Just What Gets Counted in the CIRCUITS ASSEMBLY Top 50?

I received a note today from an EMS company that had revenues exceeding $400 million in 2017. Why, they asked, did they make the MMI Top 50 EMS list but not the recently released CIRCUITS ASSEMBLY Top 50?

It’s a fair question, and one that comes up each year. In short, MMI calculates its Top 50 differently than we do. While it states it uses calendar 2017 EMS sales, that is demonstrably incorrect.

Key Tronic, for example, which is No. 35 on the MMI list, had sales by quarter of

  • Q1 113.6 million
  • Q2 118.5 million
  • Q3 109.2 million
  • Q4 111.7 million

for a total of $453.1 million. MMI lists Key Tronic’s revenue at $467 million, which was actually the amount for its fiscal year ended July 1, 2017.

Another example: Ducommun. It is similar to many EMS/ODM companies in that it is part of a larger corporation that has other divisions unrelated to contract assembly. MMI has Ducommun listed as 32 on its ranking, yet its EMS sales were, by quarter

  • Q1 $78.7 million
  • Q2 $81.8 million
  • Q3 $79 million
  • Q4 $77.2 million

for a total of $316.7 million. The rest of its sales come from unrelated products such as motors, switches and other non-PCB components. The no. 50 company on the CIRCUITS ASSEMBLY Top 50 was Global Brands Manufacture, with EMS sales of $430.2 million in 2017. As such, in EMS only, Ducommun does not belong. (And again, MMI used the fiscal year, not calendar year, for the revenue total, even though its chart explicitly states otherwise.)

Another reason why the lists don’t match up is in the definition of “EMS.” CIRCUITS ASSEMBLY counts ODMs such as Foxconn, Quanta, Compal, Wistron, Pegatron, etc., because they design and assemble products for other companies. (We also take care to remove the revenue unrelated to direct design and manufacturing for third-party customers.) MMI includes some of these companies but not all. But MMI does include Alpha Networks, which is an OEM, selling almost all its products under its own name.

MMI also counts revenue from bare board fabrication (Flex, Sanmina, etc.), which we remove. Yet MMI does not include companies such as ZDT, Mektron and MFlex which perform vast amounts of contract assembly although their primary business is flex circuit fabrication. We do so because their respective assembly operations are huge – in the billions. If you buy components and assemble them onto circuit boards for external customers, you are an EMS. To not include such firms is a huge omission.

I will say, it’s not easy to align companies’ EMS/ODM revenues, especially when they use different fiscal years, accounting standards, and reporting methodologies. Throw in the fact that most of these firms have businesses unrelated to pure EMS, some are private, and several report in languages other than English, and the task becomes very exacting. This certainly should not read as a criticism of MMI (or anyone else’s) methods, because 1. I know how hard it is to get everything right and 2. I truly respect the data that MMI (and others) add to the industry domain.


Comparing Top 50 Lists

John Tuck has issued his annual list of the top 50 EMS companies.

Years (and years) ago, Tuck, for those who are newer to the industry, was editor of Circuits Manufacturing, the predecessor to CIRCUITS ASSEMBLY, and was one the gold standard for technical editing.

I’ve taken a look at his list, and, like last year, found a few discrepancies. For instance, it would appear John is using aggregate company revenue, instead of parsing the financial reports to separate now-EMS sales.

Compared with the CIRCUITS ASSEMBLY Top 50, the top 10 are identical, save for no. 7 and 8. John flip-flops Venture and Elcoteq, which could be due to variations in currency conversion (Venture is Singaporean, Elcoteq is nominally based in Luxembourg).

Like last year, John inflates the position of Universal Scientific, ranking it tenth even though a majority of the firm’s sales come from OEM products, not EMS. Once those non-EMS revenues are subtracted, CIRCUITS ASSEMBLY dropped USI to 18th.

Kudos, however, for finding Japan’s Sumitronics, the offshoot of materials conglomerate Sumitomo. Same goes for Topscom of Hong Kong, which had 2009 sales of $300 million. I’ve never heard of SRI Radio Systems of Durach, Germany. Back to the Internet for me.)

That said, John misses on some biggies. Absent from his list is Team Precision, which had EMS sales of $446 million last year. Ditto Computime (2009 sales: $288 million) and Victron ($250 million).

And Hitachi Computer Products, which ceased EMS operations last month, should have easily made the list.

Military electronics manufacturer DRS Technologies is a consistent placer on the MMI Top 50, although I’ll be cussed if I can figure out whether they actually do EMS work in the traditional sense, or are more like an OEM with a very particular niche.

One oddity: Despite estimated sales of $445 million, France’s Eolane is no. 48. I reckon that’s because John misread the company’s first-half financial statement, mistaking it for a final-year report. (Just a guess.)

Also, Wong’s Electronics and WKK Technology are broken out on the MMI list, although they actually are the same company.

Despite the occasional variation, I love reading John’s work, and always look forward to his list.