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Japan's OEMs Look to Outsource
October 17, 2007 |Estimated reading time: 1 minute
EL SEGUNDO, Calif. Japanese OEMs, though still reluctant to use contract manufacturers (CMs) for electronics, LCD, and related assembly, are being forced to focus more on product design and marketing to maintain leadership in certain markets, according to iSuppli's briefing on vertical markets for Japan's OEMs. EMS providers and original design manufacturers (ODMs) could benefit from Japan's major OEMs divesting manufacturing operations to attain cost and time-to-market efficiencies, said Adam Pick, principal analyst for EMS and ODM, iSuppli.
Japan's consumer electronics, LCD TV, wireless, and gaming electronics OEMs have traditionally maintained tight control over supply chains, intellectual property (IP), and manufacturing, which prevented them from outsourcing to EMS/ODM companies, iSuppli contends. Some companies have looked for an outsourcing model, however, said Dan Hawtof, VP of professional services, iSuppli. SIIX, a Japan-based EMS provider, manufactures for OEMs in communications, automotive, consumer, and audio OEMs. Celestica partnered with Panasonic to manufacture flat-panel televisions, and Toshiba has bolstered mobile PC capabilities with Compal, iSuppli reports.
These moves could have resulted from declining market share for Japan's OEMs over the past 36 months, as vertical manufacturing has lessened their value to the international market, said Pick. He suggests that the OEMs will find new markets and regain prominence in traditional areas if they invest in product design and divest manufacturing to outsourcing partners.
iSuppli will host "Advancing Competitiveness with EMS/ODM Strategies" on Japan's electronics manufacturing industry in Tokyo. For details, see our Events page or visit www.isuppli.com.