What is Electronics Contract Manufacturing

Electronics contract manufacturing is the outcome of the global electronics industry development and regional differences. It means having electronics/electrical hardware manufactured by a third-party manufacturer instead of the brand owner. The brand owner, also called the end terminal company, is the client, while the third-party manufacturer is the original equipment manufacturer (OEM).

Working Mode of Electronics Contract Manufacturing

Electronics contract manufacturing is custom and includes printed circuit board (PCB) fabrication, PCB assembly, custom electronic component manufacturing, electronic component sourcing, and box-build assembly.
Usually, the end terminal company remains its research and development as well as brand marketing, and the OEM manufacturer or electronic contract manufacturer completes the electronic manufacturing according to the client’s design and manufacturing.
But some OEMs with research and development capabilities can also take part in the project design phase with their client. For example, the one-stop advanced PCB/PCBA manufacturer can help their client reduce the fabrication from the perspective of an optimum PCB design and solve issues in the developing phase.
Usually, electronic contract manufacturers build their factories in developing countries with rich and cost-effective labor resources and good business environments, such as China and Vietnam. While their clients are spread around the world. Their clients don’t have to build factories and hire workers from local, which may cost much more and slow the efficiency.
Besides, without the burden of manufacturing lines in the electronics contract manufacturing mode, end terminal companies can easily upgrade their technology and launch new products.

Electronics Contract Manufacturers

Most end-terminal companies in the world choose electronics contract manufacturing to have their products manufactured because it saves time and facility and labor costs to the best degree. For example, Apple work with the electronics contract manufacturers Foxconn, Pegatron, Quanta, Wistron, Compal, Inventec, Flex, and other for the production of many modules of iPhone, iMac, iPad, and iWatch.
The above-mentioned electronics contract manufacturers are tremendous scale manufacturing cooperations in the world. They not only work for Apple but also for Intel, Microsoft, IBM, Sony, Dell, Huawei, Cisco, NVIDIA, Amazon, LG, Samsung, etc. They target clients with bulky and long-term orders as well as high value-added so that they can make profits as much as possible.
How about the middle and small scale end terminal companies? And those research scientific institutes and business makers? Who can be a reliable electronics contract manufacturer for them with high-quality assurance and at transparent and fair prices?
If you need custom manufacturing of electronic components, such as weird-shaped parts and military-grade parts, PCBONLINE can contact component factories in Shenzhen to manufacture them for you.

Electronics Contract Manufacturing Trends in 2022

2022 is the third year since the outbreak of Covid 19. This year, the world witnessed the Russian-Ukrainian War that has continued for 7 months and global inflation. Plus, the electrical and electronics world has seen IC shortage and rising fees for raw materials and shipping since early 2019.
In 2022, due to the Covid epidemic and the Russian-Ukrainian war, the global demand for consumer electronic products, such as smartphones, is shrinking. According to Canalys, the volume of smartphones manufactured around the globe in the first quarter of 2022 was 311.2 million, which is 11% less than in the same period last year.
Though the demand shrinks this year, electronics manufacturers are looking forward to the boom in the short future and expanding their manufacturing capabilities.
According to IC Insights, the semiconductor manufacturing industry increases by 24% more investments in 2022 than in 2021. Especially, TSMC put in 42 billion US dollars in expanding semiconductor manufacturing capabilities, which is 40% more than in 2021.
The trends in electronics contract manufacturing are automotive intelligence, photovoltaic, industrial automation, and AIoT. Demand increases in these fields encourage semiconductor manufacturers to expand their manufacturing capabilities.
Automotive intelligence: with the development of high power charging and advanced driving assistance system, vehicles are getting more and more electrical, and hybrid electric vehicles and electric vehicles have already been put on the global market and gained success. According to Statista, the global automotive electronics market value was about 220 billion US dollars, and it is estimated to be 400 billion US dollars in 2028.
Photovoltaic: through IGBTs used for photovoltaic are still in shortage, the PV inverter market value in 2025 is expected to reach 100 billion US dollars with an average growth rate of 6% to 8% from 2021 to 2025.
Industrial automation: industrial controls are getting smarter, and the demand for industrial controls have been increased in recent years.
AIoT: artificial intelligence of things (AIoT) boosts the rapid growth of the smart home market. In 2021, the smart home market value was 25 billion US dollars, and it is estimated to reach 39.6 billion US dollars in 2024.

Conclusion

Electronics contract manufacturing is custom and benefits end terminal companies. Electronics contract manufacturers don’t compete with their clients, and you can stay comfortable and profitable by having electronics manufactured in the electronics contract manufacturing mode.