Bookmark and Share


Although media tablets sport the logo of a familiar brand name like Apple or Amazon, there’s a 90% chance the device was actually made by a company with a much less famous moniker, such as Hon Hai or Quanta. The vast majority of tablets actually are made by contract or outsourced manufacturers based in Asia, according to an IHS iSuppli. The percentage of tablets made by outsourced manufacturers is set to rise this year and beyond.

Contract Makers Enjoy Tablet Craze

Outsourced manufacturers in 2011 were responsible for 87.5% of tablet production, compared to 12.5% that were made in-house. The percentage of outsourced tablets this year is expected to increase to 89.2%, with the portion claimed by in-house production projected to decline to 10.8%, as shown in the figure below. The years after that will see the share by outsourced manufacturing of tablets remain in the low 90% range, hitting a high of 91.1% by 2015 before settling back down at 90.4% in 2016.

For other tablet brands like Samsung and Motorola that choose in-house production, their share of tablet manufacturing is not expected to exceed the 12.5% that the collective in-house space saw in 2011. Share of in-house production in the years ahead will stay in the 9 to 10% range, IHS  predicts, as ODMs and EMS providers battle fiercely among themselves for an increasing stake in the hotly contested tablet business.

“The high percentage of outsourced manufacturing of tablets reflects the choice among tablet brands and original equipment manufacturers - even ones as big as Apple - to refrain from in-house production. Tablet brands use outsourcing for many reasons, including faster time to market; the leveraging of capabilities, especially for firmware development and hardware integration; and asset flexibility that translates into reduced corporate expenditures and lower headcount,” said Jeffrey Wu, senior analyst for OEM at IHS.

The biggest contract manufacturer of tablets is Apple partner Hon Hai, of Taiwan, also known as Foxconn. Hon Hai accounted for 62% of tablet shipments last year. The company’s position in the tablet space is unique, not only because it accounts for the majority of tablet shipments in 2011, but also because of its close relationship with Apple.


Hon Hai is an EMS provider, a type of outsourced manufacturer that generally does not participate in designing product but simply offers manufacturing and supply chain management services. EMS providers for the most part control a smaller piece of the outsourced manufacturing space for computing products like notebook PCs - traditionally dominated by a rival group of makers known as original design manufacturers (ODM), which enjoy an advantage over EMS providers by being able to design products and offer manufacturing services alike. In the tablet production space, however, ODMs are the underdogs.

Hon Hai, with Apple as its main client, holds the coveted right to make the iPad, the industry’s best-selling tablet by a wide margin. The ODMs have then been left to scramble for what remains of the tablet market - making rival devices for the likes of Barnes & Noble, Amazon and Asus, none of whose product offerings matches the iPad’s soaring sales and unequalled clout.

With the emergence of Android, and soon Windows-based tablets, ODMs will have a better chance of breaking Hon Hai’s near-impregnable hold on the market. If the Android and Windows tablets prove successful, ODMs could see their share of the tablet outsourcing market grow, expanding to as much as 53% by 2016, on the assumption that consumers will embrace iPad alternatives.

ODMs also have concerns about their prospects in future tablet production. Most ODMs make notebook PCs as well, and choosing to produce tablets for other clients could mean endangering their own stake in the PC market - much as tablets are now eating into the share traditionally enjoyed by notebook computers among consumers. ODMs also face potentially higher operating expenses and risks with the emergence of more tablet platform options - signified by the rise of Android and Windows - which would involve additional research and development costs in order for ODMs to maintain technical capabilities on those fronts.

Hon Hai, the current champion among tablet producers, is likewise not entirely free of peril. Should Apple shift some of its tablet production to other contract manufacturers in an effort to diversify its contract manufacturing base, Hon Hai could suffer a blow.

Tags: Apple, Foxconn, Samsung, ASUS, Google, Android, Windows 8, Windows RT, Microsoft, Motorola


Comments currently: 0

Add your Comment

Related news

Latest News

Monday, April 14, 2014

8:23 am | Microsoft Vows to Release Xbox 360 Emulator for Xbox One. Microsoft Xbox One May Gain Compatibility with Xbox 360 Games

Tuesday, April 1, 2014

10:39 am | Microsoft Reveals Kinect for Windows v2 Hardware. Launch of New Kinect for Windows Approaches

Tuesday, March 25, 2014

1:57 pm | Facebook to Acquire Virtual Reality Pioneer, Oculus VR. Facebook Considers Virtual Reality as Next-Gen Social Platform

1:35 pm | Intel Acquires Maker of Wearable Computing Devices. Basis Science Becomes Fully-Owned Subsidiary of Intel

Monday, March 24, 2014

10:53 pm | Global UHD TV Shipments Total 1.6 Million Units in 2013 – Analysts. China Ahead of the Whole World with 4K TV Adoption

10:40 pm | Crytek to Adopt AMD Mantle Mantle API for CryEngine. Leading Game Developer Adopts AMD Mantle

9:08 pm | Microsoft Unleashes DirectX 12: One API for PCs, Mobile Gadgets and Xbox One. Microsoft Promises Increased Performance, New Features with DirectX 12

3:33 pm | PowerVR Wizard: Imagination Reveals World’s First Ray-Tracing GPU IP for Mobile Devices. Imagination Technologies Brings Ray-Tracing, Hybrid Rendering Modes to Smartphones and Tablets

2:00 pm | Nokia Now Expects to Close Deal with Microsoft in Q2. Sale of Nokia’s Division to Close Next Month