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Stretching supply-chain services further, contract electronics manufacturers are aggressively getting into the enclosure business, cutting into market share that was once dominated by independent enclosure makers.
Within the past two years, top-tier CEMs such as Flextronics International Ltd., Sanmina Corp, and SCI Systems Inc. have snapped up enclosure facilities around the globe.
Proponents insist that enclosure manufacturing makes sense for CEMs, since it gives them more control of the finished product and reduces costs.
But there are an estimated 800 independent enclosure makers, most of which are small companies. Some of the companies focus on plastics, while others specialize in sheet metal. The bigger players offer a variety of services.
"There are two schools of thought," said Roger Norberg, an analyst at US Bancorp Piper Jaffray Inc., Minneapolis. "The first is, 'I need to fabricate everything.' The other is, 'I need to manage a base of suppliers.'"
One CEM that thinks it makes sense to build its own enclosures...