Electronics OEMs Yearn to Manufacture -- Virtually

Compiled By Deborah Austin Original equipment manufacturers (OEMs) in the electronics industry have big plans for outsourcing, thereby significantly boosting contract manufacturers' incremental revenue forecasts, suggests the Bear Stearns Fourth Annual Electronics Manufacturing Outsourcing Survey. Of the OEMs surveyed, 85% intend to increase their outsourcing in the next 12 months. Long-term, the average OEM hopes to outsource about 73% of its total manufacturing -- more than five times the industry estimate of 13% currently outsourced. In fact 40% say they hope eventually to outsource 90% to 100% of their final product -- implying a move toward a virtual manufacturing model. When asked to rank primary reasons for outsourcing, a majority (61%) cite cost reduction -- up from 50% last year -- followed by capacity constraints (22%), and "time-to-market" (18%). The global survey questioned leading, midtier, and emerging OEMs from a variety of industries. Bear, Stearns & Co. Inc., New York, is a worldwide investment banking and securities trading and brokerage firm.

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