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Technology Stocks : Jabil Circuit (JBL) -- Ignore unavailable to you. Want to Upgrade?

To: gs who wrote (2341)	12/23/1997 5:24:00 PM
From: Dr. Doktor	Read Replies (1) \| Respond to of 6317

INDUSTRY OVERVIEW (From SANM 10-K405) Sanmina is benefiting from increased market acceptance of the use of manufacturing specialists in the electronics industry. Many electronics OEMs have adopted and are becoming increasingly reliant upon manufacturing outsourcing strategies, and Sanmina believes the trend towards outsourcing manufacturing will continue. Electronics industry OEMs use EMS specialists for many reasons including the following: Reduce Time to Market. Due to intense competitive pressures in the electronics industry, OEMs are faced with increasingly shorter product life-cycles and therefore have a growing need to reduce the time required to bring a product to market. OEMs can reduce their time to market by using a manufacturing specialist's established manufacturing expertise and infrastructure. Reduce Capital Investment. As electronic products have become more technologically advanced, the manufacturing process has become increasingly automated, requiring a greater level of investment in capital equipment. Manufacturing specialists enable OEMs to gain access to advanced manufacturing facilities, thereby reducing the OEMs' overall capital equipment requirements. Focus Resources. Because the electronics industry is experiencing greater levels of competition and more rapid technological change, many OEMs increasingly are seeking to focus their resources on activities and technologies in which they add the greatest value. By offering comprehensive electronic assembly and turnkey manufacturing services, manufacturing specialists allow OEMs to focus on core technologies and activities such as product development, marketing and distribution. Access Leading Manufacturing Technology. Electronic products and electronics manufacturing technology have become increasingly sophisticated and complex, making it difficult for OEMs to maintain the necessary technological expertise in process development and control. OEMs are motivated to work with a manufacturing specialist in order to gain access to the specialist's process expertise and manufacturing know-how. Improve Inventory Management and Purchasing Power. Electronics industry OEMs are faced with increasing difficulties in planning, procuring and managing their inventories efficiently due to frequent design changes, short product life cycles, large investments in electronic components, component price fluctuations and the need to achieve economies of scale in materials procurement. By using a manufacturing specialist's volume procurement capabilities and expertise in inventory management, OEMs can reduce production and inventory costs. Access Worldwide Manufacturing Capabilities. OEMs are increasing their international activities in an effort to lower costs and access foreign markets. Manufacturing specialists with worldwide capabilities are able to offer such OEMs a variety of options on manufacturing locations to better address their objectives regarding cost, shipment location, frequency of interaction with manufacturing specialists and local content requirements of end-market countries. The total estimated 1997 market for the EMS industry is $34 billion for the United States and Canada. Sanmina primarily markets its manufacturing services to electronics industry OEMs in the United States and Canada. The United States EMS industry is highly fragmented, with several large manufacturers with over $500 million in annual revenues, and numerous other manufacturers with annual revenues from under $10 million to several hundred million dollars. Industry sources estimate that the United States sales of backplane assemblies and printed circuit boards in 1997 were $1.4 billion and $8.5 billion respectively, and approximately 40% of backplane assemblies and 10% of printed circuit boards were accounted for by OEM in-house ("captive") production. In addition, industry sources estimate that the total merchant market for custom cable and wiring harness assemblies is $6.5 billion. In June 1997, Sanmina opened an EMS facility in Dublin, Ireland to service the European market, principally western Europe. The total EMS market for Western Europe in 1997 was estimated at $13.5 billion. 3