Original design manufacturer

An original design manufacturer (ODM) is a company that designs and manufactures a product, as specified, that is eventually rebranded by another firm for sale. Such companies allow the firm that owns or licenses the brand to produce products (either as a supplement or solely) without having to engage in the organization or running of a factory. ODMs have grown in size in recent years and, as of 2015, many have the scale to handle production in-house for the products that are branded by the buying firm. This is in contrast to a contract manufacturer (CM).

This model is especially used in international trade, where a local ODM is used to produce goods for a foreign company that sees some advantage in the transaction, such as low labor-inputs, transport links or proximity to markets. Innovative and/or patented technologies developed/owned by the ODM are another cause for this product distribution model. ODM models are also used where local ownership-laws possibly prohibit direct ownership of assets by foreigners, allowing a local firm to produce for a brand company - either for the domestic market or for export.

This type of business is part of "outsourcing". For example: Compal Electronics makes notebook computers and monitors, and operates as a mass producer for numerous brand companies, assisted by low labor-costs, low-cost transport, and the near-commodity nature of the physical inputs (in Compal's case, computer components). As of 2011, Taiwanese ODMs made ninety-four percent of all notebook computers.[1]Some companies such as Flex and Wistron are both ODMs and providers of Electronics manufacturing services.

Post-2016 Nokia phones (HMD) is an example of a firm which relies on ODMs. In late 2019, it switched from relying on only one ODM to multiple ODMs.[2]

Intellectual property

ODMs create their own intellectual property and are very proactive in patenting it. Most of their patents are filed in the US, China, and Taiwan.

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See also

References
  1. "Global and China Laptop and Tablet PC Industry Report, 2011-2012". Retrieved 2012-09-10.
  2. https://nokiapoweruser.com/despite-sales-decline-nokia-phones-business-saw-its-1st-positive-earnings-ebit-in-q4-2019/
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