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September 26,  2013 
Editor's Note 
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Hynix Fire Scorches DRAM World

 

Welcome to the premier issue of the Electronics Purchasing Strategies main newsletter. EPS, as promised in our first mailing to you, will focus the industry's attention on procurement and supply chain news, research, data, and other events of importance to the electronics manufacturing community. To sign up for the newsletter please click here.  

 

The news pipeline is chockfull of some interesting developments in the electronics world: Component distributors are furiously adding new lines, expanding into new value-added services, expanding globally and pushing aggressively into commodity markets with the goal of demonstrating new innovations to help customers clinch new businesses. Here's a further sampling of some recent developments we've covered: 

Koch Industries says it will pay $7.2 billion to acquire Molex Inc., in a deal that has suddenly thrust the staid connector market into the spotlight; Michael Dell has finally received the much-sought shareholder approval to take the company that bears his name private in a $25 billion deal; a fire at SK Hynix plant in Wuxi, China, has thrown the DRAM supply chain into a pickle with some companies talking about putting their memory inventory on allocation and; of course, Apple Inc., has unveiled new versions of its iPhone smartphones. On the product front component vendors are rolling out innovative parts designed to address key issues in the electronics manufacturing world, including applications targeted at power management devices, currently one of the industry's hottest areas.

 

Each one of these stories and others covered over the last several weeks on EPS have significant implications for manufacturers, distributors, purchasing professionals, design engineers, sales and marketing folks and OEMs. Take the SK Hynix fire situation. As Gerry Fay, a veteran of the electronics industry and chief global logistics and operations officer at Avnet Inc., points out in a blog on EPS, the SK Hynix fire points squarely to the Achilles heel of the industry. As Fay puts it, the fire demonstrates the "significant gap between perception and practice" because of the panic that resulted from the incident. (See: Avnet's Fay: Hynix Fire Exposes Supply Chain Vulnerability.) 

 

For professionals in the electronics procurement and purchasing community, keeping a tab on all segments of the industry has become critical to enterprise success. News stories like the SK Hynix fire confirm the continuing need for a deeper dive into events in the industry. A review of jostling for market positions in the IP&E . That's what you can expect in every issue of News+ Plus, Electronics Purchasing Strategies' highlight of significant industry events and analysis of their implications for the entire market. 

 

Please go to www.epsnewsonline.com to leave comments or email me at bolaji.ojo@epsnewsonline.com

 

Bolaji Ojo 

Editor in chief & publisher

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Feature Articles 
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The 3 Pillars of 3M

3M Co.'s greatest strength can often also seem like its Achilles heel. Few technology companies have quite as diversified a product portfolio, which means declines in some business segments can be offset by solid growth in other sectors but the opposite can also happen - as it did in 2012 when 3M's revenue grew a tepid one percent as opposed to a torrid 11 percent in the prior year. Continue Reading . . .      

  

Koch Veers into Electronics with $7.2B Molex Acquisition      

Koch Industries has agreed to purchase Molex Inc. for $7.2 billion in a transaction that will bring the 75-year old electronic components manufacturer into the fold of one of the world's biggest and privately-owned industrial conglomerates. The transaction represents Koch's deepest foray into the electronics industry and marks one of the biggest acquisitions in years for an economic sector that is often characterized by rapid technology shifts as well as margin-corroding commoditization. Continue Reading . . . 

  
For years now I have been advocating the importance of having a comprehensive and proactive risk management strategy to protect the continuity of the supply chain when a disruption occurs. And though I believe that there is indeed a greater awareness of the importance of risk management, the apparent panic ignited by the recent Hynix factory fire leads me to believe that there remains a significant gap between perception and practice.Continue Reading . . .  

Update: Plant Fire at SK Hynix May Impact Supply, Pricing

A fire on September 4 at South Korean-based SK Hynix's Wuxi plant, which is the company's primary DRAM production facility, resulted in a plant shutdown, according to a TrendForce report. The fire may have started in a major piece of manufacturing equipment or one of the CVD machines inside the wafer facility, according to TrendForce. The Wuxi plant produces nearly half of SK Hynix's monthly 260K wafers. This includes 100K of its PC DRAM, and 30K of its mobile DRAM. Continue Reading . . .

Spot prices for DRAMs have shot up 19 percent since a recent fire at a SK Hynix plant in China halted production at the industry's second-largest memory supplier's facility but fears of "allocation" - one of the most dreaded words in the purchasing community - will eventually prove unfounded. Continue Reading . . .   

   

Memory on Allocation at America II   

It has been years since the "A" word - allocation - has been used in association with a widely-used commodity component. On Friday, however, one of the industry's largest independent distributors, America II Electronics, announced it was putting its memory inventory on allocation. Continue Reading . . . 

 

Update 2 Plant Fire at SK Hynix May Impact Supply, Pricing 

 
In an email statement on Sept. 12, Hynix reiterates that the line not effected by the fire at the Wuxi fab resumed operations on Sept. 7. The memory maker also noted that the line impacted by the fire is still undergoing a safety inspection with plans to "complete inspections and full restoration of the air ventilation system and facilities in order to resume production in October." Continue Reading . . .

Flextronics Trims, Acquire in Bid to Win  

Flextronics International Ltd.'s strategy for achieving financial stability seem simple enough except that, these days, drastic cost-cutting involving plant closures don't necessarily go well with aggressive small and medium-size acquisitions. There's a method to the madness, though, and company executives in recent presentations to analysts and investors have insisted this strategy is helping the contract manufacturer expand revenue and boost profit margins. Continue Reading . . . 

 

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News 

Cypress Semiconductor Corp. has lowered its third quarter revenue forecast, citing weakness at an unnamed Asian mobile handset customer. The chip vendor also said inventory re-balancing at some other customers in China would likely negatively impact sales for the third quarter. Continue Reading . . .   

A U.S. court in Massachusetts has approved an agreement for AVX Corp. to pay about $366.3 million for the cleanup of a harbor in the state, moving forward a deal that was initially struck between the capacitor supplier and a group of regulators in 2012. Continue Reading . . .   

Nvidia Corp. says it has appointed Colette Kress chief financial officer, ending a multi-year search to fill the position that first became vacant in March 2011 following the resignation of David White. Kress joins the graphics chip manufacturer from Cisco Systems Inc. Continue Reading . . .     

Chip Makers Align in Automotive Market

With the PC market in decline and government budgets in sequestration, the automotive market is a bright spot for component makers. The electronics content in all types of vehicles is expected to increase significantly as car makers woo customers with advanced safety features and infotainment offerings. Continue Reading . . .

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