Ford breaks from tradition; outsources to EMS provider

El Segundo, Calif. — With the introduction of the company’s second-generation SYNC system, the MyFord platform, Ford Motor Company also marks a change in the company’s supplier strategy to using an electronics manufacturing services (EMS) provider to make the system, reports iSuppli.

By using an EMS contract manufacturer, rather than a traditional automotive supplier, Ford is behaving more like consumer electronics companies, which predominately outsource the production and design of their products to contract manufacturers, says iSuppli. According to the market researcher, this move could open up the automotive market to EMS providers and original design manufacturers (ODM) and threaten the position of established tier-1 automotive electronics suppliers.

Contract manufacturers accounted for only 5.5 percent of the global automotive electronics business in 2009, which means there is plenty of potential opportunities for the EMS industry, says iSuppli.

“In a break from tradition, Ford with its MyFord system has chosen to partner with Flextronics, a Singapore-based EMS provider that is not part of the established Tier-1 automotive supplier base,” said Richard Robinson, principal analyst for automotive infotainment at iSuppli, in a statement. “By doing this, Ford’s infotainment team has taken a page from top-tier consumer electronics OEMs, developing a product that leverages a reference platform from a contract manufacturer, rather than making the system from scratch. The EMS reference design approach has been used for years in the manufacturing of consumer devices, including cell phones and Portable Navigation Devices (PNDs), so why not in automotive infotainment?”

Robinson says the biggest question facing tier-1 automotive electronics suppliers is what happens next. He says if Ford sets a trend of using the EMS/reference approach to automotive electronics, it most likely will change the market landscape, making it an uncertain future for many tier-1 suppliers.

iSuppli has just launched its new Components and Devices Portal covering systems and semiconductors in the automotive infotainment and telematics segments.