PCs Gone, Flextronics Tries M&M

Having jumped out of the PC ODM and camera modules markets, Flextronics is rushing headlong into the lower-volume but higher margin territory of M&M: military and medical.

The world’s second-largest EMS company today snatched up Stellar Microelectronics, another California-based manufacturer whose current run rate is about $100 million in revenue. (Given the relatively small size of Stellar, Flextronics did not have to disclose what it paid.)

It’s a little late to the party. Automotive has been going gangbusters for a year, and military and aerospace programs might actually start slipping.

Still, Flextronics is clearly banking on its size and financial strength as leverage to force its way into the M&M markets. It booked $300 million worth of new business in those areas over the past nine months, and expects growth in excess of 15% in that area in the coming year. Flextronics has set a a target operating margin of 4% (currently, the company is closer to 3%), and COO Paul Read told a Goldman Sachs investors conference that the company hopes to generate some 30% of its revenue from higher margin product in the coming years (up from 20% today). Given its size and ability to jump in and out of end-markets, Flextronics is becoming something of a General Electric of the EMS space.

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About Mike

Mike Buetow is editor-in-chief of Circuits Assembly magazine, the leading publication for electronics manufacturing, and PCD&F, the leading publication for printed circuit design and fabrication. He is also vice president and editorial director of UP Media Group, for which he oversees all editorial and production aspects. He has more than 20 years' experience in the electronics industry, including six years at IPC, an electronics trade association, at which he was a technical projects manager and communications director. He has also held editorial positions at SMT Magazine, community newspapers and in book publishing. He is a graduate of the University of Illinois. Follow Mike on Twitter: @mikebuetow