Nokia pulls back from third-party manufacturing arena

nokiaAccording to iSuppli, the world's largest mobile handset brand Nokia is stepping out of the third-party manufacturing arena, and will thereby spend $5 billion on the manufacturing of handsets.

Citing weak global demand for mobile devices as the reason for stopping the use of outside contract manufacturers for the assembly of its phones, Nokia said it will pull back outsourced production to Electronics Manufacturing Service (EMS) providers and Original Design Manufacturers (ODMs).

As per Reuters' 2008 data, almost seventeen per cent of Nokia's manufacturing was outsourced to Original Equipment Manufacturers (OEMs). The outsourced mobile phone engines included phone and software, which facilitate the company's basic operations, to providers like Foxconn International Holdings, BYD, Elcoteq and Jabil Circuit.

The decision to draw back from outside contract manufacturers would help Nokia reassess its projections for 2009; more so as the company is presently standing at a 9.9 percent retrenchment in comparison to the 2008 figures.

The iSuppli EMS/ODM chief analyst Adam Pick, talking about the recent Nokia move, said: "Amid the global economic recession and slowing sales of mobile handsets, Nokia in recent months had begun the process of shifting some of its assembly operations away from contract manufacturers and back inside the company. However, this announcement clearly illustrates just how severe the situation in the mobile handset market really is!"

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