A lot has changed in contract manufacturing over the last ten years, according to Dietmar Guenther executive vice president of operations for Europe, Middle-East and Africa at electronics manufacturing services (EMS) provider Sanmina Corp. (San Jose, Calif.).
"The traditional EMS company focused on manufacturing, bill-of-materials (BoM) optimization and certification meanwhile we are focused beyond pure manufacturing with more design work and technology selection and supply chain management," Guenther said.
One could argue that the most obvious thing to happen is the rise of one contract manufacturer, Hon Hai Precision Industries otherwise known as Foxconn, to become almost a household name as the manufacturer of consumer electronics for Apple, amongst others.
"I am not sure that is part of a trend. They are the leading consumer manufacturer with more than 1 million employees but they are an extreme case. Sanmina is differentiated from Foxconn. We don't do very high volume. We were in PC but we divested that business. We focus on leading-edge technology and go beyond manufacturing in terms of design and after-sales support," said Guenther.
Sanmina was founded in 1980 in Silicon Valley and has grown organically and by acquisition. It employs approximately 45,000 people worldwide and had revenue of $6.4 billion in its 2016 fiscal year.
Guenther explained that 15 and more years ago a lot of EMS companies grew by acquiring manufacturing assets from their clients who wished to relieve themselves of the capital intensity of manufacturing. That trend has largely washed through the industry. There are still some strategic investments but it also means that EMS companies need to find other places to add value. That can be in design or by lowering cost through increased use of automation in manufacturing, Guenther said.
And with digitalization of so many products there is a lot of design to be done.
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