* Jabil Circuit is hosting an open house in Bangalore this week. Jabil is intent on building a foundation in the South Asian sub-continent. The Company’s recent acquisition of India-based EMS provider Celetronix adds some non-traditional Jabil-manufacturing focus such as hard drive-related optical services and RFID manufacturing.
* July 1, 2006 is the date the European Union’s RoHS directive will take effect. As the twenty five member countries ban six common substances typically found in electronics products, other countries such as China, Korea, and the United States (on a state-by-state basis) are moving toward similar legislation. It is believed by many financial business impacts are expected to hit OEMs harder than their EMS or ODM outsourcing partners. This is in part supported by discussions that a majority of EMS companies seem to be building non-compliant component inventories through purchase orders initiated by OEMs. INsight has found several EMS companies and certain supply chain vendors to be more prepared than others. As the deadline passes, VO suspects companies will continue to voice concerns and address directive-related challenges for the next 18 to 24 months.
* The PC market does not behave the same in all regions of the globe. Some regions are more sensitive to price changes in the PC supply chain. VO believes this could likely lead many OEMs serving this end-market to focus any price reductions by region which could adversely impact revenues margins for EMS and ODM companies servicing certain geographies.
* The handset sector remains in general, good health moving through the middle of the year. Inventories appear to be reasonable with many Taiwanese handset companies looking at double digit quarter-on-quarter growth. Any build-up should not be an issue as long as anticipated growth materializes.
VentureOutsource.com, June 2006
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