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Electronics Production | March 24, 2009

What is an ODM company?

In the world of electronics contract manufacturers, acronym use is abundant. Terms like OEM, EMS, OBM and ODMs are used - often incorrectly - without proper definition. For this reason, iSuppli has attempted to standardize such terms, including the popular use of the acronym "ODM."
To understand what an Original Design Manufacturer (ODM) is, first consider what it is not:
1. An ODM is not a brand. ODMs, like Quanta Computer, Compal Electronics, Wistron and Inventec do not sell products on the open market under their own brand names.
2. An Original Design Manufacturer (ODM) business model is different than electronics manufacturing service providers (EMS) like Sanmina, Celestica, Elcoteq.
3. An ODM does not typically manufacture electronics products for low volume, high mix niche product categories – medical, industrial, aerospace, defense.

In creating an ODM definition, now consider the activities of this unique type of electronics contract manufacturer often performs for its clients.
1. Original Design Manufacturers assemble electronics systems primarily in high volume markets including notebook computers, handsets, LCD televisions, entry-level networking gear and multi-media devices (MP3 player).
2. Unlike EMS providers, ODMs are typically responsible for providing the research and development resources (R&D) needed to design electronics systems.
3. Although they prefer not to, ODMs will, at times, be liable for inventory.
4. ODMs will adjust their standard designs to accommodate the needs of their OEM customers (the “Go Build It” approach).
5. ODMs will brand and distribute their systems on behalf of their OEM customers.

The largest ODM customers are Hewlett-Packard, Dell Computer, Sony Ericsson, Philips, Nokia and Motorola. The ODM market has been one of the fastest growing verticals in the electronics marketplace. The top 10 Original Design Manufacturers have seen their sales soar from $9 billion in 1999 to over $100 billion is 2008, states iSuppli.

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