OEM products or brands: What are they and why do companies use them?

Companies, in the vast majority of cases, are not in charge of producing their own products: they usually go to other corporations with the aim of having them produced. Thus, what is known as OEM and they are not, neither more nor less, that you are second companies behind the vast majority of technology products that come into our hands. In today’s article we bring our focus closer to knowing, a little better, what are OEMs.

What are OEMs?

As we have pointed out in the opening paragraph, the OEMs are the “shadow” companies that other companies turn to in order to supply the vast majority of their technology products. A fairly illustrative example of what an OEM is can be found at Apple. The technology giant makes use of OEMs since it is not in charge of producing its own products, but rather sends the design of its parts to Samsung or TSMC with the aim of having them generated. As soon as these second companies receive the exact formulation of the component in question, they produce it and send it back to Apple so that it can sell it to its customers.

It is interesting to note that these types of methods are very common within the technology sector, getting large companies such as NVIDIA, AMD or Apple greatly reduce their production costs, at the same time that, on the side of the production companies, they have the possibility of dedicating themselves to more than one business and can obtain the precise products at more competitive prices.

OEMs make the final product cheaper

Abbreviations OEM are literally translated as Original Equipment Manufacturer (Original Equipment Manufacturer): this definition refers precisely to the niche of companies such as TSMC, which is dedicated to generating the products that other large corporations require for their final products.

This entire production chain makes it possible to lower the prices of the products that reach the stores, and we explain the reason: if a company has a factory of its property with the exclusive objective of producing its devices, it requires specific expenses to its maintenance and management, with the logical consequence of an increase in costs, so that the final price of the product rises. However, a company (either assembler or producer) that is dedicated to the manufacture of technological components on a large scale for various companies, will enable the production of parts and components to a much more competitive price which will lower costs and lead to a cheaper final product.

The MDGs: Sellers of Complete Designs

On the other hand, it is also possible to find other types of companies whose mission is produce own designs and sell them to other brands that, once they are yours, They will give them their own name. At this point we can take the example of ARM, which is in charge of designing its architecture and makes a profit by selling it to processor manufacturers.

This type of corporation is called ODM, whose acronym in English Original Design Manufacturer give an exact idea of ​​its function and are translated, literally, as Original design manufacturer. Thus, companies like Thermaltake use this type of business method, so that they are dedicated to acquiring already manufactured products and only add their brand, in this way, the buyer can buy the products of this company at cheaper prices.

OEM products or brands

Corporations such as HP, Dell, Acer or Lenovo are also susceptible to receiving this term, since they are in charge of selling computers already assembled using components from other companies, although the truth is that they have rather little OEMs. We could say, better, that they function as original product assemblers.

In short, OEMs play an essential and very common role in the technology sector; in fact, so much so that, when one of them presents some kind of problem, a huge number of companies are affected, as was the case in 2000 with the failure of millions of capacitors in equipment of various brands.

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