Electronics Manufacturing Services

Electronics Manufacturing Services (EMS) is a term used for companies that design, manufacture, test, distribute, and provide return/repair services for electronic components and assemblies for original equipment manufacturers (OEMs). The concept is also referred to as Electronics Contract Manufacturing (ECM). Many consumer electronics are built in China, due to maintenance cost, availability of materials, and speed as opposed to other countries such as the United States. Cities such as Shenzhen and Penang have become important production centres for the industry, attracting many consumer electronics companies such as Apple Inc. Some companies such as Flex and Wistron are Original design manufacturers and providers of Electronics manufacturing services. The EMS industry was initially established in 1961 by SCI Systems of Huntsville Alabama. The industry realized its most significant growth in the 1980s; at the time, most electronics manufacturing for large-scale product runs was handled by the OEMs 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 expertise 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. The development of Surface Mount Technology (SMT) on printed circuit boards (PCB) allowed for the rapid assembly of electronics. By the mid-1990s the advantages of the EMS concept became compelling and OEMs began outsourcing PCB assembly (PCBA) in large scale. By the end of the 1990s and early 2000s, many OEMs sold their assembly plants to EMSs, aggressively vying for market share. A wave of consolidation followed as the more cash-flush EMS firms were able to buy up quickly both existing plants as well as smaller EMS companies.