EMS Plays Green Card

Other analysts agree that there are opportunities for companies in the EMS sector to benefit from the transition, especially those that are prepared and known for execution.

"The [EMS] industry could drive increased service-related revenues as customers look for assistance in working through the blocking-and-tackling of the transition process," JPMorgan analyst Tom Dinges wrote in a recent note. He also noted that limited market-share gains for better-prepared companies seem likely.

Still, Dinges said in an interview that he doesn't see RoHS compliance as a "tipping point" for the EMS industry but as one of many reasons an OEM might decide to outsource. He said it also provided opportunities for the companies to grow in new markets last year.

JPMorgan has an investment-banking relationship with Benchmark, Jabil and Solectron (SLR), another EMS provider.

Needham's Kugele wrote that he still expects "some scrambling" ahead of the imminent deadline, and that investors will continue to hear about compliance and industry issues for the next 12 to 18 months.

With that in mind, he recommends that clients focus on the "best-executing players in our universe" such as Jabil, Plexus and Benchmark. Needham has an investment-banking relationship with Plexus and Benchmark.

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