What will be the impact of the trend toward outsourced design in the electronics industry?
Design no longer is a competitive advantage. Design is a commodity. Yet design in big companies is just as inefficient as manufacturing and supply-chain management used to be. So brand companies might as well buy the designs for their products off the shelf. A big electronics company may have 10,000 designers, but maybe only 50 are doing real architecture for new products. Some of them will go down to 300 engineers. It’s going to get ugly. The electronics manufacturing services [EMS] and the Taiwanese ODMs [original design manufacturers, meaning they design as well as assemble what they produce on a contract basis] will completely restructure design in the electronics world just as we did in manufacturing. We’ll have huge design centers in China, India, and Ukraine. You can save 15% to 20% by moving manufacturing to a low-cost country. But with design, the drop can be much more dramatic. Q: Can you offer an example of what is happening with specific products? A: Take a cell-phone proje
