Why is OEM PCBA Service Better?

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Electronics manufacturing services (EMS) is a term used for companies that design, manufacture, test, distribute, and provide return/repair services for electronic components and assemblies for original equipment manufacturers (OEMs). The concept is also referred to as electronics contract manufacturing (ECM).[1]

Many consumer electronics are built in China and countries of Southeast Asia, due to maintenance cost, availability of materials, and speed as opposed to other countries such as the United States.[2] Cities such as Shenzhen, China and Penang, Malaysia have become important production centres for the industry, attracting many consumer electronics companies such as Apple Inc.[3] Some companies such as Flex and Wistron are original design manufacturers and providers of electronics manufacturing services.

History

The EMS industry was initially established in by SCI Systems of Huntsville Alabama. The industry realized its most significant growth in the s; at the time, most electronics manufacturing for large-scale product runs was handled by the OEMs in-house assembly. These new companies offered flexibility and eased human resources issues for smaller companies doing limited runs. The business model for the EMS industry is to specialize in large economies of scale in manufacturing, raw materials procurement and pooling together resources, industrial design expertise as well as create added value services such as warranty and repairs. This frees up the customer who does not need to manufacture and keep huge inventories of products. Therefore, they can respond to sudden spikes in demand more quickly and efficiently.[4]

The development of surface mount technology (SMT) on printed circuit boards (PCB) allowed for the rapid assembly of electronics. By the mid-s the advantages of the EMS concept became compelling and OEMs began outsourcing PCB assembly (PCBA) on a large scale. By the end of the s and early s, many OEMs sold their assembly plants to EMSs, aggressively vying for market share. A wave of consolidation followed as the more cash-flush EMS firms were able to buy up quickly both existing plants as well as smaller EMS companies.

Market segments

The global market for Electronics Manufacturing Services (EMS) reached an estimated value of US$504.2 billion in and is projected to grow at a CAGR of 4.94% during the forecast period -, reaching a revised size of US$707.5 billion by .[5] The EMS industry is commonly divided into Tiers by their revenue:[6]

• Tier 1: >$5 Billion
• Tier 2: $500M to $5B
• Tier 3: $100M to $500M
• Tier 4: <$100M

There is no hard rule on the actual revenue designation at this time. Other categories have been suggested by StepBeyond/EMSinsider and CIRCUITS ASSEMBLY: Micro Tier (<$50M); Tier 4 <10m and "Tier Mega" referring to the Big 2, Foxconn and Flex.[citation needed]

Another distinction is drawn between EMS that specializes in High Mix Low Volume (HMLV) and High Volume Low Mix (HVLM). Mix refers generally to the complexity or different models of the PCB assembly. Volume refers to the number of units built, with products like consumer electronics on the high end and prototype, medical electronics or machinery on the low end. Typically, lower Tier EMS provide HMLV and higher Tier provide HVLM.[citation needed]

During technology's late-s heyday, EMS players routinely acquired assets in high-cost locations. EMS players largely focused on printed circuit board fabrication, leaving system assembly to the OEMs. EMS companies largely disdained industries outside the world of information processing (computers) and communications. In recent years, EMS players have shifted production to low-cost geographies; embraced non-traditional industries including consumer electronics, industrial, medical and instrumentation; and added substantial vertical capabilities, stretching from design and ODM through system assembly, test, delivery and logistics, warranty and repair, network services, software and silicon design, and customer service.[citation needed]

EMS has also started to provide design services used in conceptual product development advice and mechanical, electrical and software design assistance. Testing services perform in-circuit, functional, environmental, agency compliance, and analytical laboratory testing. Electronics manufacturing services are located throughout the world and provide numerous benefits.[7] They vary in terms of production capabilities and comply with various quality standards and regulatory requirements.

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E2MS

E2MS (Electronic Engineering Manufacturing Service) refers to the strategy of integrating product development, prototyping and industrialization services into a traditional EMS business, with the aim to harness potential synergies. A typical E2MS offering will start in the design phase, then continue to support the client in development, prototyping, tooling and production all the way to the testing phase, allowing for faster ramp-up as the product is prepared for mass-production up-front.

The term E2MS was first coined by Escatec and has since been adopted by numerous Tier 2 and Tier 3 producers.[8] Larger companies (Tier 1) have gone even further and offered full concept to mass-production and often taking a stake in the intellectual property, becoming more similar to ODM companies.

References

One of the most common practices in electronics manufacturing is the outsourcing of printed circuit board (PCB) assemblies to third party manufacturers. This service saves OEMs a great deal of time and money, as PCB assembly typically requires specialized equipment and experienced staff. By outsourcing the assembly, the OEM won&#;t need to invest in acquiring that equipment or hiring extra staff. Instead, the electronic contract manufacturer, who already has all of those resources in place, can perform the operations for them.

Outsourcing PCB assembly has many other benefits as well. Typically, electronic manufacturers have a supply chain in place that the OEM can take advantage of, getting better pricing for components and materials that might have cost extra otherwise. Also, the OEM doesn&#;t have to designate any manufacturing space in their own facility to install the equipment necessary for PCB assembly. The space that would have been needed can instead be used for their own operations.

Another benefit of outsourcing PCB assembly is the ability to get a product with a much higher level of quality. Electronic manufacturers specialize in these types of services, and they have the experience to identify and correct potential issues in design or production, as well as the necessary equipment to produce PCBs efficiently. They will also be well versed in the quality standards that these components have to meet, and will have the capability to build them to those standards.

In addition, electronic contract manufacturers are set up to produce these assemblies with better efficiency compared to the OEM. They have the staff, the equipment, and the system in place to manufacture and assemble PCBs with quick turnaround times. Not only that, but they&#;ll have the experience necessary as well to monitor the production process and identify and correct issues if they arise.

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