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The insider: contract manufacturing opportunities in the United States.
Subject:
Contract manufacturing (Forecasts and trends)
Contract manufacturing (Market research)
Computer industry (Forecasts and trends)
Computer industry (Market research)
OEMs (Original equipment manufacturers) (Forecasts and trends)
OEMs (Original equipment manufacturers) (Market research)
Author:
Cavazos, Jessy
Pub Date:
11/01/2011
Publication:
Name: EE-Evaluation Engineering Publisher: NP Communications, LLC Audience: Trade Format: Magazine/Journal Subject: Business; Electronics; Engineering and manufacturing industries Copyright: COPYRIGHT 2011 NP Communications, LLC ISSN: 0149-0370
Issue:
Date: Nov, 2011 Source Volume: 50 Source Issue: 11
Topic:
Event Code: 010 Forecasts, trends, outlooks; 240 Marketing procedures Advertising Code: 34 Research Findings Computer Subject: Computer industry; Microcomputer industry; OEM; Market trend/market analysis; Marketing research
Product:
Product Code: 3573100 Computers NAICS Code: 334111 Electronic Computer Manufacturing SIC Code: 3571 Electronic computers
Geographic:
Geographic Scope: Brazil; Mexico; United States Geographic Code: 3BRAZ Brazil; 1MEX Mexico; 1USA United States

Accession Number:
272486036
Full Text:
Over the past 20 years, test and measurement vendors have seen contract manufacturers (CMs) become an increasing part of their customer base. Electronic CMs, in particular, have grown tremendously as original equipment manufacturers (OEMs) shifted their manufacturing activity over to them and as they expanded their value proposition to design and test.

"Twenty years ago. CMs were build-to-print assembly houses while today they provide a lot more value-added services including product design and test development. As a result, our interaction and level of business with CMs have grown." explained Jack Rozwat, general manager for the Electronic Measurement Group in Latin America at Agilent Technologies.

Although originally started in the computer industry, contract manufacturing now is an inherent part of any industry. How-even while the computer and telecommunications infrastructure industries are heavily penetrated, this is not the case in industries such as medical and industrial.

"Growth sectors going forward include automotive, with the transition toward greener vehicles, smarter navigation systems, and infotainment systems; the solar industry; and the LED industry, which has significantly increased over the past few years with the advent of OLEDs," said Lavanya Rammohan, research analyst for the Electronics Manufacturing Equipment Group at Frost & Sullivan, There is buzz around the renewable energy industry, especially solar, as CMs are building products for alternative energy.

While the contract manufacturing market is global in nature and growing in emerging markets like Latin America and particularly Brazil and Mexico, there still is significant contract manufacturing being done here at home. Industries that are IP-sensitive or deal with more complex products, such as medical, aerospace, and energy, are key areas where a relatively large amount of contract manufacturing occurs in the United States.

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The other positive trend in the contract manufaeturin market in the United States is the expansion of CMs into design as OEMs want CMs to take more responsibility for design and test. "We work very closely with many of these companies" said Richard McDonell. Americas marketing senior group manager at National Instru ments. "Some companies have built standardized test systems based on our products. If a customer comes to them with a product to manufacture and doesn't have a tester that they want them to use, CMs can make recommendations. It's part of their value-add to help customers with testing."

Developing engineering service offerings is a key area of focus for CMs. As such, test and measurement vendors are experiencing more interaction with CMs. especially for functional testing. This is turning out to be quite challenging because it requires intimate knowledge of the products.

While requirements from OEMs and CMs are quite similar, CMs more acutely focus on the reuse of assets. Most have management teams that work with test suppliers to maximize their return-on-test assets, and many of them will move these assets siloballv to reuse them.

As such, a test solution that can be used for multiple OEM customers is ideal. However, this is more difticult to do for functional test since the solution is much more tied to the end product. This doesn't mean it cannot be accomplished.

One company that has successfully done so is Benchmark Electronics, which created and deployed a standard tester leveraging PXI instrumentation and software. This not only benefited test developers and production users but, more importantly, translated into savings for customers by using available test capacity as opposed to developing an entirely new test solution.

by Jessy Cavozos, Industry Director, Frost & Sullivan
Gale Copyright:
Copyright 2011 Gale, Cengage Learning. All rights reserved.