Pan Pacific Symposium Conference Proceedings


ARE OEMS BECOMING OBSOLETE AS MANUFACTURERS?

Authors: Randall Sherman
Company: New Venture Research Corp.
Date Published: 1/25/2000   Conference: Pan Pacific Symposium


Abstract: As startling as the title of this paper may be, original equipment manufacturers (OEMs) are in fact becoming increasingly obsolete as electronic manufacturing services (EMS) companies become increasingly competent and experienced in managing the manufacturing supply chain. Stop and consider for a moment how the world of electronics manufacturing has changed over the last decade. Several trends (among many) have become apparent which include:

 Dominance and evolution of surface mount manufacturing techniques

 Pressure to accelerate time-to-market for new products

 Advances in integration of components, packages and scale

 Increase capital equipment costs and expertise for assembly

 Erosion of profit margins and average selling prices

 Pronounced trend by OEMs to outsource printed circuit board (PCB) and box assemblies

While there are many other trends in the world of electronics product manufacturing to point out, these are the dominant ones that have served to restructure the industry as we know it today. Because of this, electronic products have become one of the strongest growing market sectors of all industries over the past decade contributing significantly to the gross domestic product of individual countries and personal fortunes of millions of people. The trends indicated above have acted as an economic engine, lowering cost, improving productivity and driving the industry forward toward a fundamental change and reorganization. The question naturally becomes, will this change continue and what will be the new model in the next millennium?



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