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I spent last week in Shenzhen. Traffic is still terrible.
We operate with one preferred, one approved back up, and an approved specialist factory. We visit all as necessary or at minimum, annually. This means we get an update on a fairly good cross section of mood, capability, and technical direction.
Of course, this time of year everyone is excited getting ready for the annual new year celebration with family. This is so important to them that the government allows toll free travel on the toll roads, and so important to the companies that they endure the challenge of managing customer’s needs to get shipments out before everyone departs, and then the subsequent challenge of big backlogs to chew through during the later half of February.
Aside from CNY, the mood is cautious optimism. While everyone is suffering some from the domestic slow down, the export market is holding up and has some particular bright spots in LED lighting and RF applications.
I think the big news comes in two arenas.
First, we will see costs come down this year. Part of it is our buying power from increased volume, but also some anticipated currency adjustment.
Second, all three factories have facility expansion plans afoot for the year as a part of their capital improvement plans. New buildings, added automation, and equipment upgrades.
To us this is critical, because if you are not moving forward you are falling behind. We are moving forward. Even if we are moving very slowly in traffic.