The OEM industry will continue the growing path. The OEM industry is expected to grow from $613 billion in 1999 to $1.1 trillion in 2004, an annual growth rate of 9.1%. Outsourcing is not generalized for all OEM's. Japan is a largest OEM to assemble PCB in house like Hitachi, Sony and others. In US HP was the largest outsourcer of PCB assembly with IBM aggressive outsourcing company. Many firms will continue to successfully manufacture all of their product line, but this will succeed as a strategy only in certain situations. For example, it appears that for many high-volume consumer electronics products (Television, VCR's, camcorders) that maintain a number of electromechanical parts and absolutely low end-user costs, vertical integration may prevail as the most cost-effective model.
All the intellectual property is now moving onto silicon. You can make a cell phone on a chip. You can make a router on a chip.
Every product is on a trajectory of becoming silicon surrounded by plastic. As this move occurs, more design is no longer a competitive advantage. Design can begin to be a commodity. So brand companies might as well buy the designs for their products off the shelf. Companies like Flextronic are developing a capability to design and make products cheaper than anyone.
The medical instrumentation is the new industry to fast pace outsources the assembly of PCB's. Many new medical instrumentation use a lot of CEM, although the more established companies prefer to perform the entire product assembly in-house. The Computer Industry is by far the leading OEM worldwide, follow by Communications, Consumer, and Commercial. With the expansion of silicon on all products more quickly the EMS model developed by Flextronics will expand to other markets.
One of the first non electronic market to move to EMS is...