Contract manufacturing continues to suffer

1 min read

Conditions in the global electronics contract manufacturing sector continue to deteriorate, according to iSuppli, which has cut its expectations for what it calls a ‘volatile industry’. Global contract manufacturing revenues are now expected to decrease by 9.9% this year, compared to iSuppli’s earlier forecast of 2.2% growth.

“This marks the third significant cut to our forecast during the past 24 months. The recessionary ripple has compounded the pre-existing conditions that already pressured the manufacturing value chain,” said Adam Pick, principal analyst, EMS/ODM for iSuppli. “Looking forward, it’s not pretty,” Pick added. “Stalwarts of the electronics marketplace – including leading brands, manufacturers and component suppliers – have issued lacklustre guidance or – in Sanmina’s case – no guidance at all.” In fact, iSuppli sees ‘no bottom to the market’. Pick predicts global contract manufacturing revenue will rise at a compound annual growth rate of only 1.3% from 2006 until 2012, down from the previous outlook of a 5.3% increase. iSuppli believes electronics OEMs continue to value the benefits of outsourced manufacturing. “However,” Pick said, “weak demand has triggered program delays and push outs. Also, we have detected some OEM in sourcing activities that will hamper industry performance during 2009.”