Recent commentary from Wall Street states performance of electronics manufacturing services (EMS) companies remains tied to the fate of corporate IT spending which suggests EMS companies will not be immune from a slow down in the U.S.
Deutsche Bank, the investment firm providing background to this article, feels visibility on EMS revenue pipelines is fairly limited at about three months, with long-term visibility more uncertain.
The performance of many large, global EMS companies such as Jabil Circuit, Flextronics, Celestica, to name a few, is surely not being helped by the slower, summer months and recessionary concerns in the U.S.
Most EMS end markets are seeing pressure with electronics storage and servers holding up reasonably well. Deutsche Bank believes telecom spending is seeing the most weakness as CTOs and enterprises look to scale back expansions and costs.
Networking is also an area of concern, as Cisco made clear in early February.
Consumer electronics are also being squeezed, suggesting that electronic displays; mobile phones, peripherals, automotive and industrial electronics segments will also experience slower growth for EMS companies this year.
However, not everything is doom and gloom. On a positive note, it is believed computing and storage spending is holding up better than other segments, as corporations continue to prioritize storage spending and virtualization projects.
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