Joseph Rajendran, Singapore
Contract Makers Foresee
10-20% Order Cutback
Singapore's contract electronics manufacturers are bracing themselves for a 10-20% cutback in monthly orders in the next few months with the future beyond autumn looking uncertain.
Singapore's high dependence on the US electronics sector makes the country more vulnerable than its neighbours in the region, claim analysts.
They say that in light of the current worldwide electronics slow-down, the tendency is for companies to source for products in lower-cost locations like Malaysia, Indonesia and China. Singapore, however, is a relatively high-cost manufacturer.
Analysts tracking the disk drive industry forecast that unit shipments from Singapore will slow to an average of two million units a month in the third quarter, down from the monthly 2.8 million in the second quarter. They project cutbacks in monthly output in Singapore from 500,000 units by Seagate to a high of one million units by Maxtor.
Singapore's smaller companies, which depend on these multinationals for subcontract manufacturing, have indicated that they are expecting 10-20% cutback in monthly orders in the coming months.
Singapore's bigger companies like Creative Technology Ltd and Aztech Systems Ltd, have already indicated they've made substantial provisions for loss in value of inventories.
Confirming the weakness in Singapore's electronics sector, the country's Ministry of Trade and Industry said in mid-August the country's electronics sector grew 12% in the second quarter, compared with 23% in the first quarter.
"Output in printed circuit assembly boards and computer peripherals registered weak growth. This was due to sharp price declines in DRAMs and output of PCs was affected by lower demand from the US, keen competition and changes in product mix," said a ministry spokesperson.
The news comes barely after Singapore announced that non-oil domestic exports, which comprises mainly electronics goods, fell 6.1% to S$7.85 billion in July from a year earlier.
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