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
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
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
"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
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
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