Consolidation Ahead for Fractured
Inc., one of the world's biggest makers of connectors for a variety of markets,
including automotive, communications, consumer electronics, industrial, medical
and networking equipment, has been absorbed by Koch Industries Inc., a
conglomerate with limited presence in the industry. While Koch is keeping the
current management of Molex in place, it is certain to implement changes
intended to increase sales and boost profitability at the connector
manufacturer. (See: Molex Will Change Under Koch But How Much?).
greater impact of Koch's shift into electronics lies ahead. Prior to the Molex
transaction, Koch had more than $110 billion in revenue and employed
approximately 60,000 people. Molex alone will jack up Koch's payroll by more
than 35,000 people. Will Koch wield the axe or concentrate on becoming a bigger
player in electronics, using Molex to accelerate the consolidation of the $48
billion connector market. Within years, Molex's market share could rise above 10
percent from less than 8 percent today. This means some of today's smaller
players in the interconnects, passives and electromechanical (IP&E) market
could become acquisition targets for Koch and other major conglomerates.
electronics industry is used to constant flux, though. One of the more wrenching
changes taking place in the market and one that will affect a large swath of the
supply chain is occurring in the communications market. Nokia Corp., once the
world's biggest vendor of wireless handsets and still a big player, is getting
out of the business after agreeing to sell its devices and services division to
Microsoft. So, what will Nokia do once it closes the transaction as expected in
the first quarter of 2014? The company plans to focus on the mobile
infrastructure equipment market but considering its history of morphing from a
wood pulp vendor to a rubber company, then TVs, radio and mobile phones, it
shouldn't surprise anyone if Nokia - flush with cash from the Microsoft deal and
IP licensing - targets other potentially lucrative fields in and outside of high
tech. (See: Nokia: The Next Chapter Begins).
other news of significance to the industry, Micron Inc. is vaulting to the No. 2
position in the embattled DRAM market following its acquisition of Elpida Memory
Inc. The transaction also helped make Micron the world's fourth largest
semiconductor company by revenue and will contribute towards what the chipmaker
hopes would be the end of the DRAM arms race. (See: Micron Stabilizes, Predicts end of DRAM 'Arms'
not just the big guys that are driving news in the electronics supply chain.
Smaller companies are also in the spotlight. Many components distribution are
reorganizing operations to better understand and respond to customers' needs.
PEI-Genesis, for example, is making expansion plans for China after staying on
the sideline initially but as EPS managing editor Barbara Jorgensen points out
in a recent blog, there isn't a perfect time to enter the Chinese market. Each
company must go at its own pace, Barb noted. (See: PEI-Genesis Prepares for Expansion into China and
It's Never Too Late For China).
the components level, some suppliers continue to emphasize the importance of the
Western market by investing more in the region despite ongoing shifts in
manufacturing to lower cost Asia Pacific and Eastern Europe. Ametherm, a
supplier of thermistors and other components for circuit protection, believes so
much in the American market that it doubled the size of its production facility
in Nevada, as Gina Roos, EPS executive editor notes in a report. (See: Ametherm Thrives in Nevada).
Bradley, a veteran of the electronics market and one of my favorite writers on
industry issues, kept the theme of change alive in a blog posted this week. Ken,
who's seen and experienced firsthand what happens when enterprises fail to
promptly respond to change, focused on Agilent Technologies' recent decision to
split itself into two enterprises. The company had done this before but rather
than wait for its leadership in two key segments to be eroded, it decided to
lead the change it sees coming. Agilent's action, according to Ken, is a good
example of how companies can anticipate and respond to the unknown. (See: Becoming & Staying a Leader: the Agilent
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Will Change Under Koch But How Much?
Don't hold your breath if you believe Molex Inc. will not change at all or only
superficially following its acquisition by Koch Industries Inc. The new master is in the house
and more than the furniture will be shifted around. Koch targeted Molex because
it sees an opportunity to improve operational performance, jack up sales and
squeeze more profits out of the company. It will do whatever it sees necessary
to achieve these goals, including reorganization, management reshuffle, further
acquisitions and brand extension into new markets.Continue Reading . . .
Thrives in Nevada
Ametherm, a U.S. manufacturer of thermistors and
other electronic components for circuit protection, has doubled the size of its
manufacturing plant with the purchase of a 36,000-square-foot facility in Carson
City to meet increased demand. The privately-held company manufactures all of
its circuit protection devices at the new facility, which now serves as its new
headquarters, and a smaller plant in Carson City. Ametherm expects to hire about
10 to 15 new employees as a result of the expansion. Continue Reading . .
Nokia Corp. is charting a new future. Only those
who haven't researched its history will look at the recent challenges and write
off the Finnish company. Nokia is not new to change; it's first logo spotted a
fish. (See below). It's going through a wrenching evolution right now but the
current reorganization is being layered on a long history of self-renewal the
company has gone through since it was founded by a mining engineer as a wood
pulp mill in 1865. Continue Reading . ..
After more than a decade of
savage pricing pressures that devastated margins and profitability at suppliers
combined with wild demand-supply swings, the semiconductor DRAM market appears
to be finally settling into a more "normal" trading pattern, according to an
executive at Micron Technology Inc. Continue Reading . .
Although the company announced the split in September,
the Board and senior management team at Agilent Technologies impress me for giving their
shareholders and employees such a great Christmas gift. As announced, this great
company will split into two separate units; one focused on life sciences and the
other on test and measurement.Continue Reading . . .
Market conditions have changed in the power
semiconductor market in 2013, and this is good news for suppliers. The market is
expected to grow in the single digits in 2013, although some application sectors
will grow faster or fall below the total market, said Victoria Fodale, senior
semiconductor market analyst for IHS. Some power semiconductor manufacturers expect
higher growth of about 10 percent for discrete devices particularly as more
customers address power efficiency in their end products. Continue Reading . . .
One of the things we at EPS
are trying to do is shine a spotlight on companies that may not get a lot of
press. I've spoken to a number of such companies recently and an interesting
trend is emerging: these companies are only now seriously evaluating
China. Continue Reading . . .
Hardware was the foundation of the electronics industry
but over the last decade software has taken over the furnishing of the
household. Where hardware innovation once defined winners and losers, the
reverse is the case today. The high-tech business names on the tips of
everyone's tongues today - aside from Apple Inc. - aren't the likes of Cisco,
Dell, Hewlett-Packard, IBM or Intel but social media and marketing enterprises
like Amazon, Facebook, Google, LinkedIn, Pinterest, Sina (Sina's Weibo.com is really big in China, trust me) Twitter
and Zynga. Continue Reading . .
Complexity of Managing Materials Reporting
a simple example of a chip capacitor used in a majority of electronic products
today, SGS shows how complex it can be to identify and
report on the materials used in an electronic component. This is a growing
challenge for electrical and electronics suppliers and manufacturers as they
need to deal with growing demand to be accountable for every molecule of
material contained in their products, which may impact the health of the
environment, consumers and workers responsible for the manufacturing of
products, and for the recovery, recycling and disposal of end of life products,
said SGS. Continue Reading . .
and the Date Codes Tool
One of the responsibilities for purchasing is to
maintain a strong supplier relationship by providing critical feedback to the
supplier from time to time. When there is a problem with a shipment or a sub-par
performance of the product shipped, then the buyer should be in contact with the
selling agent to determine the best and most timely solution to the problem.
Continue Reading . .
Industry Set to Grow 5% in 2013
The numbers are rolling in for the global semiconductor
industry in 2013, and they look good, according to several market research
firms, thanks to a strong rebound in memory devices. Several market analysts peg
growth at approximately five percent in 2013. Continue Reading . .
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