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Establishment of Electronic Manufacturing Services (EMS)
Electronic manufacturing services (EMS) refers to companies that design, manufacture, test, distribute electronic components and assemblies for original equipment manufacturers (OEMs), and provide return/repair services. This concept is also known as electronic contract manufacturing (ECM).
Electronic Manufacturing Services (EMS) refers to companies that design, manufacture, test, distribute electronic components and assemblies for Original Equipment Manufacturers (OEMs), and provide return/repair services. This concept is also known as Electronic Contract Manufacturing (ECM).
Many consumer electronics are manufactured in China due to lower maintenance costs, material availability, and speed, compared to other countries such as the United States.
The EMS industry began with SCI Systems in Huntsville, Alabama in 1961. The industry saw significant growth in the 1980s; at that time, most electronics manufacturing for mass-produced products was assembled in-house by OEMs. These new companies provided flexibility for smaller businesses undertaking small-batch production and alleviated human resource issues. The EMS industry business model focuses on manufacturing economies of scale, raw material procurement and resource pooling, industrial design expertise, and creating value-added services such as warranty and repair. This allows customers to avoid manufacturing and holding large product inventories. Therefore, they can respond more quickly and efficiently to sudden surges in demand.
The development of surface mount technology (SMT) on printed circuit boards (PCBs) enabled rapid assembly of electronic products. By the mid-1990s, the advantages of the EMS concept became compelling, and OEMs began outsourcing PCB assembly (PCBA) on a large scale. In the late 1990s and early 2000s, many OEMs sold their assembly plants to EMS companies, aggressively competing for market share. This was followed by a wave of consolidation as well-funded EMS companies were able to rapidly acquire existing plants and smaller EMS companies.
During the technology boom of the late 1990s, EMS players frequently acquired assets in high-cost regions. EMS players primarily focused on printed circuit board manufacturing, leaving system assembly to OEMs. EMS companies largely shunned industries outside of information processing (computers) and communications. In recent years, EMS players have shifted production to lower-cost regions; embraced non-traditional industries, including consumer electronics, industrial, medical, and instrumentation; and added significant vertical capabilities, from design and ODM to system assembly, testing, delivery and logistics, warranty and repair, network services, software and silicon design, and customer service.
EMS providers also began offering design services for concept 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 globally distributed, offering numerous advantages. They vary in production capabilities and meet various quality standards and regulatory requirements.
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