Contract manufacturers had some bad news late on Friday when Nokia declared that it has stopped out-sourcing the assembly of its mobile phones.
This is the latest indication of the slowdown in the mobile phone market as global demand for handsets falls away.
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According to Adam Pick, principal analyst for electronic manufacturing services (EMS)/original device manufacturer (ODM) at iSuppli: “Nokia’s pull-back will shed more than $5bn in revenue from electronics contract manufacturers.”
The result will be more overcapacity in an industry sector already being stretched.
According to the analyst, the EMS/ODM market could contract 9.9% in 2009 to reach $270.8bn, down from $300.7bn in 2008.
“This announcement clearly illustrates just how severe the situation in the mobile handset market really is,” said Pick.
Nokia in 2008 outsourced approximately 17% of the manufacturing volume of its mobile phone engines, which include the phone and software that enable its basic operations, to providers including Foxconn International Holdings, BYD, Elcoteq and Jabil Circuit.