The terms “OEM” vs “EMS provider,” “CEM,” “ODM,” and “CMO” refer to the different kinds of companies involved in the electronics manufacturing value chain. Although they are all different, the terms are frequently confused and misused. Let’s define them all and outline the critical differences between them and the roles they play within the electronics manufacturing sector.
What's the difference between OEMs vs EMS, CEMs, ODMs, CMOs?
These different abbreviations apply to the various kinds of companies that operate in the electronics manufacturing value chain. They all have different roles in the industry, but sometimes their functions and capabilities can overlap.
This table helps clarify the strategic differences and overlapping services amongst these key players in the electronics manufacturing ecosystem:
| OEM | EMS | CEM | ODM | CMO | |
| Primary role | Designs products sold under its brand | Manufactures electronic components/products for OEMs | Like EMS, focuses on electronics manufacture | Designs and manufactures products to be rebranded | Manufactures on behalf of another brand (spans various sectors) |
| Design responsibility | Full design control | May support DFM/DFT, but design provided by OEM | OEM provides design | Owns design, offers products as white-label | OEM/client provides design, may offer improvements |
| Manufacturing capabilities | Often outsources | High-capacity, complex electronics assembly | PCB assembly and testing | Full manufacture capabilities | Varies; typically sector-specific capabilities |
| Intellectual Property (IP) | Retains full IP ownership | IP remains with OEM | IP remains with OEM | Owns IP unless otherwise agreed | IP remains with client unless co-developed |
| Product branding | Under OEM’s brand | Under OEM’s brand | Under OEM’s brand | Rebranded by client | Under client’s brand |
| Time-to-Market | Slow due to design and compliance | Fast, with scalable resources | Fast, efficient for mature products | Fast, ready-to-market solutions | Depends on complexity and compliance |
| Cost control | High design investment, variable production costs | Economies of scale lower costs | Cost-effective for standardised products | Low upfront cost for client, fixed pricing | Controlled via agreements; depends on project scope |
| Scalability | Resource-dependent | Highly scalable manufacture footprint | Moderate scalability | Scalable for selected designs | Typically scalable based on client needs |
| After-sales services | Provides or outsources | Often includes logistics, repair, warranty | Limited post-production services | Rarely involved | Contract-dependent; some support full lifecycle |
| Supply chain management | Self-managed or outsourced | End-to-end management offered | Partial—component sourcing & assembly | Manages own supply chain for design-based products | Managed in coordination with client |
| Examples | Apple (product design) | Foxconn (makes Apple products) | Asteelflash, Zollner | Quanta (white-label laptops) | Lonza (pharma), Flex (electronics) |
What is an OEM?
An OEM, or “Original Equipment Manufacturer,” could design and market complete "turnkey" products for its customers or just certain subsystems or components. In the latter example, an OEM offers components or subsystems that another company then resells as part of its end product.
However, the 'M' in OEM is often a misnomer, as many OEMs don't manufacture their own products. While they design most of their products and own the 'rights' to them (i.e. the intellectual property), they increasingly outsource all or part of their manufacturing to third parties such as EMS providers. In doing so, many OEMs focus solely on product innovation and development.
What is an EMS provider?
An EMS (Electronic Manufacturing Services) provider is the generally accepted term for a contract manufacturer in the electronics sector. These providers typically not only make products for OEMs but also offer a wide array of value-added services, such as:
- Initial ideation and design
- DfX (Design for Excellence)
- Supply chain management
- Configure-to-order
- Outbound logistics
- Repair and rework
EMS companies can be huge. In fact, in the so-called "Tier 1" environment, they are multi-billion-dollar businesses in their own right. So it’s no surprise they manufacture some of the world’s best-known products, like Apple’s iPhone, HP printers, and many other famous branded products.
While these suppliers often make "Top 10" lists, they specialise in manufacturing high-volume, low-complexity products and, as a result, demand multimillion-dollar spending levels. This is why much of the world's consumer electronics ship from their factories.
However, for OEMs that design and sell low- to medium-volume, often complex products in sectors outside consumer electronics, such as medical devices, Tier 1 suppliers may not be the most appropriate fit. Instead, OEMs are encouraged to take an alternative view of the EMS horizon and find the most suitable supplier for their business model and product range.
What is a CEM?
Contract Electronics Manufacturers, or CEMs, make products under contract for other companies. They typically take on, wholly or partially, the manufacturing responsibility for OEMs in the industrial, defence, oil and gas, test and measurement, computing, instrumentation, communications and transportation sectors.
Thousands of different products are manufactured each week by CEMs, which are then usually branded with the OEM's name and sold out by the OEM to its customer base.
What is an ODM?
ODM stands for Original Design Manufacturer. An ODM is similar to a contract electronics manufacturer, but they typically own the IP for the product itself, while regular contract electronics manufacturers use their customers' designs and IP. In addition, CEMs often produce a vast array of products across multiple markets, whereas ODMs typically specialise in a small number of specific product types.
What is a CMO?
A CMO (Contract Manufacturing Organisation) or CDMO (Contract Development and Manufacturing Organisation) typically provides a comprehensive suite of services to pharmaceutical and biotech companies. These services range from early-stage formulation development to commercial production, and include everything in between, such as stability studies, clinical trials, method development, and scale-up.
What sets CDMOs apart from traditional contract manufacturers is that they also offer development as a standard part of their services. CDMO customers expect not only competitive pricing but also regulatory compliance, flexible production capabilities, and reliable on-time delivery.
These firms were pivotal in ramping up the speed of development, production, and distribution of the COVID-19 vaccines. In fact, COVID-19 drew attention to the importance of third-party CMO expertise in helping specialist, cutting-edge companies meet sudden surges in demand. Their ability to accelerate and scale up drug design and manufacturing cycles saved the world from years of more fatalities and lockdowns.
OEMs vs EMS: The key differences
OEMs are ORIGINAL Equipment Manufacturers. They own the product IP and are focused on R&D and market expansion. Conversely, EMS partners like ESCATEC are the design, manufacturing, supply chain, and logistics experts, focused on helping OEMs fast-track their design process and scale production to conquer new sectors and markets.
1. Assembly equipment
OEMs often have surface-mount equipment that takes longer to set up but is faster to run. They may also have dedicated build cells and production lines for each product in their range. EMS companies, on the other hand, must offer more agility. They will invest in equipment that supports much faster changeovers and programming that gives them added flexibility, but may run at reduced rates.
2. Time-to-market
An OEM designs its own products and, therefore, has an established portfolio of products to sell. As a result, the frequency of new products it releases into the marketplace is typically low. If it is currently building the products in-house, then there is no real need to share build documentation with a third-party supplier.
Compare this with an EMS working with a wide range of OEMs across multiple markets. They will frequently be asked to deliver "new" products for their customers. As a result, the NPI process for EMS companies is much more refined and robust, as the volume and completeness of data they manage will vary significantly between the different customers and products they manufacture.
3. Supply chain and testing expertise
EMS companies typically manufacture for multiple customers, producing various products, resulting in the need for a much broader and more global supply chain. Similarly, the variety of PCB assemblies and "box build" products that EMS companies have to design test solutions for means that they often have a greater breadth of experience than OEMs' engineers.
Therefore, OEMs and EMS companies differ in their priorities, core skills, and the levels of utilisation of their manufacturing resources. The length of time required for an OEM to recoup these investments is usually much longer, making a compelling case for outsourcing to an EMS provider.
Why do OEMs outsource manufacturing?
So, why do some of the world’s most successful companies outsource their manufacturing?
Take Apple, for example. Still one of the world’s most valuable companies, its product design capabilities and end-to-end industry knowledge are about as good as it gets. Yet it still chooses to outsource.
Apple has acknowledged that external partners often offer more agility and cost-effectiveness in resolving specific manufacturing problems. By outsourcing production to expert EMS providers, Apple accesses external strengths in expertise like Design for Manufacture (DfM) and Design for Sustainability (DfS). These partnerships allow them to optimise component integration, enhance recyclability, and improve repairability – all while Apple engineers remain focused on high-level innovation and user experience.
While Apple represents a high-profile, high-volume case, the same principles apply to the low-to-medium, medium-to-high volume and complexity sector. Success still hinges on strategic focus – letting in-house teams concentrate on IP and differentiation, while experienced manufacturing partners manage execution with precision.
Conclusion
OEMs considering outsourcing their manufacturing should be reassured that there are EMS companies that can do everything they can, but can often do it better, more consistently, and more efficiently.
Because of the extended range of products and markets EMS providers have to service, and the expertise and experience this creates, their breadth of knowledge can add value right across an OEM’s business.
Are you looking for an EMS partner? Get our practical guide to outsourcing your electronics manufacturing or contact our team of experts today.
Editor's note: this post was originally published in 2018, and updated in June 2025 for accuracy.
