Jabil Circuit reportedly plans to enter the notebook and smartphone manufacturing businesses, as the company recently started headhunting talent from Taiwan- and China-based notebook and smartphone players, and hiring engineers through its subsidiary Green Point, according to sources from the upstream supply chain.

Jabil is a global top-three EMS provider with headquarters in Florida, the US and revenues reaching US$17.1 billion in its fiscal 2012. The company has branches in 33 countries worldwide and over 165,000 employees. In 2006, the company spent NT$30 billion (US$1 billion) to acquire handset chassis maker Green Point.

Although most notebook brand vendors are still sending out requests for quotation (RFQ) for their 2014 models, so far notebook ODMs have not yet seen Jabil showing up to compete for orders, and expect the US-based maker to only have a limited effect on their shipments in the short term. However, they will continue to keep an eye on Jabil's moves, the sources said.

Some ODMs pointed out that Jabil may be more interested in the smartphone manufacturing business since its subsidiary Green Point has reportedly landed chassis orders for Apple's entry-level iPhone, and is now trying to land manufacturing orders for the smartphone. Foxconn is also the US-based maker's major headhunting target, the ODMs added.

Since both notebook and smartphone manufacturing businesses only yield limited gross margins currently, most players are surprised by Jabil's actions, while some believe that the company is trying to respond to the US government's requests to return manufacturing back to the country.

The sources pointed out that this is not the first time an EMS provider has tried to enter the notebook manufacturing industry. Since EMS providers have strong advantages in terms of in-house component supplies, players such as Foxconn Electronics (Hon Hai Precision Industry) and Flextronics both tried to enter the industry before.

However, because of issues over quality, which raised their production costs, both Foxconn and Flextronics have already stepped out of the business. With the possible entry of Jabil, some ODMs are concerned that a new wave of price competition may arise.

By: DocMemory
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