foxconn, the world’s leading EMS provider, achieved revenue growth of only 1.3% in 2008 with estimated sales of $55.4 billion, up from $54.7 billion in 2007. This compares to Foxconn’s booming increases of 39.4% in 2007 and 43.7% in 2006. The attached table presents iSuppli’s preliminary ranking of the Top-10 EMS providers in 2008. Foxconn’s foibles “The preliminary 2008 EMS rankings show that the “Foxconn Effect” has run its course,” noted Pick. “Foxconn’s robust growth has been the primary factor driving the perennial double-digit expansions of the global EMS market. For example, if Foxconn’s contribution was removed from the Top-10 EMS providers’ results in 2007, total revenue growth would have amounted to only 8.3%, rather than 19.2%.” Pick cited two factors for Foxconn’s growth slowdown: a steep decline in consumer demand and exchange-rate issues. “As demand waned during 2008 for Foxconn’s consumer-oriented products like desktop PCs and mobile handsets, the company was forced to issue profit warnings, to restructure operations and to rescind prior growth forecasts,” Pick observed. “Another factor that greatly impacted Foxconn’s consolidated gross sales was the precipitous drop in the exchange rate between the Taiwanese dollar and the U.S. dollar.” An EMS mess in 2008 As recently announced, iSuppli cut its revenue forecast for the 2006-2012 timeframe to a 1.3% Compound Annual Growth Rate (CAGR), down from 5.3% before. Beyond Foxconn’s tepid growth in 2008, several other developments during the past 12 months suggest that iSuppli’s lowered expectations for the EMS industry are likely to be realized. For one, No.-5 EMS provider Sanmina-SCI Corp. continues to face major challenges. While Sanmina-SCI did experience an investor and operational rally following the sale of its PC assets to Foxconn and Lenovo during 2008, the boost was short-lived. The company’s revenue plunged by 32.5% during 2008—amounting to a decrease of $3.3 billion. “Selling its PC assets wasn’t enough for Sanmina to re-ignite its growth engine,” Pick noted. “Our estimates suggest that Sanmina lost over $400 million in sales from its core business, which now is heavily oriented toward higher-mix, lower-volume programs.” During the fourth quarter, Sanmina-SCI’s sales dropped by 16.7% sequentially to $1.4 billion. Given the volatility in demand from its OEM customers, Sanmina-SCI chose to not offer guidance for the first quarter of 2009. Diversification deferred Another factor impacting the EMS industry’s growth in 2009 is the slow pace of program diversification initiatives among some of the Top-10 providers. The 2008 results from Elcoteq SE and Benchmark Electronics, Inc. indicate their diversification efforts are not yielding any significant increases in revenue. No.-6 EMS provider Elcoteq saw its revenue fall by 13% during 2008 as Nokia continued to shift handset orders to competitors FIH, Jabil Circuit and BYD. Now, Elcoteq considers BlackBerry-seller Research In Motion to be its largest customer. As for No.-8 ranked Benchmark, its revenue dropped by 11.2% during 2008 as both Sun Microsystems and EMC diverted spend to alternate suppliers and/or terminated mature product lines. iSuppli expects very challenging times for EMS providers in 2009, given the global recession and financial crisis. iSuppli’s outlook calls for sales to shrink 9.9% as demand erodes and operating concerns increase. Image source: Cogent
Plessey partners with Axus Technology Plessey, an embedded technologies developer, is partnering with Axus Technology (Axus), a provider of CMP, wafer thinning and wafer polishing surface-processing solutions for semiconductor applications, to bring high-performance GaN-on-Silicon monolithic microLED technology to the mass market.
GPV Electronics CN resumes production On 19 February 2020, the Chinese Central Government informed that all enterprises in the Guangdong province are now allowed to resume production.
Nano Dimension moves its main commercial activity to USA Nano Dimension announces that the company is establishing its headquarters for the Americas in South Florida.
Rockwell Automation inks deal for Italy’s ASEM Rockwell Automation Inc. has signed a purchase agreement to acquire digital automation technologies provider ASEM S.p.A.
IFR releases ‘Top Trends 2020 Robotics’ The International Federation of Robots (IFR) has forecasted an uptick of 2 million industrial factory robotic units in the next two years.
Paslin, Rivian fuel EV factory expansion The Paslin Company, a builder of robotic assembly lines for Tier 1 suppliers and OEM auto companies, is expanding in Warren, Michigan.
Nokia plans to acquire US-based company The Finnish telecom company is planning to acquire Elenion Technologies, a U.S.-based company focusing on silicon photonics technology.
neutec electronic to handle Asymtek and Dima in Switzerland Asymtek, a part of Nordson Electronics Solutions - announces that their distributor, neutec electronic AG, has expanded its representation of all Asymtek and DIMA products to the French-speaking areas of Switzerland.
BMZ subsidiary Poland reports successful business year 2019 BMZ Poland, the second largest production site of the BMZ Group, is expanding its production area and is reporting 10% sales growth and thereby reached record results for the business year 2019.
Scanfil CEO: ‘Our operations are making good progress’ The last quarter of 2019 was the strongest one for the EMS provider. Scanfil recorded a turnover of EUR 155 million, a growth of EUR 15 million or 10% year-over-year.
Prime Technological Services acquire ITS EMS provider Prime Technological Services LLC has acquired Georgia-based I Technical Services (ITS).
Florida’s Sypris snags BAE Systems contract Sypris Electronics LLC, a subsidiary of Sypris Solutions Inc., has won a contract award from London-based BAE Systems’ Electronic Systems sector.
Into the future, San Diego style IPC APEX EXPO, the North American electronics manufacturing industry’s biggest gig, has left the teenage years behind with this year’s 20th anniversary show held Feb 3-8 in San Diego.
5 semiconductor companies hold 53% of global wafer capacity The world’s top-five wafer capacity leaders each had capacity of more than 1,000,000 wafer starts per month, says IC Insights.
Global DRAM revenue holds steady in 4Q19 The DRAM inventory finally returned to a relatively normal level for most OEMs in 4Q19 after nearly three consecutive quarters of adjustments, says the DRAMeXchange research division of TrendForce.
Mitsubishi Electric completes new satellite production facility Mitsubishi Electric has completed construction of a new facility for the production of satellites at the company’s Kamakura Works in Kamakura, Japan.
ISS-Broadband delivered by Kongsberg Kongsberg equipment is to enable broadband transmission for the International Space Station (ISS) to 'significantly improve communication between the ESA astronauts manning the station and earth.
Mycronic receives order for an SLX mask writer Swedish equipment provider, Mycronic AB, has received an order for the new SLX mask writer from a customer in Asia. The customer already has mask writers from Mycronic.
A new production unit for mirror segments for ELT Safran's new production unit at the company's Saint-Benoît facility near Poitiers in central France will make the primary mirror segments for Europe's Extremely Large Telescope (ELT).
A more sustainable approach to semiconductor manufacturing Reuse; that is the key to driving environmental sustainability in global semiconductor manufacturing, says Steven Zhou, CEO of Moov Technologies.
Teslas German venture comes to a halt following court order A court in Germany has ordered the US electric carmaker to stop clearing the forest at its future location outside Berlin.
Marposs expands with acquisition of Stil Precision metrology equipment supplier Marposs has acquired STIL S.A.S., a French company specializing in research, development, production and sales of optical measurement instruments.Load more news