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Contract Manufacturers Expect Growth

May 19, 2003
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Original equipment manufac-turers in the electronics sector are planning to substantially increase outsourcing of manufacturing to contract manufacturers, according to a survey conducted by New York investment house Bear Sterns. "Brand name companies plan to use contract manufacturers more frequently in order to manufacture their products," said Bear Sterns.

One example is Sony Corp., the Japanese consumer electronics powerhouse, which recently began outsourcing some of its manufac-turing to Solectron Corp. (Milpi-tas, CA).

Of the 104 companies polled in the Bear Sterns survey, 85% said they plan to increase their outsourcing of manufacturing over the next year. Of those manufac-turers that plan to outsource, 40% said they expect to outsource between 90% to 100% of their final product, "indicating a move toward a virtual manufacturing model in which all of a company's manufacturing would be done by contract manufacturers."

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