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Electronic Manufacturing Services is the
unambiguous term that describes the services provided by companies that design, test, manufacture, distribute and provide return & repair services for electronic components and assemblies for Original Equipment Manufacturers (OEMs). #EMS
Original Equipment Manufacturers is the
most confusing term. Originally it means the big brands (HP, IBM, etc) that contract the EMS providers to manufacture for them. Over time in Asia it has become the synonym for the EMS providers (Foxconn, Pegatron, etc) as well. #OEM
Following the confusing Asian logic
of calling EMS providers "OEMs", more advanced EMS providers that are able to design final products for OEM Clients (HP, IBM, etc) are called Original Design Manufacturer (ODM). #ODM
Contract Manufacturer is our preferred
terminology as it describes exactly what the startups want from the manufacturers. Note that this does not prevent the confusing terms "OEM/ODM" to show up in your conversations with Asians. #CM
MOST HARDWAREENTREPRENEURS ARE ONLY FAMILIAR
WITH THINGS IN THEIR OWN COMFORT ZONE AND LACK GLOBAL VIEW, MAKING THEIRPROTOTYPESUNPRODUCIBLE “ ”FRÉDÉRIC WETS Industry and process expert, Usine IO Formerly with Scentys and L'Oréal
WE FIND THAT YOU ARE
GONNA END UP WITH HUNDREDSOF FACTORIES THAT ARE LIKELY NOT QUALIFIED “ ”SCOTT MILLER Formerly VP of Engineering at iRobot Founder and CEO of Dragon Innovation General Partner of Bolt Partners * A video interview with Scott is included in SCHOOL
PEBBLE VISITED SHENZHEN SIX TIMES
IN 2012 WITH ITS KICKSTARTER ORDER OF 70,000 WATCHES BUT NO CM TOOK THEM SERIOUSLY “ ”TERRY CHENG Former VP of Foxconn Group & CEO of Foxconn FIH Former senior executives at HP and Texas Instruments
EVEN STARTUPS FROM TAIWAN, WHICH
SHARE THE SAME LANGUAGE AND SIMILAR CULTURE WITHCHINA GET BURNED IN SHENZHENSOMETIMES “ ”JERRY YANG Formerly with Qualcomm, 13 years of semiconductor R&D experiences in Taiwan,Silicon Valley and Paris, 4 years as an entrepreneur with key clients from JAPAN, TAIWAN and CHINA
“ ”BEN EINSTEIN Founder &
General Partner at Bolt Partners Quoted from Medium post "Polygamy and Hardware" TOO OFTEN STARTUPS TREAT CMs LIKE SERVICE PROVIDERS: “JUST MAKE THE DAMN THING AND I’LL PAY YOU.” WRONG. CMs CONTROL THE PRICE, SCHEDULE, AND QUALITY OF YOURPRODUCT. THEY’RE INVESTING MASSIVE AMOUNTS OF TIME AND RISK IN THE HOPE THAT YOU’LL BE THE NEXT BIG PRODUCT.
#REALITYcheck in Shenzhen there are
more than 1,000 IP-Cam contract manufactures, many of which make profit from component sourcing and supplierkickback in addition to manufacturingcontracts
“ white-label products with the
same design appeared on TAOBAO.com before we even received our order ” “ manufactures refused to return the molds to us after we terminated our OEM contract with them ” #HORRORstories
#TAIWAN-CHINA • Most large EMS
providers are Taiwanese, but have their factories in China • Most ICs and turn-key modules (BT, WiFi, etc) that HW startups use are from US and Taiwan • Turn-key solution was invented by Mediatek and popularized byMStar and Realtek, all Taiwanese IC design houses • Around 1.5-2M Taiwanese work and live in China, out of the total population of 23M
#CANTON The Cantonese speak Cantonese,
not Mandarin.Today GuandongProvince has 106M people, most of which speak Cantonese. #CHINATOWN Most of the Chinatowns aroundthe world were built by Cantonese immigrants. The Chinese Food that most westerners know is actually Cantonese.
Why not go in-land? I
heard thatlabor in SHENZHEN is getting more expensive. Isn't it true that Foxconn has factoriesall over the mainland China?
#WHYnot In-land EMS companies might
have lower labor costs, but they usually take much larger orders and naturally have longer lead time till FOB #WHY SHENZHEN has a huge amount of small CMs with a very dynamic and flexible supply chain. It also benefits from the tax codes of Special Economic Zones (SEZs)
$10B+ FOXCONN, QUANTA, PEGATRON, FLEXTRONICS,
COMPAL, WISTRON, JABIL, INVENTEC $0.5-3B Overall capability and qualityof services as good as the elephants, justwith lower volumes. $15-50M Expert EMS firmsin Shenzhen & Dongguan founded bypeople formerly with the elephants & the lions
Request for Quotation is the
official request form you send out to the multiple CMs that you selected out of all CM candidates, which you believe could manufacture your products with the quality and in the time/cost structure you want ... #RFQ
Minimum Order Quantity is the
minimum quantity required by a CM for an order. The CM needs this MOQ for the fixed cost (setup cost, transaction cost, etc) to be spreaded out. MOQ varies from 1k~10k somewhat based on unit price (BOMcost). #MOQ
Freight On Board is literally
the status where the CMs send your finished goods on-board of the sea freights for shipping. The CMs usually quote its production time (e.g. 180 days) as between the release of your final design database and FOB. #FOB