The soaring popularity of media tablets such as Apple Inc.'s iPad means big business to contract manufacturers based in Asia. Such companies build nearly nine out of every 10 tablets sold—a percentage that is expected to increase, according to a new report.
Outsourced manufacturers were responsible for 87.5 percent of tablet production in 2011, according to a global manufacturing and design report by market research firm IHS iSuppli. That number is expected to grow to 89.2 percent this year, with only 10.8 percent of tablets built in-house by branded electronics companies, according to the report.
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While consumers flock to tablets carrying the logos of the likes of Apple and Amazon, not all realize that the devices are built on a contract basis by the likes of Hon Hai Precision Industry Co. Ltd.—which does business under the trade name Foxconn—Quanta Computer Inc. and others, IHS said.
"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," said Jeffrey Wu, senior analyst for OEM at IHS, in a statement.
According to Wu, there are several reasons companies like Apple and Amazon choose the outsource the building of their tablets, including faster time to market, leveraging of capabilities for firmware development and hardware integration, and flexibility that translates into lower expenses and reduced headcount.
IHS projects that the percentage of tablets built by contract manufacturers will grow to 91.1 percent by 2015, before sliding back to 90.4 percent in 2016.