Vol. 14, No. 5

May 2004

China Contract Manufacturing

As demand picks up in the electronics manufacuring services industry, low-cost China contract manufacturing sites and elsewhere in Asia are seeing more than their fair share of new business. That's a good thing for EMS suppliers because higher capacity utilization helps their margins. But an industry consultant warns that busy China and other Asian plants in some cases may not have the resources to ramp new programs as fast as OEMs would like.

"For instance, if the OEM's program is not a good fit technically, i.e. requires new processes or higher level of process control, then time to quality production might require considerably more time than scheduled," said Robert Freid, president of Contract Manufacturing Consultants (Bellevue, WA), "OEMs should take this into consideration in their supplier risk assessments when deciding among China contract manufacturing suppliers."

Freid believes that smaller programs are more likely to face this problem with China contract manufacturing or elsewhere in Asia, since major global accounts have the leverage to get resources allocated to them.