Vol. 27, No. 10 October 2017 The Problem of Excess Inventory in EMS

EMS companies do two things really simulation, without customized used its backward-looking MRP analysis well: They excel at soldering and they software. The CMC simulation model capability for a part-by-part inventory are also very good at managing was designed for this and to develop liability analysis. It illustrated how the inventory. Material requirements “what-if” scenarios of inventory that contract manufacturer’s MRP system planning (MRP) is the production tool yield practical excess liability should have managed raw materials used by manufacturers to schedule and assessments, as well as flexibility in inventory and vendor orders to support control the inventory and allowing, or not allowing, safety client product-level orders and forecast manufacturing process, but if not stock. It can also incorporate changes. Model data included the client’s tightly controlled, it can create judgement on key input factors such rolling forecasts, bills of materials, actual excesses that can have a devastating as a vendor’s true cancellation demand, shipments, and component lead effect on profitability. Sooner or later, window, which may differ from the times. It also incorporated inventory an EMS company is going to have an vendor’s quoted terms, and also takes management algorithms based on common excess inventory problem (either into account email communications industry practices, including timely buyer resulting from internal processes or from both parties that may include corrective actions in response to computer- customer imposed)—so wouldn’t it be data not in the EMS MRP. The CMC based MRP-generated messages. Lastly, nice to have a tool that mitigates this model is independent of the EMS consideration was given to the contract exposure and allows the principals to MRP, which the parties may prefer manufacturer for periods of parts supply see the dynamics of forecasts, yields, so as to mitigate real or perceived shortages and for volatility of client orders, cancellations, shipments, and partiality. forecasts. inventory levels, all in one place? Freid has offered several examples Another example involved assessing Robert Freid, president of Contract of the CMC simulation model in Nokia’s share of liability in an assembly Manufacturing Consultants (CMC), action. The tool helped resolve an program dispute with a mid-tier EMS firm. has developed such a tool. The tool $18 million lawsuit by an EMS The CMC simulation model provided doesn’t have a name, but Freid company against a customer for analysis that included understanding what describes it as a proprietary simulation excess inventory damages related to procurement actions could have and should model that allows the manufacturer to sudden product forecast reduction, have been done by the EMS company to calculate expected excess inventory purchase order cancellation, and mitigate the impact of damages due to a quantities on a part-by-part basis after subsequent switch to another business downturn. The “backward- production ends, and presents the supplier. The CMC simulation model looking” MRP simulation examined all dynamics and results in an understandable and usable format. In the real world, the purpose of an Some articles in this issue EMS MRP system is to schedule Cover Story…………………………………………………………………………………….1 production and to place parts orders The Problem of Excess Inventory in EMS (new and change orders)—but this Some Quarterly Results…………………………………………………………………………….3 does not allow for dynamic backward Kitron Expands Capabilities in the US.….……………………………………………………4 Sparton Shareholders OK Ultra Deal…..…………….………………..….…………………5 Wisconsin Redoing Terms of Deal………………………………………………..7 the component materials to quantitatively company alleging that excess inventory typical EMS company would have reasonably show a reasonable range of liability. The and other consequential damages were been expected to manage inventory in court discovery documents that were due to its customer’s high frequency of response to customer forecasts within reviewed and analyzed included production schedule and product design component lead times and with an aim of manufacturing supply agreements; changes over several years. Products controlling excess inventory risk. It treats all reschedule and stop-work notice history; involved were printed circuit board parts according to the same prudent MRP EMS company past and present claims, assemblies plus a high mix of finished principles regardless of value. Model including supporting inventory records; communications products. projections of excess quantities are later used bills of materials (BOMs) and approved- A sample of the CMC simulation model as benchmark comparisons to actual after vendor lists for all finished goods; printed can be seen in Table 1. This model was returns but before customer part buy-backs. circuit board assemblies and components developed by CMC in 2001 and since The CMC simulation model is by definition related to contractor claims; manufacturing refined to assist both customers and EMS an explanatory tool. In most cases, it makes it methods and cycle times; and internal and companies in evaluating the “share of is easier for principals and attorneys to see consulting studies. burden” for excess inventory. The model the dynamics of industry operations so that A final example of the CMC simulation does not try to replicate or explain all of the accuracy of the results is manifest. For model included a $28 million claim by the many procurement actions that more information, see KBM Enterprises, an Alabama EMS transpire; rather, it illustrates how a http://www.cmcseattle.com/.

Table 1: MRP SIMULATION

Y SAFETY STOCK 400 SERIES Y CANCELLATIONS IF-1101-001 Y RETURNS 3,832,4 54 $5,445,010 PROJECTED TTL PART / ASSEMBLY n:12345678910 Mar‐16 Apr‐16 May‐16 Jun‐16 Jul‐16 Aug‐16 Sep‐16 Oct‐16 Nov‐16 Dec‐16

1077644 pcba FG Fcst (@ n‐LT) 0 8667 9005 12334 11100 10174 7735 500 500 0

PCBA, LLC2 FG Shipments (actual) 0 4450 6430 12300 6577 3293 141 36 5 0 QTY EA / YIELD 2 92.00%

LT (#b‐days) / SS (#wks.) 105 2 Parts Receipts 18860 19596 26864 24196 22172 16836 1104000 MOQ / $ EA. 92 $13.12 Parts Cancel 0 0 0 0 ‐9108 ‐13708 ‐1104000 CANCEL / RETURN CNRParts Returned0000000000 FW START (# Mos.) 3 Parts in Shipments 0 ‐9674 ‐13978 ‐26739 ‐14298 ‐7159 ‐307 ‐78 ‐11 0 FW END / EFFECT MO. 3

RESIDUAL INV (QOH) 47,169 $618,857 QOH EOM (excl. SS) 18860 28782 41667 39123 37889 33858 33551 33472 34933 47169 Active / Inactive Mar‐16 Allocated 18860 19596 27951 24196 22172 16836 1104000

Qty Yielded 2.17391 Unallocated 0 9186 13716 14927 15717 17022 32447 33472 34933 47169 LT (calendar mos.) 5 QOH Safety Stock 0 0 0 6164 6164 6164 12144 13708 12236 0 1023446 pen FG Fcst (@ n‐LT) 0 4691 7883 12396 8268 8600 5040 810 0 0

PEN, DRY ERASE, BLACK FG Shipments (actual) 0 4450 6430 12300 6577 3293 141 36 5 QTY EA / YIELD 6 98.75%

LT (#b‐days) / SS (#wks.) 25 0 Parts Receipts 28512 47952 75384 48816 44712 347760000 MOQ / $ EA. 216 $0.78 Parts Cancel 0 0 ‐1296 ‐7560 0 ‐10800 0000 CANCEL / RETURN CRParts Returned000000000‐58536 FW START (# Mos.) 1 Parts in Shipments 0 ‐27038 ‐39068 ‐74734 ‐39962 ‐20008 ‐857 ‐219 ‐30 0 FW END / EFFECT MO. RESIDUAL INV (QOH) 40 $31 QOH EOM (excl. SS) 28512 49426 84445 50966 55716 59683 58826 58607 58576 40 Active / Inactive Mar‐16 Allocated 28512 47952 76804 54937 44712 396980000

Qty Yielded 6.07595 Unallocated 0 1474 7641 ‐3971 11004 19985 58826 58607 58576 40 LT (calendar mos.) 1 QOH Safety Stock 0000000000

Manufacturing Market Insider, October 2017 2 Some Quarterly Results production from Fullerton in the US to Aerospace and Defense (A&D) growth its Bedlington facility in the UK. from defense programs. Industrials and Revenue in Global Manufacturing Telecommunications growth remained , Inc. (NYSE: JBL). Jabil Solutions declined by 2% organically, muted year over year from softness reported fourth quarter net revenue of but returned to growth in the second among several of its top customers. $5.0 billion and fiscal year net revenue quarter, supported by contract wins in The company projects that new of $19.1 billion. Total sales were up the US. The Group’s order momentum program bookings for the third quarter 13% y-o-y, driven by market share continues to be good across all three will result in annualized gains in EMS up ~2.2% y-o-y, while divisions. revenue of $138–$165 million when DMS was up on solid Underlying operating profit increased fully launched in the next 12–18 healthcare/packaging and mobility- by 31% to £10.9 million (H12016: £8.3 months. The new program bookings related products. Operating margins million) with the improvement largely align with Benchmark’s strategic focus were up 136 bps y-o-y to 3.8%, with driven by Sensors and Specialized on higher value markets. EMS margins surprisingly to the upside Components and Power Electronics. Fourth quarter 2017 outlook: on end-of-life contracts and cost Underlying operating profit increased Revenue between $590 million recoveries that drove ~$10–$12 million by 11% at constant currency. There was and $610 million. Diluted GAAP in incremental profits. The firm beat its a £1.5 million foreign exchange benefit. earnings per share between target of above $1B in cash flow from At current exchange rates, the company $0.29 and $0.33. Diluted non‐GAAP operations (CFO), mostly driven by is not expecting any further FX benefit earnings per share between working capital management, and in the second half. $0.34 and $0.38 (excluding exceeded free cash flow guidance of Cash performance was excellent, with restructuring charges and amortization $435 million handily at ~715 million. cash conversion from continuing of intangibles expected at JBL expects to post EPS of operations of 128% (H12016: 63%). approximately $0.05 per share). $0.65–$0.91 on revenues of $5.25– The working capital movement for the $5.75B. The firm expects to write off continuing operations improved to a Company News hurricane Maria–related damages to £2.0 million inflow (H12016: £5.6 Puerto Rico facilities in 1HFY18, but million outflow), with the adverse Kitron Signs Contract this will largely be offset by insurance impact of revenue growth on debtors coverage. The firm expects to drive and inventory more than offset by the with Kongsberg FY18 revenues of $20–$21B and timing of creditor payments. Maritime reiterated its FY18 PF EPS guide of The Group’s free cash inflow totaled EMS provider Kitron has signed $2.60. CFO is expected to be greater £6.8 million (H12016: outflow £4.9 a frame agreement with than $1B and capex at ~$700 million. million). Net debt was £56.0 million as Kongsberg Maritime that has a Jabil posted solid F4Q17 results of 30 June 2017 (31 December 2016: potential value of NOK200 million above expectations, largely exceeding £55.4 million). On a pro forma basis, (€21.22 million) for the next five FCF targets on solid operating margin taking account of the proceeds of the years. performance and working capital disposal of the Transportation Sensing Kitron will produce and deliver management. F1Q18 guidance captured and Control (TS&C) division net of existing and future electronic expectations, though FY18 guidance fees, net cash on 30 June 2017 would be modules and products to points to ~30 bps of margin expansion approximately £55 million. Kongsberg Maritime and actively on higher-than-expected revenues and Benchmark Electronics, Inc. collaborate on the design, cost savings from restructurings done in (NYSE: BHE). The company reported development, industrialization, and FY17. Overall a solid outcome and 3Q2017 revenue of $604 million. production of future products and guide despite the uncertain timing and Operating margin was 3.4% technology. magnitude of iPhone shipments, and the (non‐GAAP 4.1%). The cash “This agreement is strategically impact of hurricanes on operations. conversion cycle improved by 8 days, important for Kitron. We have TT Electronics plc. The company from 80 on September 30, 2016 to 72 long-lasting and close relations reported that H12017 revenue increased days on September 30, 2017. Cash was with other divisions in Kongsberg. by 13% to £180.0 million (H12016: $730 million on September 30, of which This new partnership with £159.2 million), or 6% excluding the $75 million was available in the US. Kongsberg Maritime, the largest effects of foreign exchange. On an Overall revenue increased 5% year business area within Kongsberg, organic basis, revenue increased by 5%, over year, driven by continued strong holds significant potential for us,” driven by positive market dynamics and demand in Test & Instrumentation said Hans Petter Thomassen, share gains in the Sensors and serving the semi‐capital equipment Managing Director of Kitron Specialized Components division and market, Computing growth from Norway. strong market demand in Power existing and new customers, Medical Production will take place at Electronics, including some one-off growth from new programs, and multiple Kitron facilities. last-time-buy activity as it moves Manufacturing Market Insider, October 2017 3 Spanish EMS Firm GPV specializes in the production giant’s investment by agreeing to Improves Throughput with of advanced mechatronics products nearly $3 billion in incentives for the and also in developing customized company. However, the status of this Sawyer Robot solutions in low and medium volumes matter is still undecided, pending a Spanish EMS provider P4Q with a high degree of flexibility. It can vote by Wisconsin’s Economic Electronics is increasing production provide both electronic subassembly Development Corp. (see p. 7). throughput by 25 percent by deploying solutions and finished products (box Rethink Robotics’ Sawyer to test build). printed circuit boards. ams Expands Singapore Based in Alonsotegi, P4Q has been Manufacturing Capacity seeking to automate more of its factory Kitron Expands Austrian chip manufacturer ams is for many years to improve efficiency Capabilities in the US expanding its manufacturing operations and consistency, but traditional caged Norwegian EMS provider Kitron in Singapore at the JTC nanoSpace in robots were unappealing due to high continues to invest in its US presence Tampines. costs and employee safety concerns. and its site in Johnstown, ams is expecting to invest around After purchasing Sawyer, the company Pennsylvania. $200 million over the next three years deployed the robot in just a few hours The company has recently made in manufacturing in Tampines. The and is using and considering the robot new investments to expand its investment includes a fully automated for several additional tasks beyond capabilities and to enter the next clean room with filter deposition printed circuit board testing. These phase of its US presence. Kitron technology for high-precision micro- include inspecting parts, taking pictures hosted an event on October 6, 2017 to optic sensors and a new facility for for quality assurance, picking and celebrate the new investments. VCSEL (vertical cavity surface- placing, and line loading and unloading. Kitron has now invested in a emitting laser) R&D and sensor P4Q plans to assign additional tasks to surface-mount technology (SMT) line manufacturing. Sawyer moving forward, with the goal of in Johnstown. With this addition the ams’s continued expansion in 100 percent part quality. Additionally, site has all the capabilities locally to Singapore is the direct result of P4Q is hiring additional personnel with offer complete solutions to customers, customer volume requirements for the the stated goal of finding additional spanning PCBA, box build, and high- company’s sensor solutions and optical areas to implement collaborative robots level assembly. packaging. The new expansion will and automate the production process The company also said that in order enable ams to manufacture micro-optic even further, Rethink Robotics states in a to handle the increased business, sensors for mobile applications. This press release. Kitron will have to hire additional new facility complements the capacity staff in Johnstown. at Ang Mo Kio and the company’s Danish EMS Provider GPV manufacturing operations in Austria, as Foxconn Has Found Its well as manufacturing partnerships Opens New Plant in Mexico with major contract manufacturers The Danish electronics manufacturer Wisconsin Factory Site around the world. GPV has officially inaugurated its new EMS giant Foxconn has detailed plant in , Mexico. The plant exactly where the company plans to already employs around 80 people and build its $10 billion manufacturing Seamus Grady to Head the company expects to reach 350 complex in the southeastern Fabrinet as CEO employees in the coming years. Wisconsin village of Mount Pleasant. Fabrinet has appointed Seamus Bo Lybæk explains that during recent Mount Pleasant sits about 25 miles Grady as Chief Executive Officer years the company has focused on south of Milwaukee and has a (CEO) and a member of Fabrinet’s gaining a footing in the American population of about 26,000 people. Board of Directors. Mr. Grady will market, and has been successful in The new plant will initially employ report to Fabrinet’s Board of Directors achieving this. 3,000 people, but Foxconn has and, initially, to Tom Mitchell, who has The new 4,500-square-meter previously stated that this number been named Executive Chairman. electronics plant currently employs could grow up to 13,000, which Mr. Grady most recently served as about 80 people. But within the next two would make Foxconn a huge Executive Vice President (EVP) and quarters the company is planning to set employer for the region. Chief Operating Officer (COO) of the up another manufacturing line and Back in mid-September Governor Mechanical Systems Division at expand the workforce further. GPV is in Scott Walker signed the Wisconn , where he dialogue with local universities Valley Special Session Bill (also oversaw 10 facilities in five countries regarding talent development. known as the Foxconn Bill) into law, and reported to Sanmina’s chief which paved the way for the EMS executive officer.

Manufacturing Market Insider, October 2017 4 Top 10 Nordic Region 1. Scanfil – Finland Benchmark Settles on 2. Kitron – Norway EMS Providers 3. HANZA – Sweden Tempe for New HQ In the run-up to TEC Lund, where 4. GPV – Denmark After a six-month, extensive site Reed Electronics Research will 5. NOTE – Sweden selection process, global design, present its annual strategic analysis of 6. Norautron – Norway engineering, and manufacturing leader the European EMS industry, the market 7. Orbit One – Sweden Benchmark Electronics announced analyst has released its provisional 8. Inission – Sweden that its new corporate headquarters will ranking of the Top 10 Nordic EMS 9. BB Electronics – Denmark be located at Rio 2100, a new 52-acre, providers based on global revenues. 10. LEAB – Sweden Class A office park situated in the heart The acquisition of PartnerTech by of Tempe, Arizona. Scanfil in 2015 created a group with The company announced relocation sales of over half a billion euros and Salcomp Inaugurates a New plans to Arizona from Angleton, operations in six countries on three Guigang Factory in China Texas, in April of this year and expects continents. The company, which has Salcomp is expanding its operations in to add approximately 500 new jobs to undergone a major restructuring of its China and has opened a new factory in the greater Phoenix area over the next manufacturing footprint, including sites Guigang, in the Guangxi autonomous five years. in Norway, the UK, and Hungary, is region. Construction of the Guigang Groundbreaking for the new site is about double the size of the second- factory site started in June 2016. The expected to begin before the end of the place company, Kitron. Like Scanfil, campus consists of a production plant, year, with an expected completion date Kitron has established low-cost warehouse, offices, and dormitories, with in early 2019. In the interim, operations in central and eastern more than 85,000 square meters in total. Benchmark’s headquarters is at 4141 Europe (CEE) and Asia, as well as a The annual production capacity of the N. Scottsdale Road. The current and site in the US to support customer Guigang plant will gradually reach 350 new headquarters will house the requirements for local manufacturing. million units, and as a result, Salcomp’s corporate leadership team and key The Danish EMS GPV established a total capacity will increase to over 600 corporate functions in finance, human production site in Mexico in 2016 to million devices. The Guigang plant will be resources, legal, marketing, operations, support its North American customers the biggest single factory of the Salcomp and supply chain. Benchmark’s and is the only other company outside Group, providing thousands of new jobs in Internet of Things (IoT) and RF and of the top two with a manufacturing the region. The factory currently employs high-speed Design Centers of presence in that region. around 1,000 people; by the end of 2018, Innovation will also transition to the Apart from the Norwegian company the number of employees is forecast to be new location. HAPRO, all of the top 15 Nordic around 5,500. Benchmark’s 23 locations span eight companies have established low-cost The Guigang facility started production countries across the globe. The new manufacturing operations in either CEE at the end of June 2017. In Guigang, corporate headquarters near Sky or Asia. However, for the majority of Salcomp manufactures adapters and Harbor International Airport gives the companies, production remains in the chargers for smart phones and other company quick access to customers Nordic region. electronic devices, as well as other worldwide. Outside of the Nordic-headquartered wireless charging solutions. The most companies there are only three major important market area is China, which Sparton Shareholders OK players with significant manufacturing accounts for more than 70 percent of the operations in the region. The Swiss world’s smart phone production. Products Ultra Deal company Enics has sites in Finland and will also be exported to Malaysia, Sparton shareholders have approved Sweden, and at the beginning of 2017 Vietnam, India, South Korea, Brazil, adoption of a previously announced acquired PKC Group’s site in Raahre, Mexico, Europe, and the US. merger with Ultra Electronics Finland but has subsequently closed the Holdings. plant. The global top-tier company Sanmina Closes Batam The transaction remains subject to Sanmina has three sites, one in certain other customary closing Sweden and two in Finland, while the Assembly Site conditions and the parties continue to Polish EMS Fideltronik established a Sanmina SCI has closed its assembly work toward its completion. presence in the region in 2013 through plant in Batam following ongoing worker The deal with Ultra, which includes the acquisition of an OEM strikes that disrupted production. its Ultra Electronics Aneira subsidiary, manufacturing site in Sweden. Based According to the Jakarta Post, was announced on July 7. on revenues generated in the region, Batamindo general manager Tjaw Hioeng both Enics and Sanmina are ranked in blamed the move on a “series of rallies Foxconn to Build Training the Top 5 EMS providers in 2016. and strikes by workers that had harmed The top 10 Nordic EMS providers for the company’s reputation.” Centers in India 2016 are as follows: Sanmina had operated in Indonesia for A Foxconn subsidiary plans to set up more than a decade. three regional training centers in India in the coming years, according to local Manufacturing Market Insider, October 2017 5 media reports. their component suppliers to design the orders, while Shunsin has just Josh Foulger, managing director of related products, according to sources recently joined the supply chain to Foxconn India, reportedly told the state from the upstream supply chain. provide SiP services and will begin finance minister that the company, the In the past, HP and would processing related orders in February world’s largest EMS/ODM, will set up cooperate with medical care device or March 2018, the sources noted. the sites in the district of East Godavari. vendors to supply customized systems As for the AirPods, the sources Finance Minister Yanamala and monitors for them to sell to pointed out that shortages have Ramakrishnudu reportedly suggested hospitals or clinics; now, however, the already eased and Apple has also putting the centers in Peddapuram, Tuni, PC vendors are planning to skip the increased its orders for the device. and Amalapuram. intermediaries and form direct Inventec is the manufacturer of the Up to 400 prospective workers could partnerships with medical care service AirPod, while the device’s be trained at these centers each month, providers. communication module is supplied by the reports indicated. The sources pointed out that orders for Luxshare-ICT. In addition to the medical care devices started growing AirPod orders, Luxshare-ICT also and HTC Enter a significantly in 2017 and they expect supplies connectors, cables, and the increase to continue into 2018. antennas for Mac and iPhone $1.1 Billion Cooperation Research firm BMI Research has products, according to DigiTimes. Agreement figures showing that the worldwide Google and HTC Corporation have medical care device market had a scale Lite-On Technology entered into a definitive agreement of US$323.9 billion in 2015 and will under which certain HTC employees— grow to US$382.5 billion by 2018 at a Expands in China many of whom are already working with CAGR of 5.7% from 2015 to 2018. EMS provider Lite-On Technology Google to develop Pixel smart phones— In addition to brand vendors, ODMs will invest US$45 million to establish will join Google. such as , Compal an automotive electronics subsidiary HTC will receive $1.1 billion in cash Electronics, , and Inventec are in Suzhou and US$35 million in from Google as part of the transaction. aggressively trying to grab a slice of the another subsidiary for storage devices Separately, Google will receive a non- pie. Since most of the new equipment and components in Changzhou. exclusive license for HTC intellectual requires support for cloud computing The subsidiaries, Suzhou Lite-On property. and big-data analysis, related demand is Technology and Lite-On In a press release, HTC says that the expected to give these PC makers some Automotive Electronics agreement also supports the company’s advantages against traditional medical (Changzhou), are both in eastern continued branded smart phone strategy, care device suppliers. China. and will enable a more streamlined Lite-On will also spend up to product portfolio. HTC will continue to Upstream Suppliers to NT$1.15 billion (US$38.1 million) to have engineering talent, which is add automation equipment at its currently working on the next flagship Enjoy Rising Revenues existing subsidiary, Lite-On phone, following the launch of the HTC from AirPods and Apple Electronics (Guangzhou), in southern China. U11 earlier this year. Watches in 4Q17 For Google, this agreement further The Suzhou plant will produce Quanta Computer and Inventec, as SSDs (solid-state drives) mainly for reinforces its commitment to smart well as the ASE group’s Universal phones and overall investment in its notebooks and cloud computing Scientific Industrial (USI) and the devices, while the Changzhou maker emerging hardware business. In addition Foxconn group’s Shunsin Technology to the experienced team of professionals, will mainly produce automotive and Luxshare-ICT, are expected to see electronics and LED lighting Google will continue to have access to strong growth for their wearable product HTC’s IP to support the Pixel smart modules. operations in the fourth quarter, thanks The Guangzhou subsidiary phone family. Additionally, this to rising sales for Apple’s AirPods and agreement also represents a significant produces smart phone CCMs Watches, according to sources from the (compact camera modules) and the investment by Google in Taiwan as a upstream supply chain. key innovation and technology hub. additional automation equipment will With the Apple Watch series 3’s be used mainly to produce large/wide- support for LTE connection and phone angle and 3D-sensing models, as PC Vendors Eyeing functionality, and the introduction of the reported by DigiTimes. Medical Care Market AirPod, demand for the smart watches PC brand vendors including Hewlett- has been picking up recently. Insight Equity Acquires Packard (HP) and Dell have shown Quanta and USI have been long-term interest in entering the medical care supply-chain partners of the Apple Virtex Enterprises device market and are partnering with Watch series and are expected to see a An affiliate of Insight Equity significant revenue contribution from Holdings, LLC (Insight Equity), the Southlake, Texas–headquartered 6 Manufacturing Market Insider, October 2017 private equity firm, announced the acquisition of VirTex Enterprises Sparton and Ultra China IIoT Market to See (VirTex), a vertically integrated Electronics USSI JV 20% CAGR in Next Four electronic manufacturing services provider. The company has over Awarded New Contracts Years 165,000 square feet of manufacturing Sparton Corporation and Ultra With the advent of the Industry 4.0 space, giving it the ability to produce Electronics USSI, a subsidiary of era, China is aggressively gearing up both complex electronic components Ultra Electronics, have been for the development of IIoT (Industrial and complete systems for customer awarded subcontracts valued at Internet of Things) applications to platforms at volumes ranging from $12.9 million from their accelerate industrial upgrades and prototyping to full-scale production. ERAPSCO/SonobuoyTech transformations. It is estimated that VirTex combines the sophisticated Systems joint venture. China’s domestic IIoT market will processes and manufacturing ERAPSCO/SonobuoyTech experience a CAGR of 20% from capabilities of a large-scale electronic Systems will provide manufacturing 2018 to 2021, according to a report manufacturing services provider with subcontracts in the amount of $5.7 issued by the China-based Qianzhan the attention and customization of a million to Ultra Electronics USSI Industry Research Institute. local partner. The company has and $7.2 million to Sparton De Leon The report cited declining labor advanced manufacturing and assembly Springs, LLC. Production will take productivity, thinning demographic capabilities, broad end-market place at Ultra Electronics USSI’s dividend, and escalating production diversification, and a deeply Columbia City, Indiana facility and costs as the major factors driving experienced management team that is Sparton’s De Leon Springs, Florida Chinese authorities to step up their focused on providing the highest facility. promotion of industrial upgrades and quality of service to its customers. “We ERAPSCO/SonobuoyTech transformations. The government has are excited to partner with the VirTex Systems was awarded multiple come up with a spate of policies management team to continue to grow foreign contracts for the associated with its “Made in China the company and further expand its manufacture of passive and active 2025” program to effectively fuel manufacturing capabilities,” remarked sonobuoys in support of multiple innovative development of industries Luke Bateman, a vice president at underwater missions for detection, in the country. Insight Equity. classification, and localization of IIoT is one of the major segments of adversary submarines during IoT applications, with manufacturing, Foxconn Starts Shipping peacetime and combat operations. warehousing, and logistics operations having to rely heavily on the IIoT iPhone X Wisconsin Redoing advantages of collecting and analyzing EMS giant Foxconn has reportedly the data concerning operation lines started shipping iPhone X devices. Terms of Foxconn Deal and equipment to satisfy their However, the first batches are smaller A key Wisconsin agency is tracking, forecasting, and prewarning than expected. delaying a vote on a $3 billion needs, according to the report. Foxconn has shipped the first batch incentive package for Foxconn over Meanwhile, statistics compiled by of 46,500 units from Zhengzhou and concerns about how the deal is China-based CCID Consulting showed Shanghai, heading for the Netherlands worded. that, driven by policy support and and United Arab Emirates, The vote by the Wisconsin strong market demand, China’s IIoT respectively, reports DigiTimes, citing Economic Development Corp. is market scale is estimated to reach the Chinese-language Xinhuanet. now expected to take place no CNY450 billion (US$68 billion) by Apple will start to take presales earlier than November. The public- the end of 2020. It said the key to orders on the iPhone X on October 27 private agency, created by an act of China’s booming development of IIoT and has said it would start delivering the state legislature in 2011, serves applications and the rapidly expanding the devices on November 3. However, as the state’s department of market scale rests with robust the paucity of the first batch would commerce. development of software platforms in suggest that the new X model might be A state legislator compared some the country. one of the more “hard to get” smart of the terms of the deal with the To explore the huge market phones on the market these days. world’s largest EMS/ODM to a potential, international industrial Foxconn has now ramped up its “nuclear bomb” and is insisting on heavyweights have rushed to set up output of the new iPhone product from changes. relevant operating platforms in China. 100,000 units on a weekly basis to The state is negotiating the Germany’s Siemens, for instance, 400,000, the report continues. The package in order to attract a new launched its Mindsphere platform in question now is if this increase will be LCD manufacturing campus. It is 2016; this is an open, cloud-based enough to meet market demand. expected that the deal will still pass, operating system allowing users reports Circuits Assembly.

7 Manufacturing Market Insider, October 2017 to connect their machines or physical Collaborates Comintel to Sell BCM infrastructure to the digital world. In Electronics for RM123.8M March 2017, US-based General with on Health Comintel Corp Bhd is selling its Electric (GE) also teamed up with Application Platform electronic manufacturing services unit BCM China Telecom to debut an IIoT Intel has recently launched its Electronics Corp Sdn Bhd for RM123.8 software platform dubbed Predix, Health Application Platform million, to a company partly owned by its aimed at building an open industrial (HAP), an application software executive director Loh Hock Chiang. Internet ecosystem and offering platform that can be used by Comintel, in its filing to Bursa Malaysia, corporate application solutions to remote care solution providers to said BCM Electronics provides turnkey drive the digital transformation of enable a variety of remote manufacturing services and this planned sale China’s industrial manufacturing. healthcare usage models. gives it an opportunity to unlock and realize In April this year, China-based Remote patient care the value of its investment in the unit. Haier Group also released its Cloud encompasses a variety of care of Smart Manufacturing Operations modalities that are provided to a Platform (COSMO Plat) to integrate patient outside of a clinical Publisher: Randall Sherman the resources of users and developers setting. The advent of the Editor: Anna Reynolds of manufacturing equipment to Internet of Things (IoT) has been facilitate smart manufacturing. a huge boon to the healthcare Research Analyst: Vivek Sharma industry. Board of Advisors: Michael Thompson, Appoints New To make the Intel HAP CEO, I. Technical Services; Ron Keith, platform readily available to CEO, Riverwood Solutions; Andy Leung, Chief Financial Officer solution providers, Intel has CEO, VTech Holdings, Ltd. EMS provider Celestica has collaborated with manufacturing appointed Mandeep Chawla as the Manufacturing Market Insider is a monthly solutions provider Flex. newsletter published by New Venture company’s Chief Financial Officer, Flex collaborated with Intel to Research Corp., 337 Clay St., Suite 101, effective immediately. create an IoT computing engine Nevada City, CA 95959. Phone (530) 265- Mr. Chawla has been Celestica’s offering a connected device that 2004, Fax (530) 265-1998. Copyright 2017 interim CFO since June and was provides wireless connectivity to by NVR™. ISSN 1072-8651 appointed following a search process verified peripherals like blood The information and analysis presented that included both external and pressure and glucose monitors, here are based on sources believed to be internal candidates. Since joining pulse oximeters, weight scales, reliable, but content accuracy is not Celestica in 2010, Mr. Chawla has and more. This solution aims to guaranteed. The publisher shall not be held held progressively senior roles in the enable healthcare solution liable for any business decisions influenced organization, most recently as Senior providers to bring transformative by this publication. Vice President, Finance. Prior to remote care solutions to market. E-mail: [email protected] joining Celestica, he held finance positions with MDS, Inc., Tyco Website: www.newventureresearch.com International, and .

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