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26 Aug 2008
LCD-TV vendors are increasingly seeking to outsource production to contract manufacturers to help beat the economic climate, research has claimed.
A report from analyst iSuppli claims that the percentage of LCD-TVs produced by outsourced manufacturers will rise from 28.2 per cent last year to 41.1 per cent in 2012. iSuppli claim that top Asian manufacturers are loosening the tight controls they have historically exerted on manufacturing operations and are looking more seriously at farming out production to cut costs.
Of the current top five vendors, only Philips is embracing outsourcing in a big way, with Samsung, Sony, Sharp and LG each keeping about 90 per cent of LCD-TV production in-house. But Jeffrey Wu, iSuppli's senior analyst for electronic manufacturing services (EMS) and original design manufacturer (ODM) services, said: “A recent trip to Asia revealed that a number of Japanese and South Korean LCD-TV OEMs are considering increasing their level of outsourcing to EMS providers and ODMs.
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"The major Asian LCD-TV brands, which traditionally have been loath to outsource LCD-TV production, said the use of contract manufacturing could help them to improve risk mitigation and asset flexibility during a time of economic uncertainty.”
The report claims that opportunities for contracted manufacturers will open up if revenue from the consumer market starts to grow more slowly but not decline. iSuppli indicated slower levels of growth would see the big Asian LCD-TV manufacturers reconsidering possible expansions of their internal manufacturing teams.
A representative from an unnamed Japanese OEM quoted in the report said: “We plan to increase our TV shipments by more than 80 percent within the next couple of years and intend to use ODMs to fill the production gap." A spokesperson from an unnamed Korean OEM added: "We are now reassessing the originally planned continuous internal capacity expansion and, in the meanwhile, conducting discussions with ODMs to understand their capabilities."
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