Giant PC outsourcer throws in the towel
Sanmina-SCI sells business to Foxconn and Lenovo
Sanmina-SCI, the US electronics contract manufacturing company, has sold its PC business to Foxconn, a major Taiwanese competitor, for between $80m-$90m. It is also selling its Mexican PC plant to Lenovo, for an undisclosed sum.
Foxconn will get its mitts on factories in the US, Mexico and Hungary, but we must wait for Sanmina-SCI's Q2 earnings call in April for further details. The deal is expected to close by June 28.
Considering that PC manufacturing accounted for $3bn or so of Sanmina's $10.3bn revenues in 2007, the price that Foxconn is paying shows how terrible margins are in this business, and how keen Sanmina is to get the hell out of there. Sanmina-SCI says the two deals should result in a $200m benefit - as it has "significantly reduced the net assets" in the business since last year, when it first announced its intention to flee PCs.
Sanmina-SCI also builds computer servers for clients. But a company that is capable of junking a $3bn revenue line because it is "no longer integral" is capable of junking anything.
IBM, HP and Lenovo are the company's three biggest customers, accounting for more than 10 per cent of current revenues, Sanmina-SCI noted in a recent 10-k filing.
Press release here. ®
Foxconn not really shoddy
I've worked with Motorola and Nokia in Foxconn, I've found them very good, sure they use more manual labour than is probably best, but their quality can be very good. Their facility in Shenzhen is incredible, last time I checked, there was almost quarter of a million workers on the one factory site.
Other manufacturers that are there:
Talk of slave labour is overblown. The "cheap labour" is not all that cheap locally, they pay ok, you get cheap university on the campus and very cheap accomodation. It's considered one of the best places to go to first when arriving in Shenzhen from the provinces as they train you up and then you move on to somewhere else.
Not to mention that western companies do reguarly audit them, i know Nokia has gone on random checks for ID and proof of age to check for workers under 16.
Which, considering I started (part time) work myself at 14 years old, is not too shabby
PC Chips not so bad
I have to agree about Foxconn motherboards - I've fallen for seemingly good deals a few times on these and they have mostly been unreliable. Same goes for their fans. I've seen some Foxconn nice cases though. I think Foxconn make a lot of Dell boards also.. and I don't their boards are any worse than average
But PC-Chips have been loads better these last few years than say 7 years ago when most of their boards were right old duffers.
I agree. I have seen so many of these boards fail for no apparent reason and with little use. Which is another reason I won't buy Apple, because guess who makes a lot of their stuff. Make it cheap, sell it above market value but make it shiny and hype it up and the lemmings will buy it.
Mind you, to give Foxconn some credit - they are slightly better than PC-Chips!
They are the cheapest, but they produce the worst quality. In most brand machines I see the part that breaks first is usually labeled by foxconn. Considering their use of chinese youth (slave) labor, this isn't good news.