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Popularity Boost Could Invigorate EMS Outsourcing

By Deborah Austin Electronics manufacturing services (EMS) companies could gain much-needed momentum from original equipment manufacturers' outsourcing plans, suggests the fifth annual Electronics Manufacturing Outsourcing Survey from investment banking/securities trading firm Bear Stearns & Co., New York. Of OEMs polled, 87% intend to increase outsourcing in the coming year. Long-term, they cite an outsourcing goal of 51% -- versus today's 38% -- on a cost of goods sold (COGS) weighted basis. Since last year's survey, the industry has reaped $19 billion in incremental outsourcing through major new outsourcing programs and should see $25 billion to $26 billion in the next 12 months, forecasts Bear Stearns. For printed circuit board assembly -- already the primary EMS service -- 70% of OEMs expect increased use of EMS providers, and for box-build/systems integration, 73%. In the more underpenetrated area of front-end outsourcing, 52% expect increased EMS use, and in aftermarket services, 54%. The study polled 101 companies.

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