iSuppli: Outsourcing to be limited for mobile phone OEMs

DigiTimes picks up an iSuppli press release that states "although mobile phone OEMs are expected to outsource a significant portion of their production to contract manufacturers over the next few years, they still will keep the majority of manufacturing in house."

iSuppli predicts that By 2009, "mobile handset OEMs will outsource 44% of their production to Electronics Manufacturing Services (EMS) and Original Design Manufacturing (ODM) providers, up from 34% in 2005." This is still in sharp contrast to the PC market, where most manufacturing is outsourced.

Jeffrey Wu at iSuppli said, "It is unfeasible that the percentage of outsourced manufacturing for mobile phones will be as high as that for PCs. Many leading mobile phone OEMs are expanding their production capacity, and consequently will attempt to keep manufacturing in house in order to ensure high utilization."

Wu believed the "OEMs’ manufacturing strategies and outsourcing approaches will limit the role of ODMs in the handset industry to serving product niches, such as smart phones and third-generation phones, or to focusing only on commoditized product categories"

According to iSuppli, the level of outsourcing varied widely among OEMs and cited Sony Ericsson being the top user of contract manufacturing with nearly 66% of its production outsourced. "At the other end of the spectrum are the South Korean OEMs, which produce nearly all of their mobile phones in house."