Nokia contractors to lose US$5B, says iSuppli
30 March 2009 – Nokia’s decision to stop using outside contractors for the assembly of its phones could lead to electronics contract manufacturers losing more than US$5 billion in revenue, says research firm iSuppli. The firm says that the world’s largest handset vendor outsourced approximately 17 percent of the manufacturing volume of its mobile phones in 2008, but will now move the business in house due to weakening global demand for handsets. “Amid the global economic recession and slowing sales of mobile handsets, Nokia in recent months had begun the process of shifting some of its assembly operations away from contract manufacturers and back inside the company,” said Adam Pick, principal analyst for Electronics Manufacturing Service (EMS) and Original Design Manufacturers (ODMs) at iSuppli. “This announcement clearly illustrates just how severe the situation in the mobile handset market really is.”
iSuppli had previously forecast that the EMS/ODM market will contract 9.9 percent in 2009 to reach US$270.8 billion, down from US$300.7 billion in 2008, but is now downgrading the forecast in light of the Nokia development. However, the firm praised Nokia for its ability to adjust to changing market conditions. “Nokia is an operational juggernaut with leading procurement and supply chain techniques,” noted Jeffrey Wu, iSuppli’s senior EMS/ODM analyst. “You have to give Nokia credit for maintaining a hybrid manufacturing system that adjusts pursuant to volatile demand patterns.” According to iSuppli, Nokia had previously outsourced elements of its mobile phone production to companies such as Foxconn, BYD, Elcoteq and Jabil Circuit. ♠ JC
Source: GSMA
