Nokia stops outsourcing to contract manufacturers
The world's largest mobile phone maker decides to insource because of weakened cell phone handset demand.
By Jim Carbone -- Purchasing, 4/2/2009 1:41:00 PM
Nokia-- the world’s largest mobile handset company-- says it has stopped using contract manufacturers to build its phones.
Nokia says it ceased outsourcing production to electronics manufacturing services (EMS) providers and original design manufacturers (ODMs) because of weak handset demand. Instead it will build all of its phones in-house.
The announcement is a blow to the electronics contract manufacturing industry which has been hard hit by the economic downturn.
“This doesn’t help the eroding EMS/ODM industry,” says Adam Pick, principal analyst for iSuppli. “Nokia’s pull-back will shed more than $5 billion in revenue from electronics contract manufacturers. That most means more overcapacity, more headcount reductions and, obviously, more problems.”
Nokia had outsourced about 17% of its mobile phone manufacturing o a variety of EMS ODMS including Foxconn, Elcoteq and Jabil.
The EMS/ODM market is expected to decline by about 10% in 2009 to $270.8 billion, according to iSuppli’s most recent forecast. However, with Nokia’s announcement, iSuppli is expected to downgrade its forecast for the electronics outsourcing market.
Also see: Electronics outsourcing revenue to fall 9.9% as EMS demand slips
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