Contract Manufacturers Feeling The Pinch

Market researcher iSuppli is reporting a major downturn in an important part of electronics, the electronics manufacturing services (EMS) sector, in 2008 compared to previous years. In 2008, the collective revenue for the world's top 10 EMS providers amounted to $129.9 billion, or a drop of 2.8 percent from the $133.6 billion reported in 2007. In contrast, that figure in 2007 represented a 19.2-percent growth over 2006. It marked the first time since 2002 that the top 10 EMS providers saw their aggregate revenue decline on an annual basis.

According to Adam Pick, Principal Analyst for EMS and ODM services for iSuppli, "The EMS industry has moved well beyond the inflection point and has been decelerating for some time. The data coming out of the industry has been indicating a state of slowdown for the last 12 months." Much of the economic woes are blamed on a steep decline in consumer demand and profit deterioration due to exchange rates between US dollars and foreign currencies. The numbers for the EMS industry can be found in the latest iSuppli report, "A Slippery Slope for Contract Manufacturers."