RT..Outsourced Electronics..Electronics Outsourcing Will Continue to Increase; Bear Stearns Releases Its
Fifth Annual Electronics
Manufacturing Outsourcing Survey
Business Editors
NEW YORK--(BUSINESS WIRE)--May 6, 2002--Electronics manufacturing
services outsourcing has been growing in popularity among makers of
computers, cell phones, telecom hardware and almost all other
electronics end-market segments over the past several years; and
according to a new survey from Bear, Stearns & Co. Inc. it is about to
grow even further. Bear Stearns questioned a wide array of original
equipment manufacturers (OEMs) and found that 87% planned on
increasing their outsourcing in the coming year. That trend bodes well
for Electronics Manufacturing Services (EMS) companies -- the
companies that actually manufacture the myriad of electronics products
for the world's most popular branded technology hardware OEMs.
"Despite the tech downturn, and in some cases because of the
downturn, OEMs expect to increase their outsourcing to reduce costs
and capital spending," said Thomas Hopkins, Bear Stearns managing
director and electronics manufacturing services analyst, who
coordinated the survey.
The Bear Stearns Fifth Annual Electronics Manufacturing
Outsourcing Survey investigated the world's leading original equipment
manufacturers from a wide variety of industries. The study polled 101
companies -- representing 73% of the estimated $560 billion total
available market (TAM).
The strongest responses for increasing outsourcing came from
semiconductor capital equipment manufacturers (100%), consumer product
companies, automotive related companies (93%) and telecom
manufacturers (91%).
According to the survey, OEMs cited 70% as their long-term
outsourcing goal; on a cost of goods sold (COGS) weighted basis they
cited 51%, versus 49% last year. The 51% terminal goal represents $286
billion in potential terminal revenue versus the $111 billion already
outsourced for the EMS industry ($91 billion) and to ODMs ($20
billion). Given the potential incremental outsourcing revenue, if the
relative mix of EMS versus ODM were to stay the same at 82% / 18%, the
EMS industry could grow from $91 billion to $234 billion, or increase
more than 157% on the secular outsourcing driver alone.
During its five years in existence, the Bear Stearns survey has
proven to be a solid indicator of the growth of the outsourcing
market. Since the 2001 survey results a year ago, there has been $19
billion in incremental outsourcing from major new outsourcing programs
($20 billion including small programs); close to the fourth annual
survey's prediction of $20-$25 billion last May.
The combination of a richer mix from front-end and back-end
outsourcing, more profitably structured deals (less plants taken), and
incremental revenue from core EMS outsourcing, Hopkins believes, will
help the EMS sector return to peak earnings. "Combined with our recent
boom/bust cycle primary research work on declining tech hardware
inventory and investment in capacity, the survey results increase our
conviction on earnings growth recovery for the industry," concluded
Hopkins.
Members of the press who would like to speak with Tom Hopkins or
learn more about the survey may contact Russell Sherman at
russellsherman@bear.com or Michelle O'Brien michelleobrien@bear.com.
Founded in 1923, Bear, Stearns & Co. Inc. is a leading worldwide
investment banking and securities trading and brokerage firm, and the
major subsidiary of The Bear Stearns Companies Inc. (NYSE:BSC). With
approximately $31.1 billion in total capital, Bear Stearns serves
governments, corporations, institutions and individuals worldwide. The
company's business includes corporate finance and mergers and
acquisitions, institutional equities and fixed income sales, trading
and research, private client services, derivatives, foreign exchange
and futures sales and trading, asset management and custody services.
Through Bear, Stearns Securities Corp., it offers prime broker and
broker dealer services, including securities lending. Headquartered in
New York City, the company has approximately 10,500 employees
worldwide. For additional information about Bear Stearns, please visit
the firm's Web site at bearstearns.com.
--30--mw/ny*
CONTACT: Bear Stearns, New York
Russell Sherman, 212/272-5219
RussellSherman@bear.com
KEYWORD: NEW YORK
INDUSTRY KEYWORD: BANKING COMPUTERS/ELECTRONICS PRODUCT
SOURCE: Bear Stearns
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May-06-2002 15:33 GMT
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