More TV makers will outsource to EMS providers and ODMs

Increased outsourcing by major television OEMs may result in tighter electronics manufacturing capacity

By Jim Carbone -- Purchasing, 8/20/2008 12:51:00 PM

Buyers at computer and communications OEMs may find their companies competing for manufacturing capacity with Asia television makers.

Asian television OEMs will outsource more production over the next several years to electronics manufacturing services (EMS) providers and original design manufacturers (ODMs). About 41.1% of liquid crystal display televisions will be produced by EMS providers in 2012, up from about 28% in 2007, says researcher iSuppli.

“The major Asian LCD-TV brands, which traditionally have been loath to outsource LCD-TV production, said the use of contract manufacturing could help them to improve risk mitigation and asset flexibility during a time of economic uncertainty,” says Jeffrey Wu, senior analyst, EMS and ODM Services for iSuppli.

Companies like Sony, Samsung and Sharp which have maintained tight control over product design, supply-chain management and manufacturing operations, are now looking to gain financial and operational leverage from EMS providers and original design manufacturers.

The companies expect to increase television shipments by as much as 80% over the next several years and will use manufacturing partners rather than increase production capacity.

OEMs are concerned that internally managed production facilities might sit on idle capacity if consumer demand fails to catch up. Outsourcing would also help them avoid capital expenditures.

Also see: Growth rate for electronics outsourcing to slow