SCI SYSTEMS, INC.

  • Overview

Sanmina means to be a top contract manufacturer of sophisticated electronic components. It designs and makes printed circuit boards and board assemblies, backplanes and backplane assemblies, enclosures, cable assemblies, optical components and modules, and memory modules. In addition, the company provides services such as design and engineering, materials management, order fulfillment, and in-circuit testing. It serves OEMs in the health care, defense, medical, aerospace, telecommunications, and technology industries, among others. Because its customers' base production is in lower-cost regions, more than 80% of sales come from outside the US.

Geographic Reach

Sanmina has 75 facilities in 25 countries on six continents. The company's largest geographic segment is China, which represents more than a quarter of sales. Mexico accounts for more than 24% of sales, followed by the US (18%).

Operations

In late 2012 Sanmina divided its business into two operations. Integrated Manufacturing Solutions (IMS; 78% of total 2013 sales) makes printed circuit board assembly and test, optical, and radio frequency modules. Components, Products, and Services (CPS; 22% of sales) makes its interconnect systems and mechanical systems components in addition to memory and storage products and other services.

Sales and Marketing

The company supplies OEMs primarily in the communications networks, defense and aerospace, industrial and semiconductor systems, medical, multimedia, computing and storage, automotive and clean technology sectors.

Alcatel-Lucent accounted for 10% of the company's sales in 2013; Sanmina's top 10 customers together generate half of sales.

Financial Performance

After reporting two straight years of growth, Sanmina posted an 8% and 3% drop in revenues in 2012 and 2013, respectively.  Sales to customers in its computing and storage and multimedia end markets decreased significantly from 2012 to 2013 primarily as a result of reduced demand from existing customers and the wind-down of certain customer programs. In 2013 this decline was partially offset by growth in its services business within the industrial, defense, and medical markets.

Sanmina's net income decreased by 56% in 2013 over 2012 due to lower revenues and an increase in research and development costs, higher provision for income taxes, and other expenses.

Strategy

Operating in a highly cyclical industry, the company is continually restructuring in order to provide more cost-efficient products to its customers.

Its strategy includes extending its technology capabilities; building customer partnerships; moving into diverse end markets; pursuing strategic transactions; and cutting costs.

In order to reduce costs and exert greater control over production, the company follows suit with its customers, locating its components plants in lower-cost regions, while its final system assembly plants sit near customers and their end-markets. It continues to eye regions such as Latin America, Eastern Europe, China, Southeast Asia, and India for opportunities to keep its manufacturing costs down. Restructuring initiatives over the past several years include closing or consolidating facilities, moving manufacturing plants to lower-cost regions, and terminating employees.

Company Background

Two investment entities each own 10% of the company: Invesco and Donald Smith & Co.

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SCI SYSTEMS, INC.


13000 Memorial Pkwy Sw
Huntsville, AL 35803-6000
Phone: 1 (256) 882-4800
Fax: 1 (256) 8824466
www.sci.com

STATS


  • Employer Type: Unknown
  • Chief Executive Officer: Anthony Loveltte
  • Chairman: Alberto Paniagua
  • Chairman: Edmund Yuen

Major Office Locations

  • Huntsville, AL
  • Huntsville, AL

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