Tuesday, June 19, 2012

RIM's Manufacturing Partner Ends BlackBerry Production

Research In Motion accounted for 19 percent of contract manufacturing partner Celestica’s revenue in its last quarter. By the end of this year, it will account for none at all.

Over the next three to six months, Celestica will cease production of the handsets it has been making for RIM, as the struggling BlackBerry maker streamlines its supply chain. A tough break for Celestica, whose long-running contract with RIM and nearly one-fifth of its revenue is now just another casualty of RIM’s plan to trim roughly $1 billion from its operating costs by the end of fiscal 2013.

And for RIM? A necessity. And an inevitability. Celestica mostly produced BlackBerry components for the North American market, a region where BlackBerry sales have declined dramatically. It doesn’t take an Etruscan haruspex to see that cuts were coming, as RIM’S mound of inventory grew and demand for its handsets fell. Supplier consolidation typically follows declines in volume, and that’s precisely what’s going on here.

“We are making changes to our supply chain as part of wider efforts to improve the efficiency and cost effectiveness of RIM’s operations to help meet our strategic objectives and to deliver long-term value to our stakeholders,” RIM said in a statement.

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