Frequently Asked Questions

What is the role of a contract manufacturer in the OEM market?

A contract manufacturer plays a pivotal role in the Original Equipment Manufacturer (OEM) market. They are responsible for producing specific merchandise on behalf of a business. In the realm of computers and general electronics, contract manufacturers produce products in large quantities. The OEM orders these products, brands them with their name, and then sells them to their customers. Notably, contract manufacturers are often large-scale operations, producing some of the most popular merchandise in the business. For example, the Xbox from Microsoft is made by Flex. Ltd., a massive firm with factories worldwide. Other significant contract manufacturers include Sanmina Corporation and Celestica. Unlike Original Design Manufacturers (ODMs) who own the intellectual property for the actual product, contract manufacturers typically use the customers' designs and intellectual property. They have the capacity to produce thousands of products, while ODMs usually focus on fewer categories. Contract manufacturers also provide design assistance and often refer to themselves as Electronics Manufacturing Services (EMS) or Contract Electronics Manufacturing Services (CEMS). They offer a quote for the components based on processes, labor, tooling, and material costs. Once the hiring agency selects a source, the contract manufacturer acts as the hiring agency's factory, producing and shipping goods according to the hiring agency's design.