The Worldwide Electronics Manufacturing Market

Transcription

1 The Worldwide Electronics Manufacturing Market Presented by Randall Sherman NEW VENTURE RESEARCH CORPORATION A Market Research and Business Development Consultancy Nevada City, California

2 Who is New Venture Research? Specialists in contract manufacturing and outsourcing management consulting services for more than 15 years Produce syndicated research on the EMS industry through Electronic Trend Publications that is the most widely quoted in the industry - The Worldwide Contract Electronic Manufacturing Services Market - The Worldwide Electronics Assembly Market - Electronics Manufacturing in China - The Worldwide Original Design Manufacturing Market - The Worldwide Printed Electronics Market - Nanotechnology Markets and Trends - The Worldwide Solar Panel Assembly Market Page 2

3 The Worldwide Electronics Assembly Market Cost of Goods Sold, ($B) Segment CAGR Computer % Communications % Consumer % Industrial/Medical % Transportation % Total % Page 3

4 The Worldwide EMS Market by Geographic Region Rev. by Region ($B) ($B) CAGR North America % - Mexico % Europe % - Eastern Europe % Asia % - China % Rest of the World % Total % Page 4

5 Worldwide EMS Direct Labor Statistics Country Germany England USA Japan Ireland Spain Hungary Mexico Taiwan India China Hourly Rate ($) Page 5

6 CM Industry EMS Revenue Growth ($B) EM S Growth Page 6

7 CM Industry EMS Growth Estimate ($B) Page 7

8 Leading CM Companies in Mexico, 2007 Benchmark Electronics Guadalajara BenQ Mexicali Celestica Monterrey, Querretaro Elcoteq Juarez, Monterrey Flextronics Aguacalientes, Guadalajara Foxconn Chihuahua Jabil Chihuahua, Guadalajara, Reynosa (2) Plexus Juarez Sanmina-SCI Apadoca, El Salto, Guadalajara (2), Monterrey Solectron Chihuahua, Guadalajara Venture Tijuana Page 8

9 Leading CMs in Eastern Europe, 2007 Benchmark Electronics Romania Celestica Czech Republic, Romania Elcoteq Estonia, Romania, Russia EPIQ Bulgaria, Slovakia Flextronics Czech Republic, Hungary (2), Romania, Ukraine Foxconn Czech Republic (2), Hungary Jabil Hungary, Poland (2), Ukraine NOTE Lithuania, Poland Sanmina-SCI Hungary SIIX Slovakia Videoton Bulgaria Zollner - Hungary Page 9

10 Leading CM Companies in China, 2007 Benchmark Electronics Suzhou Celestica Dongguan, Shanghai, Suzhou Elcoteq Dongguan, Shenzhen, Beijing Flextronics Changzhou, Dongguan, Doumen (2) Nanjing, Qingdao, Shajing, Shanghai (2), Shenzhen, Xixiang, Zhuhai Foxconn Beijing, Chongchang, Dongguan, Jinchang, Kunshan, Shanghai, Shenzhen, Tianjin, Taiyuan, Yashou Jabil Beijing, Huangpu, Nanjing, Shanghai (2), Shenzhen, Suzhou, Tianjin (2), Wuxi (2) Sanmina-SCI Kunshan, Shenzhen, Suzhou, Wuxi USI Shenzen, Shanghai Venture Shanghai (2) Page 10

11 New Industry Player: ODMs ODM - Original Design Manufacturer (also called an Contract Design Manufacturer or CDM) is a Chinese/Taiwanese OEM offering contract manufacturer (CM) services in a specific product area which other OEMs can private label. OEM Customer ODM Supplier End Product Dell/HP/IBM Quanta Computer Notebooks Ericsson/Sony BenQ Cell phones Cisco Systems HuaWei Low-end routers ElectroLux Zhongyi Light appliances Page 11

12 Supplier Differences in Value-Add/Cost Cost $ OEMs CMs ODMs Development Page 12

13 Why OEM Customers Like ODMs ODMs are low risk for OEMs because they no longer have to invest in design, materials or inventory ODM outsourcing is with an industry expert in a specific product area not just a generic CM firm ODMs are more attractive because they offer advanced designs, fresh IP and the ability to bring a new product to market quickly Page 13

14 Why OEMs Dislike ODMs A ODM partner may become an industry competitor after several years once they gain the product design knowledge Many Chinese companies have not standardized their business practices with regard to accounting and legal. Very difficult to pursue equitable solutions in courts Because of a tendency to accept unhealthy profit margins many ODMs are putting at risk their future survivability. Page 14

15 ODM Market Forecast, ODM Growth Forecast ($B) Page 15

16 Chinese OEM/ODM Companies Amoisonic Aucma Bird BOE Changbai Changhong Dalian Datang Desay Dongfeng Eastcom Founder Great Wall Gree Haier Hisense SEG Huaqiang Shanghai Bell Huawei Shangling Irico Shinco Jinling Skyworth Kaifa Soutec Kejian Start Computer Kelon SVA Konka TCL Langchao Tiancai Legend Tongfang Midea Utstarcom Panda Wandong Peacock Xiamen Putian Zhonghuang SED ZTE Page 16

17 Strengths of Manufacturing in Asia Cost Leader 1/10 direct labor rate of USA the lowest cost manufacturing region in the world Quality Not as high as OEMs would like (Six Sigma) but generally very good Reliability Most Chinese firms are viewed as reputable, with highly trained work forces. Stable wages, low inflation, good work ethic, high technical capability Product Fit High volume products that are price sensitive computer motherboards, cell phones, low-end networking, consumer products Page 17

18 Strengths of Manufacturing in Mexico/Eastern Europe Cost Competitive 1/5 direct labor rate of USA the lowest cost manufacturing region in North America Quality Excellent, have fully embraced advanced manufacturing processes and systems transparent to U.S/Europe. Reliability Politically more attractive with longer history of doing business with the U.S. NAFTA/EC Commission a positive. Good technical skills and infrastructure Product Fit Best suited for low-to-medium volume products of higher complexity and mix appliances, automotive, industrial, medical Page 18

19 Weaknesses of Manufacturing in Asia Intellectual Property there have been examples of Chinese firms are going to steal designs and products to make knock-offs for domestic markets Capital Chinese firms lack capital to invest in technology, equipment and advanced processes Honesty OEMs have some bad experiences with firms promising things (volumes, quality, on-time delivery, parts, etc.) that they cannot deliver Government Red Tape Customs, tariffs, inspectors can be a friend or enemy. Bribery is not an acceptable practice. There is favoritism to local firms and a weakness in the legal system. Page 19

20 Weaknesses of Manufacturing in Mexico/Eastern Europe Inflation wages are subject to regular increases and many government imposed benefits Lack of Government Policy Electronics industry lacks many supporting government policies and tax incentives that China has to improve competitiveness Competition Could be more competitive and industry focused. No apparent national priority. Electronics industry was theirs to lose Costs Power, telecommunications, transportation, wages could be more efficient and competitive Page 20

21 Summary/Conclusion - Market for EMS will remain expand vigorously particularly in low-cost regions for next 5 years - All regions are eager to find good and long-term partners incentives make the difference - Competition will intensify among Chinese suppliers over time creating a feeding frenzy and over capacity - Mexico may regain favored partner status if improvements are made and China stumbles in its offering. Eastern Europe makes steady progress. - Private ownership in socialist countries will grow over the next few years creating a more capitalistic society Page 21

22 Conclusion It is not the strongest species that survive, nor the most intelligent, but the ones most responsive to change. Charles Darwin Page 22

23 NEW VENTURE RESEARCH CORPORATION A Business Research and Development Consultancy Nevada City, California Page 23