ODM competition driving margin erosion

By Staff

Competition among electronics ODMs in Taiwan remains fierce. Its to the point today margins have remained tight since 2017. No longer are OEM customer new product launches, regardless whether they contain complex features, are able to insulate ODMs against margin erosion as ODMs compete for new business.

Average net margin of Taiwanese EMS providers and ODMs

Some ODMs, and EMS providers, are losing their pricing competitiveness more so than others.

This benefits OEM customers when in RFP/RFQ phases and selecting manufacturing partners — depending on ODM market being served, OEM product type, and product design and manufacturing location needed in the OEM supply chain. Read more on locations, markets, and margins here.

Hon Hai (Foxconn), Wistron and others are particularly facing pressure.

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Whether ODM industry rationalizes depends on several factors but ODM/EMS industry capitulation many have spoken for years is not likely to happen anytime soon.

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