_The Global Information and Communications Technology Industry: Where Vietnam Fits in GVCs_ Manufacturing plus product design services are known collectively as original design manufacturing (ODM) services. Most large ODM contract manufacturers are based in Chinese Taipei, with manufacturing now concentrated in China. These firms have historically focused on producing for lead firms in the personal computer (PC) industry. Because manufacturing process technology, especially at the circuit board level, is quite generic, EMS contract manufacturers can aggregate business from lead firms in many electronics subsectors. Design expertise is far less generic, however, which explains why ODM contract manufacturers have historically been confined to the PC industry (Sturgeon and Lee 2005), and more recently, mobile phone handset industries, where design is driven at the component level by platform leaders such as Intel and Qualcomm.

**Table 3. Top-Five Electronics Contract Manufacturers Different Regions, 2013**

|**Chinese Taipei, China**|**Primary service**|**Profit as % of Revenue**|**Revenue (USD Million)**|
|---|---|---|---|
|Foxconn/Hon Hai|EMS|2.72%|136,024|
|Quanta Computer|ODM|2.17%|30,300|
|Pegatron|ODM|1.50%|29,867|
|Compal Electronics|ODM|0.36%|23,840|
|Wistron|ODM|1.28%|18,577|
|North America||||
|Flextronics(U.S. & Singapore)|EMS|1.18%|23,569|
|Jabil Circuit(U.S.|EMS|2.79%|18,337|
|Sanmina-SCI(U.S.)|EMS|1.34%|5,917|
|Celestica(Canada)|EMS|2.04%|5,796|
|Benchmark Electronics (U.S.)|EMS|4.43%|2,506|
|Other locations||||
|Cal-CompElectronics(Thailand & Chinese Taipei)|EMS|0.44%|3,982|
|Shenzen Kaifa Technology (China)|EMS|1.06%|2,412|
|Venture(Singapore)|EMS|4.57%|2,330|
|SIIX(Japan)|EMS|1.49%|2,387|
|Universal Scientific Industrial(China)|EMS|4.42%|2,312|

_Source:_ Digitimes (Chinese Taipei, China) and company annual reports _Note:_ EMS = electronic manufacturing services; ODM = original design manufacturing (services) Despite their differences, both the EMS and ODM contract manufacturing segments have been characterized by rapid growth and geographic expansion, making them key actors in electronics GVCs. For example, contract manufacturers now purchase the bulk of the world’s electronic components, albeit on behalf of their lead firm customers. Even with large market shares in specific product segments (for example, ODM contract manufacturers produce more than 90 percent of the world’s notebook computers), their market power (and profitability) has generally remained low because they are highly substitutable. In fact, the electronics contract manufacturing sector has long been characterized by intense competition, low profitability, and dramatic consolidation, even as it has experienced rapid growth (see the third column of Table 3).

Whatever the competitive battles and complementarities that have emerged among developed and developing country suppliers, the most important change is that increasing supplier capability is allowing lead firms to implement global production strategies in ways that were unimagined 20 years ago. Sustained efforts by the largest lead firms to expand and consolidate their sourcing networks have helped to create a new class of huge ‘global suppliers’. Suppliers that have developed ‘full package’ capabilities can now provide one-stop shopping for lead firms seeking regional and global supply-chain solutions. This new class of supplier has internalized many of the most difficult and costly aspects of cross-border integration such as logistics, inventory management, and the day-to-day management of factories (Sturgeon and Lester 2004).

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