The case for contract manufacturing

Some years ago every Original Equipment Manufacturer (OEM) designed, built, tested and serviced all of their own products. They bought equipment that became obsolete quickly, hired people who had to be laid off during production slumps and leveraged their futures on unproven products. As the electronics industry changed, OEMs realized the industry was moving too quickly for them to keep up with every aspect of the products' life cycle. As the industry changed, Contract Manufacturing (CM) started its growth. Originally, OEMs used CMs to balance workloads, lower operation costs and avoid capital expenditures. The CMs were mostly considered low-tech "board stuffers", used by the OEMs for "peak shaving" their production schedules. But today's modern CMs are involved in every aspect of the OEMs' product from silicon to customer delivery.