Electronics manufacturing services
Encyclopedia
Electronic manufacturing services (EMS) is a term used for companies that design, test, manufacture, distribute, and provide return/repair services for electronic component
s and assemblies for original equipment manufacturer
s (OEMs). The concept is also referred to as electronic contract manufacturing (ECM).
The EMS industry took off after the late 1970s when Solectron
was established. At the time, most electronics manufacturing for large-scale product runs was handled by in-house assembly. These new companies offered flexibility and eased human resources
issues for smaller companies doing limited runs. The business model
for the EMS industry is to specialize in large economies of scale
in manufacturing, raw materials procurement
and pooling together resources, industrial design expertises as well as create added value services such as warranty and repairs. This frees up the customer who does not need to manufacture and keep huge inventories of products. Therefore they can respond to sudden spikes in demand more quickly and efficiently.
By the 1990s the advantages of the EMS concept became so compelling that many established electronics firms started selling their assembly plants to established EMS players. A wave of consolidation followed, as the more cash-flush firms were able to quickly buy up both existing plants as well as smaller EMS companies. Today the market is dominated by a handful of companies such as Hon Hai Precision Industries (Foxconn
), Flextronics
, Celestica
, Sanmina-SCI, Jabil, Elcoteq
, Benchmark Electronics
, Vanguard EMS, Inc., Plexus
, Mara Technologies, Kimball Electronics Group, ESCATEC, Electronic Systems Inc. in Sioux Falls SD, and a few dozen others, several thousand smaller companies continue to occupy EMS niches.
During technology's late-1990s heyday, EMS players routinely acquired assets in high-cost locations. EMS players largely focused on printed circuit board
fabrication, leaving system assembly to the OEM
s. And EMS companies largely disdained industries outside the world of information processing (computers) and communications. In recent years, EMS players have shifted production to low-cost geographies; embraced non-traditional industries including consumer electronics
, industrial, medical and instrumentation; and added substantial vertical capabilities, stretching from design and ODM through system assembly, test, delivery and logistics
, warranty and repair, network service
s, software and silicon design, and customer service.
EMS have also started to provide design services used in conceptual product development advice and mechanical, electrical and software design assistance. Testing services perform in-circuit, functional, environmental, agency compliance, and analytical laboratory testing. Electronic manufacturing services are located throughout the world. They vary in terms of production capabilities and comply with various quality standards and regulatory requirements.
Electronic component
An electronic component is a basic electronic element and may be available in a discrete form having two or more electrical terminals . These are intended to be connected together, usually by soldering to a printed circuit board, in order to create an electronic circuit with a particular function...
s and assemblies for original equipment manufacturer
Original Equipment Manufacturer
An original equipment manufacturer, or OEM, manufactures products or components that are purchased by a company and retailed under that purchasing company's brand name. OEM refers to the company that originally manufactured the product. When referring to automotive parts, OEM designates a...
s (OEMs). The concept is also referred to as electronic contract manufacturing (ECM).
History
SCI (then Space Craft Inc.; now Sanmina-SCI) is generally credited for being the first major EMS / contract assembly company in North America.The EMS industry took off after the late 1970s when Solectron
Solectron
Solectron Corporation was a global electronics manufacturing company for original equipment manufacturers . It pioneered the electronics manufacturing services industry in 1977 and was a leader in the field...
was established. At the time, most electronics manufacturing for large-scale product runs was handled by in-house assembly. These new companies offered flexibility and eased human resources
Human resources
Human resources is a term used to describe the individuals who make up the workforce of an organization, although it is also applied in labor economics to, for example, business sectors or even whole nations...
issues for smaller companies doing limited runs. The business model
Business model
A business model describes the rationale of how an organization creates, delivers, and captures value...
for the EMS industry is to specialize in large economies of scale
Economies of scale
Economies of scale, in microeconomics, refers to the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer’s average cost per unit to fall as the scale of output is increased. "Economies of scale" is a long run concept and refers to reductions in unit...
in manufacturing, raw materials procurement
Procurement
Procurement is the acquisition of goods or services. It is favourable that the goods/services are appropriate and that they are procured at the best possible cost to meet the needs of the purchaser in terms of quality and quantity, time, and location...
and pooling together resources, industrial design expertises as well as create added value services such as warranty and repairs. This frees up the customer who does not need to manufacture and keep huge inventories of products. Therefore they can respond to sudden spikes in demand more quickly and efficiently.
By the 1990s the advantages of the EMS concept became so compelling that many established electronics firms started selling their assembly plants to established EMS players. A wave of consolidation followed, as the more cash-flush firms were able to quickly buy up both existing plants as well as smaller EMS companies. Today the market is dominated by a handful of companies such as Hon Hai Precision Industries (Foxconn
Foxconn
The Foxconn Technology Group is a multinational business group anchored by the Hon Hai Precision Industry Co., Ltd. , a Taiwan-registered corporation headquartered in Tucheng, Taiwan...
), Flextronics
Flextronics
Flextronics International Ltd. is an electronics manufacturing services provider that offers services to original equipment manufacturers . It also provides supporting supply chain services, including packaging and transportation throughout the world, as well as design and after-sales...
, Celestica
Celestica
Celestica Inc. is a multinational electronics manufacturing services company headquartered in Toronto, Canada. Celestica’s global manufacturing network comprises more than 40 locations in 11 countries in the Americas, Europe and Asia, supplying a wide variety of leading OEMs...
, Sanmina-SCI, Jabil, Elcoteq
Elcoteq
Elcoteq SE is a Finnish contract manufacturer, EMS, and ODM company headquartered in Luxembourg. The company filed for bankruptcy protection in Luxembourg on October 6 2011....
, Benchmark Electronics
Benchmark Electronics
Benchmark Electronics Inc is an EMS, ODM, and OEM company based in Angleton, TX. It provides contract manufacturing services.-History:Initially a subsidiary of Intermedics, a medical implant manufacturer, Benchmark was sold to Electronic Investors Corporation in 1986.The company made an IPO in...
, Vanguard EMS, Inc., Plexus
Plexus Corporation
Plexus Corp , is an Electronics Manufacturing Services provider to the wireline/networking, wireless infrastructure, medical, commercial and defense/security/aerospace industries. With headquarters in Neenah, Wisconsin, Plexus has engineering and manufacturing facilities in China, Malaysia,...
, Mara Technologies, Kimball Electronics Group, ESCATEC, Electronic Systems Inc. in Sioux Falls SD, and a few dozen others, several thousand smaller companies continue to occupy EMS niches.
During technology's late-1990s heyday, EMS players routinely acquired assets in high-cost locations. EMS players largely focused on printed circuit board
Printed circuit board
A printed circuit board, or PCB, is used to mechanically support and electrically connect electronic components using conductive pathways, tracks or signal traces etched from copper sheets laminated onto a non-conductive substrate. It is also referred to as printed wiring board or etched wiring...
fabrication, leaving system assembly to the OEM
OEM
OEM means the original manufacturer of a component for a product, which may be resold by another company.OEM may also refer to:-Computing:* OEM font, or OEM-US, the original character set of the IBM PC, circa 1981...
s. And EMS companies largely disdained industries outside the world of information processing (computers) and communications. In recent years, EMS players have shifted production to low-cost geographies; embraced non-traditional industries including consumer electronics
Consumer electronics
Consumer electronics are electronic equipment intended for everyday use, most often in entertainment, communications and office productivity. Radio broadcasting in the early 20th century brought the first major consumer product, the broadcast receiver...
, industrial, medical and instrumentation; and added substantial vertical capabilities, stretching from design and ODM through system assembly, test, delivery and logistics
Logistics
Logistics is the management of the flow of goods between the point of origin and the point of destination in order to meet the requirements of customers or corporations. Logistics involves the integration of information, transportation, inventory, warehousing, material handling, and packaging, and...
, warranty and repair, network service
Network service
Network services are the foundation of a networked computing environment. Generally network services are installed on one or more servers to provide shared resources to client computers.- Network services in LAN :...
s, software and silicon design, and customer service.
EMS have also started to provide design services used in conceptual product development advice and mechanical, electrical and software design assistance. Testing services perform in-circuit, functional, environmental, agency compliance, and analytical laboratory testing. Electronic manufacturing services are located throughout the world. They vary in terms of production capabilities and comply with various quality standards and regulatory requirements.