Electronics manufacturing services (EMS) willdisappear and be replaced by design manufacturing services (DMS) asEMS providers such as Flextronics and Foxconn Electronics (Hon HaiPrecision Industry) are starting to strengthen their R&Dabilities by recruiting talent in Taiwan, according to Acer founderStan Shih.
Meanwhile, with notebook ODMs are also strengtheningtheir vertical integration with regards to upstream componentsupply to provide more complete and cheaper services to theirclients. In the end the EMS providers and ODMs will all end upbecoming DMS providers, Shih noted.
Therefore, Shih believes Taiwan notebook ODMs willface direct competition from these providers in the future.
Shih also pointed out that in addition tostrengthening R&D capabilities, ODMs and EMS providers willalso need to work on their contact with consumers. He cited theexample of Intel using the Intel Inside mark through its clients'products to gain market recognition from consumers.