Outsourced manufacturers have been witnessing new challenges in the manufacturing of mobile handsets, mainly due to smartphone dominance which has overturned earlier models of design and production outsourcing, according a report by iSuppli.
In addition, handset brands that have conventionally relied more on outsourced manufacturers for lower-end feature phones are now focusing on internal production for their smartphones, ultimately challenging outsourced manufacturers.
IHS iSuppli Global OEM Manufacturing & Design market tracker report revealed that in 2012, most mobile phones were made in-house by original equipment manufacturers, over mobile phones produced by outsourced manufacturers.
During the year, in-house OEMs accounted for 73.4% of all mobile phones produced in 2012, down from 74.5% in 2011, mainly due to Apple’s move to continue to outsource iPhones manufacturing to electronic manufacturing services (EMS) providers.
EMS providers were responsible for 19.6% of global mobile phone production, reporting a decline from 20.1% registered in 2011, over BlackBerry’s dull performance in the smartphone segment.
However, original design manufacturers (ODM) reported a 7% rise in shares during 2012 compared to 5.5% in 2011. IHS anticipates that by 2016, in-house OEM handset production would capture 72.1% share, compared to EMS share of 21.1% and ODM with 6.7% share.
According to the report, OEMs have been scaling back their deployment of outsourced manufacturers as many struggling brands look to optimise product portfolios toward smartphones.
