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IMI oscillates from consignment to turnkey services

Posted: 07 Jun 2013 ?? ?Print Version ?Bookmark and Share

Keywords:EMS? manufacturing? automotive?

During a recent visit to Integrated Microelectronics (IMI) headquarters at Laguna, Philippines, Olaf Gresens, managing director for global sales and marketing, spoke to EE Times Asia about the company's adjusted business vision to address the persistent global economic crisis facing the electronics industry.

In 2011, IMI recorded a 40 per cent year-over-year rise in consolidated sales revenue from 2010. This was largely attributed the strong growth in the automotive and industrial segments, increased presence in China as well as added revenue from PSi Technologies and IMI's new business units in Europe and Mexico. (see) However, IMI managed to grow by only 15 per cent last year primarily because of lower capacity utilisation in its China facilities and also because major clients, specifically automotive manufacturers in Japan, are still financially crippled.

Worldwide demand for electronic products remains challenged but global semiconductor sales have been gradually growing through the first quarter of 2013 compared to last year. As IC companies show signs of replenishing their inventories, this is expected to give the electronics manufacturing services (EMS) sector a much needed boost.

Gresens echoed in his presentation the regionalisation trend that IMI CEO Arthur Tan highlighted during the company's annual stockholders' meeting last month (see IMI banks on smart sensors, managed growth .) China remains a key market because of its rapidly growing domestic market and advantages it offers for EMS firms like IMI. The country's main strength is its robust supply chain especially in areas like Guangdong and Shenzhen where every type of component is available. "There is no place on Earth that has that concentration of suppliers so that means supply is stable and very inexpensive and it can react on very short notice," Gresens explained.

Though IMI will keep a close eye on China, it is seeing potential in manufacturing elsewhere in Asia, specifically in the Southeast. The reason for this, Gresens said, is because of the rising political tensions and government-mandated increase in labour costs. A number of companies are reviewing their corporate strategy, weighing whether they really want to put all their eggs in one basket. IP protection is another consideration because existing laws are still widely recognised as falling short of what is needed to deter violations (see Can China ever shed its shady IP reputation?). Currently, products that require higher level of engineering and skill are manufactured outside of China while those that involve more intelligent processes independent of manual labour are produced within.

Like most electronics companies riding the industry's peaks and dips, IMI has been switching its business focus to meet client demands. IMI's global market revenue share shifted from Japan to Europe when the financial crisis hit in 2009. Over the past few years, the company went from pure execution-in charge of just the labour and production environment-to having more control of the overall manufacturing process, material purchases, and after-sales service such as failure analysis because typically European and American companies expect partners to take care of logistics. More recently though, IMI began reviving its traditional consignment businesses because Japanese clients, who want more control over manufacturing and their related aspects, are slowly but steadily getting back on their feet.

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