New Sony CEO Could Mean More Outsourcing

Filed in archive Outsourcing News on March 27, 2005

Sony's new chief executive is expected to outsource more of the company's electronics manufacturing to tier 1 providers. Newly appointed, Howard Stringer, said that changes may be coming, indicating that he would push for more outsourcing in the notoriously "do-it-ourselves" electronics company.

Research firm IDC said that Sony would likely outsource to large companies that are already in business with them. However, analysts also said that there are no guarantees that current suppliers will gain the most from Sony's extensive outsourcing. They predicted that China would be the likely beneficiary of any future outsourcing.

Sony is undergoing a restructuring plan that will cut fixed costs by $3.25 billion through operations streamlining and job Cuts. At present, Sony outsources production of its cell phones, PS2 game consoles, and laptop PCs. The company manufactures many of its products like screen printers, placement machines and AOI.

Additionally, "analyst Piper Jaffray estimated that if Sony's outsourced all its electronics manufacturing last quarter, it would have added $14.5 billion to the EMS sector."