Flextronics fights to remain in EMS race

The battle for electronics manufacturing services (EMS) crown is flaring up, following Singapore-based Flextronics International Ltd's acquisition of Solectron Corp.

The move helped Flextronics beat revenue and net income estimates in the December quarter, and bring critical heft for securing new OEM contracts. It could also save EMS.

Taiwan's Foxconn, on its way to claiming the EMS title, left others in the dust as it locked up high-volume contracts with major OEMs. Even after absorbing Solectron, Flextronics trails Foxconn by $10 billion or more in annual revenue.

Foxconn's domination has been both good and bad for the industry. Its economies of scale have yielded cost savings that have been passed on to OEM customers. But the marginalization of Foxconn's competitors has left OEMs overly reliant on a single provider. A reversal of fortunes at Foxconn would spell trouble for its customers.

By fighting back, Flextronics not only saves itself, but also safeguards the interests of the OEM customers who have come to rely so heavily on EMS.

- Bolaji Ojo
EE Times