Via bls.gov

IDH and China: What Else You Need to Know about the Sector

So in the previous post, those of us at TechDesign brief you through the history of Chinese IDHs and how do they get to where they are now. Naturally, it only makes sense to continue down the road by introducing you the current status and future prospect of the Chinese IDHs. If you remember, the TechDesign team talked about how Chinese IDHs extends its business reach to nearly all parts of the electronics value chain, and its close relationship with ODMs, OEMs and EMS. However, we leave out another significant aspect to its current status, as a result, we will start this post by helping you to gain more understanding of that aspect.

IDH and OCM: A mutually beneficial relationship 

Via flinders.edu.au
Via flinders.edu.au

Unlike IDHs relationship with other players in the electronics value chain, the relationship with OCM is particularly important to Chinese IDHs. In a way, the relationship is mutually beneficial to both sides, because OCMs can widely spread their products in the market through the wide reach of IDHs. However, since Chinese IDHs are still in the process of transitioning, its relationship with OCMs is still at the stage of development. Currently, Chinese IDHs work with OCMs to fill the void by offering evaluation boards or design services to mid to small sized local designers who don’t have direct access to international OCMs’ services. The emergence of Chinese IDHs in this supply chain makes life much easier for both local designers and international OCMs. In a way, cheaper production price suddenly becomes the best bid for Chinese IDHs to rise up the rank in the electronics value chain.

However, it may still be hard to see the reason why this relationship is mutually beneficial to both parties through the passage above. You have to know that apart from filling the void to serve local designers, Chinese IDHs often hope to gain access to the design information, product and software tools that are usually held by global OCMs. By helping them to maintain the status in local markets, Chinese IDHs’ ultimate goals are usually receiving training or support from global OCMs in exchange with their supporting roles. As always, nothing can be gained without offering something in return.

How to define IDHs? 

Via aboriginalaccess.ca
Via aboriginalaccess.ca

After learning the basics of Chinese IDHs position in the electronics value chain, you may still wonder how to clearly distinguish IDHs from the rest of the field. According to Embedded Developer’s report, the current Chinese IDHs are mostly small to mid-sized companies with less than 500 employees. What they mainly do is producing reference designs, evaluation boards, and customized design services for different clients. However, a few of them might also assist with prototyping, document optimization, and administering contract manufacturers. In other words, Chinese IDHs are typically multi-functional to their customers.

As always, we hope you find the information above useful and informative. Those of us at TechDesign understand how too much information can sometimes be overwhelming, so we are taking the pace off to let you have time to get to know this field better. Don’t switch away because we have more to offer in the coming days and weeks.

 

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