In the middle of the month, DigiTimes 4/15/09, released some good news about 3Q09 foundry sector growth to come because of orders from netbook and 3G handset makers. Despite Nokia and Sony-Ericsson's slumping 1Q09 earnings calls, drilling down into the MID, smartphone and 3G subsector, we come to a likely source of the mobile market driver and the better news.
A great example of such a source is the SanDisk earnings call transcript from 4/21/09. Herein we find some important information underscoring the positive impact that MIDs and their product cousins are having along the supply chain (check out this ZDNet blog for more commentary). According to Dr. Eli Harari, Chairman and CEO of SanDisk:
In the second half of this year, we [at SanDisk] expect demand for NAND to continue to grow particularly for mobile and portable computing platforms and this should hopefully absorb the industry supply growth projected for second half. [...]
As for demand creation, I believe that the handset business is being transformed on a scale similar to that which the web experienced in its early days and this has far-reaching implications for our mobile storage business.
That's great for the component specific side of the coin, but what about the rest of the mobile device? The mobile OEMs are also transforming, now favoring ‘insourcing' as bell weathers like Nokia reverse course to reduce cost and improve profitability. According to a report by iSuppli's senior analyst, Jeffrey Wu, "Nokia in 2008 decreased the percentage of its outsourced manufacture volume to 17.1 percent, down from 21.5 percent in 2007. This reflects a larger trend in the mobile-handset supply chain."
iSuppli's Wu has a new white paper that looks more closely at "the fatal pitfalls in wireless handset outsourcing." This is an important read because the relationship between OEMs and CMs is certainly changing and the supply chains are changed by the present market forces. These types of supply chain changes are also explored in more detail here. Certainly, it's not business as usual - as if we didn't already know that. But knowing why is different than knowing what.
It'll be interesting to see what the decrease in outsourcing will mean to the ODM-EMS turf wars as we continue to walk through the new territory of 2009.