For years, many OEMs have outsourced manufacturing to reduce cost. Now they are outsourcing design for the same reason. That's the reason original design manufacturers (ODM) continue to enjoy double-digit annual growth and why many electronics manufacturing services providers have beefed up their design expertise. (see story p. 38)

EMS providers are building their design capabilities because of the ODMs that will design a product using its own design or with licensed intellectual property. They will also manufacture the product for the OEM and ship it to the OEM's end customers. Often they will sell the same product to multiple OEMs.

However, the ODM will also manufacture a product based on the OEM's design or just provide design help if that's what the OEM wants.

Many major EMS providers have had design expertise for years, but not at the same level as ODMs. Most EMS design efforts have involved design for manufacturability. However, OEM buyers involved in outsourcing decisions can expect EMS companies to offer many of the same services as ODMs.