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Electronics Production | December 05, 2008

OEMs producing consumer electronics consider more outsourcing

Today less than 15% of the consumer electronics equipment is produced by different EMS companies. According to Adam Pick, analyst at iSuppli, OEM companies will review their strategy. Should they produce the products in-house or outsource to EMS companies - all decisions connected to the global economic slowdown.
According to Adam Pick at iSuppli, OEM companies will either tighten their manufacturing or cut back capacity to clear their balance sheet . Most of them will focus more on their own core business. OEM companies that are producing consumer electronics have so far been slow to outsource in this downturn, reports Purchase. However this might change and they will outsource for the same reason as other OEMs did before.

According to Mr Pick, the same thing happened in 2001, when many communications OEMs decided to reduce or stop with the internal manufacturing. As a consequence, many companies sold their production facilities to different EMS companies - thus being able to use the EMS companies for manufacturing. Today, EMS giants like Foxconn, Flextronics, Jabil and Celestica have a very strong presence in the consumer business, while other EMS companies may not be able to handle the large volume requirements.

Image source: Incotex

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