The term refers to companies that offer a complete range of services for producing electronic assemblies and products. These services often encompass design, manufacturing, testing, distribution, and repair. A business needing to bring a new electronic gadget to market, but lacking in-house production capabilities, might utilize this type of provider.
The significance of this business model lies in its ability to streamline the development and manufacturing process, thereby reducing capital investment and time-to-market for original equipment manufacturers (OEMs). Its prevalence has grown with the increasing complexity of electronic devices and the demands of global supply chains, contributing to a more agile and specialized manufacturing landscape. Historically, it emerged as a response to the increasing outsourcing trends within the electronics industry, allowing companies to focus on core competencies such as research and development, marketing, and sales.