Electronic Contract Manufacturing

Electronic Contract Manufacturing (ECM) is a is term used for companies that offer contracts for electronic assembly for another company. For instance, instead of attempting to manufacture complex circuit boards themselves OEM companies often outsource their manufacturing operations to ECM companies. In effect Contract manufacturing providers do not post their brand name on any product, and both design and the brand name belongs to the OEM.

The birth of the CM industry was marked by IBM's entry into the PC market in 1981, which started a trend to outsource what was considered outside core competence. This sparked a feedback cycle of outsourcing, giving the ECM companies a way to obtain better economies of scale. Also, many OEMs sold off their production units to ECMs. For instance Swedish telecommunications manufacturer Ericsson sold seven plants in Sweden to Flextronics and Solectron in 1997. It is believed that this development has in general led to a shift in market power from OEMs to large ECMs, and has led to a rapid centralization of the CM industry. The key ECM companies today are Foxconn, Solectron, Flextronics, Sanmina-SCI, Celestica, EE Technologies and Jabil Circuit, mainly operated from North America and Taiwan.

As ECMs grew larger, many of them developed into EMS (Electronic Manufacturing Service) companies to offer a broader spectrum of services in addition to manufacturing. Today the trend continues even further, with many EMS becoming what is caller Original Design Manufacturers, offering complete electronic products for companies such as Wal-Mart, skipping the OEMs all-together.

See also

• Electronics Manufacturing Services
• Solectron

Vertically Integrated Example hunterpcb.com Hunter Technology[[1]]

External links

• Electronics contract manufacturing: Global production and the international division of labor in the age of the Internet