IDC Sees Light at the End of Tunnel for the Contract Manufacturing Industry

FRAMINGHAM, MA – SEPTEMBER 24, 2001 – Flat revenue growth in the contract manufacturing industry will turn slightly upwards in the next few years. According to IDC, contract manufacturing services (CMS) revenue reached $22 billion for the second calendar quarter of 2001, which represented flat year-over-year growth. IDC believes the CMS industry will continue to slow during the current quarter to $20 billion in revenue; however, the long-term forecast remains optimistic, at over $230 billion by 2005.

 

In the previous quarter, Solectron remained the dominant player with 21% of industry revenue. Flextronics and Celestica followed with 12% and 10% market share, respectively. IDC expects the merger of SCI and Sanmina will change the competitive landscape among the top five vendors as the single entity will capture significant market share within the marketplace.

The CMS industry has continued to evolve through numerous mergers and acquisitions, as well as strategic alliances and partnerships. "CM vendors are using the downturn to accelerate their long-term growth plans of targeting specific growth areas, such as the wireless and optical segments, to better position themselves for the economic recovery," said Kevin Kane, program manager of IDC’s Contract Manufacturing Services service.

IDC has identified several key enablers that will be critical in moving the market forward for CM vendors, including: increased service offerings, diversified product portfolios, and improved internal systems. "The current move to vertical and virtual integration in the CMS industry will allow the CM vendor to further penetrate the product development cycle and, ultimately, strengthen the relationship between the CM vendors and the branded system suppliers," Kane said.

IDC’s recently released reports, Worldwide Contract Manufacturing Services Industry Forecast and Analysis, 2000-2005 (IDC #24869) and Contract Manufacturing Quarterly Report-Market Challenges Abound (IDC #25467), analyze the contract manufacturing industry and its vendors on an annual and quarterly basis.

To purchase these documents, please contact Cheryl Toffel at 1-800-343-4952 extension 4389 or ctoffel@idc.com

About IDC

IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and ebusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in-depth analysis, and client interaction, IDC forecasts worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC's customers comprise the world’s leading IT suppliers, IT organizations, ebusiness companies and the financial community. Additional information can be found at http://www.idc.com.

IDC is a division of IDG, the world's leading IT media, research and exposition company.

 

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