Independent Design Houses in China - EEWeb
Independent Design Houses in China - EEWeb
Independent Design Houses in China - EEWeb
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E M B E D D E D D E V E L O P E R • 2 0 1 2 C H I N A I D H R E P O R T<br />
<strong>Independent</strong> <strong>Design</strong><br />
<strong>Houses</strong> <strong>in</strong> Ch<strong>in</strong>a<br />
A 2012 Report on Understand<strong>in</strong>g the Trends and Value<br />
Proposition of the IDH Sector <strong>in</strong> the Ch<strong>in</strong>a Market<br />
By Glenn ImObersteg and Bruce Rayner, Embedded Developer,<br />
Steve Cholas, Hearst Electronics, and Hector Lui, 21IDH
1<br />
E M B E D D E D D E V E L O P E R • 2 0 1 2 C H I N A I D H R E P O R T<br />
Executive Summary: Key F<strong>in</strong>d<strong>in</strong>gs from the Study<br />
In August and September 2011, Embedded Developer LLC, <strong>in</strong><br />
cooperation with 21IC, Ch<strong>in</strong>a’s lead<strong>in</strong>g site for eng<strong>in</strong>eers, and 21IDH,<br />
the lead<strong>in</strong>g site for <strong>Independent</strong> <strong>Design</strong> <strong>Houses</strong> <strong>in</strong> Ch<strong>in</strong>a, conducted a<br />
ground-break<strong>in</strong>g survey to ga<strong>in</strong> an <strong>in</strong>-depth understand<strong>in</strong>g of the trends<br />
driv<strong>in</strong>g the growth and evolution of Ch<strong>in</strong>a’s <strong>Independent</strong> <strong>Design</strong> House<br />
(IDH) sector. The survey gathered <strong>in</strong>put from over 800 respondents<br />
represent<strong>in</strong>g all sectors of the electronics <strong>in</strong>dustry, <strong>in</strong>clud<strong>in</strong>g 245 IDHs,<br />
504 customers, 17 component suppliers and 62 distributors<br />
and traders.<br />
A series of two-dozen <strong>in</strong>terviews with <strong>in</strong>dustry executives complemented<br />
the survey results to provide a fuller picture of this dynamic<br />
service sector that has become a vital part of today’s product design<br />
and development process <strong>in</strong> Ch<strong>in</strong>a’s electronics <strong>in</strong>dustry.<br />
Ch<strong>in</strong>a’s IDHs have relationships with all parts of the electronics value<br />
cha<strong>in</strong>. They play a key role <strong>in</strong> support<strong>in</strong>g the design and development<br />
efforts of their customers <strong>in</strong> virtually all sectors of the electronics<br />
<strong>in</strong>dustry.<br />
Their customers <strong>in</strong>clude orig<strong>in</strong>al equipment makers (OEMs), orig<strong>in</strong>al<br />
design manufacturers (ODMs), and electronics manufactur<strong>in</strong>g services<br />
(EMS) providers.<br />
Table of Contents<br />
Section 1:<br />
The IDH role <strong>in</strong> Ch<strong>in</strong>a’s electronics value cha<strong>in</strong> Page 4<br />
Section 2:<br />
The evolv<strong>in</strong>g IDH bus<strong>in</strong>ess model Page 5<br />
Section 3:<br />
Aspirations, Growth and Challenges for Ch<strong>in</strong>a’s IDHs Page 6<br />
Section 4:<br />
Leverag<strong>in</strong>g the power of 21IDH:<br />
Provid<strong>in</strong>g global suppliers greater access to Ch<strong>in</strong>a’s eng<strong>in</strong>eer<strong>in</strong>g<br />
community Page 8<br />
Appendix: IDH Survey Demographic Data Page 9<br />
To a lesser extent, Ch<strong>in</strong>a’s IDHs provide orig<strong>in</strong>al component<br />
manufacturers (OCMs) and software companies with a channel to<br />
seed the market with their products. And they offer distributors a<br />
channel for generat<strong>in</strong>g component sales to the mass market.<br />
While the OCM relationship is central to the IDH bus<strong>in</strong>ess model <strong>in</strong><br />
other regions of the world, <strong>in</strong>clud<strong>in</strong>g both North America and Europe,<br />
it is not yet as well developed <strong>in</strong> Ch<strong>in</strong>a. Instead, Ch<strong>in</strong>a’s IDH sector<br />
emerged to satisfy the demand of local design eng<strong>in</strong>eers for evaluation<br />
boards and other design and software services that were not be<strong>in</strong>g<br />
met by <strong>in</strong>ternational OCMs or distributors. Either the products and<br />
services were not available locally or they were too expensive. IDHs<br />
were able to fill this unmet demand at a fraction of the cost of the<br />
OCM. Only recently, have websites such as Embedded Developer LLC’s<br />
21IDH, begun to provide a platform for Ch<strong>in</strong>ese design eng<strong>in</strong>eers,<br />
IDHs, OCMs and distributors to engage directly, thus help<strong>in</strong>g to spur<br />
the maturation of Ch<strong>in</strong>a’s IDH sector.<br />
Today, 21IDH is the market leader provid<strong>in</strong>g access to the broadest<br />
array of IDHs <strong>in</strong> Ch<strong>in</strong>a and the largest collection of <strong>in</strong>digenous evaluation<br />
boards, reference designs and other services available to Ch<strong>in</strong>a’s<br />
eng<strong>in</strong>eer<strong>in</strong>g community.<br />
Trademarks & Copyrights<br />
Published by Embedded Developer LLC. The contents of this whitepaper and the f<strong>in</strong>d<strong>in</strong>gs of the survey are<br />
Copyright 2012, Embedded Developer, LLC. Transmitt<strong>in</strong>g or reproduc<strong>in</strong>g all or any portion of the Whitepaper<br />
is not permitted without express permission of the author(s) <strong>in</strong> writ<strong>in</strong>g. All requests should be sent to Glenn<br />
ImObersteg, Embedded Developer LLC, at Glenn@EmbeddedDeveloper.com. Embedded Developer Ch<strong>in</strong>a<br />
and 21IDH are Embedded Developer LLC properties. Embedded Developer LLC is a jo<strong>in</strong>t venture between<br />
Convergence Promotions LLC and Hearst Corporation.<br />
About Hearst Electronics Group<br />
Hearst Electronics Group is the largest publisher of product <strong>in</strong>formation to the electronics <strong>in</strong>dustry. Its<br />
directories, e-newsletters, web sites, magaz<strong>in</strong>es, webcasts, <strong>in</strong>ventory access tools, and databases are<br />
<strong>in</strong>valuable resources for eng<strong>in</strong>eers <strong>in</strong>volved <strong>in</strong> product design. Hearst Electronics Group is part of Hearst<br />
Bus<strong>in</strong>ess Media (HBM), an operat<strong>in</strong>g group of the Hearst Corporation. For additional <strong>in</strong>formation about Hearst<br />
Electronics Group, please visit http://www.hearstadvantage.com<br />
About Convergence Promotions<br />
Convergence Promotions is the premier provider of Alliance Partner Programs <strong>in</strong> the Embedded, Handheld<br />
and Wireless <strong>in</strong>dustries, deliver<strong>in</strong>g partner programs that serve as a catalyst, br<strong>in</strong>g<strong>in</strong>g like-m<strong>in</strong>ded bus<strong>in</strong>esses<br />
together. Their flagship program, Embedded Developer, is a global leader <strong>in</strong> provid<strong>in</strong>g solutions for eng<strong>in</strong>eers<br />
<strong>in</strong> the research and evaluation phase of the design cycle. Company <strong>in</strong>formation is available at<br />
www.convergencepromotions.com, and www.EmbeddedDeveloper.com.
e Profile of Ch<strong>in</strong>a’s IDH Sector<br />
Based on the results of the study, today’s IDHs <strong>in</strong> Ch<strong>in</strong>a are typically small and<br />
mid-sized companies of less than 500 employees that produce reference designs,<br />
evaluation boards and custom design-related services for OEMs, ODMs and EMS<br />
companies. (See the Appendix of this study for the full demographic profile of<br />
survey respondents.) In addition to design services, a m<strong>in</strong>ority of IDHs also provide<br />
post-design services <strong>in</strong>clud<strong>in</strong>g product prototyp<strong>in</strong>g, optimiz<strong>in</strong>g the bill of materials<br />
(BOMs), component procurement, and assistance <strong>in</strong> the selection and manag<strong>in</strong>g<br />
contract manufacturers. (See Chart E.1.)<br />
Reference designs<br />
Custom design work (PC board and/or modules)<br />
Evaluation boards<br />
Custom software development<br />
Component purchas<strong>in</strong>g (direct and/or through distribution/traders)<br />
Product prototyp<strong>in</strong>g<br />
Contact manufacturer selection and management<br />
Turnkey product design<br />
Bill of Materials (BOM) management/recommendations<br />
Standard Licensed software<br />
The IDH customer is typically a small to mid-sized company. Accord<strong>in</strong>g to the<br />
Embedded Developer Ch<strong>in</strong>a survey, 65 percent of their customers have fewer than<br />
500 employees. However, 6 percent have over 25,000 employees. (See Chart E.2.)<br />
Accord<strong>in</strong>g to their customers, the IDH provides a measurable bus<strong>in</strong>ess value by<br />
speed<strong>in</strong>g up the design process, reduc<strong>in</strong>g time to market and lower cost<strong>in</strong>g. In<br />
E M B E D D E D D E V E L O P E R • 2 0 1 2 C H I N A I D H R E P O R T<br />
3%<br />
3%<br />
2%<br />
many cases they act as a complement to the customer’s <strong>in</strong>-house design<br />
department, offer<strong>in</strong>g additional design capacity when needed and provid<strong>in</strong>g unique<br />
design expertise that the customer does not possess. (See Chart E.3.)<br />
The IDH relationship with component suppliers <strong>in</strong> Ch<strong>in</strong>a is <strong>in</strong> development and<br />
characterized as one of <strong>in</strong>terdependence. IDHs need access to the design <strong>in</strong>formation,<br />
product and software tools from the makers of high-value components such<br />
as microprocessors, microcontrollers, DSPs, and FPGAs <strong>in</strong> order to provide their<br />
Chart E.1: Over 50% of IDHs offer hardware solutions such as reference design platforms, PC boards or modules, and evaluation boards.<br />
Under 100<br />
100 - 500<br />
500 - 1,000<br />
1,000 - 5,000<br />
5,000 - 10,000<br />
10,000 - 25,000<br />
More than 25,000<br />
Don’t know<br />
Number of full-time employees<br />
OEMs, ODMs and EMS customers<br />
4%<br />
2%<br />
6%<br />
1%<br />
8%<br />
Chart E.2: 65% of IDH customers, <strong>in</strong>clud<strong>in</strong>g OEMs, ODMs and EMS providers, are<br />
small companies, with 500 or fewer employees.<br />
14%<br />
Services IDHs provide their customers<br />
multiple responses<br />
28%<br />
37%<br />
4%<br />
8%<br />
9%<br />
14%<br />
18%<br />
17%<br />
23%<br />
services. They seek out relationships with world-class orig<strong>in</strong>al component makers<br />
(OCMs) that are will<strong>in</strong>g and able to provide support and tra<strong>in</strong><strong>in</strong>g. At the same<br />
time, IDHs provide a valuable service to the OCMs <strong>in</strong> the demand creation<br />
process, especially among small and mid-sized customers that OCMs are unable<br />
to service directly.<br />
#1 bus<strong>in</strong>ess value the IDH Provides its customers<br />
Speed up the design process – improve<br />
efficiency of design and time-to-market<br />
Cost sav<strong>in</strong>gs <strong>in</strong> product development<br />
Reduce headcount of <strong>in</strong>-house<br />
eng<strong>in</strong>eer<strong>in</strong>g staff<br />
Access to world-class silicon suppliers<br />
for FPGAs, microprocessors,<br />
microcontrollers, DSPs, etc.<br />
Other<br />
8.6%<br />
4.9%<br />
0.3%<br />
31.0%<br />
60.3%<br />
Chart E.3: 60% of IDH customers said the primary value the IDH provided was to<br />
speed up the design process.<br />
2
3<br />
IDHs typically align themselves with a few world-class OCMs that provide tra<strong>in</strong><strong>in</strong>g,<br />
support and tools <strong>in</strong> exchange for the IDH creat<strong>in</strong>g reference designs and design<strong>in</strong>g<br />
evaluation boards with the OCMs technology. In most sectors of the electronics<br />
<strong>in</strong>dustry, particularly the <strong>in</strong>dustrial sector, the relationships between OCMs and<br />
IDHs have not been formalized. The exception is <strong>in</strong> the consumer sector where the<br />
IDH model and the role they play <strong>in</strong> product development is more mature.<br />
At the same time, the IDH relationship with electronics distributors is still fairly<br />
nascent. However, there are examples of formal relationships where an IDH<br />
supports the distributor’s demand creation efforts by provid<strong>in</strong>g design services<br />
to the distributor’s customers and prospective customers coord<strong>in</strong>ated with the<br />
distributor’s OCM. These distributors tend to be second- and third-tier distributors<br />
often focused on a specific end market. Two-thirds of the distributors surveyed<br />
<strong>in</strong>dicated their relationship with their IDHs is “important” or “very important” to<br />
the success of their company.<br />
Market Diversification<br />
A decade ago, Ch<strong>in</strong>a’s IDHs were concentrated primarily <strong>in</strong> the consumer<br />
electronics sector, focus<strong>in</strong>g specifically on the design of set-top boxes, MP3<br />
devices, DVD players, and cell phone handsets. However, as Ch<strong>in</strong>a’s electronics<br />
<strong>in</strong>dustry has matured and diversified, IDHs have emerged to serve virtually all<br />
major segments of the electronics <strong>in</strong>dustry. Today, the consumer IDH sector is<br />
relatively mature and IDH market growth is shift<strong>in</strong>g to support the needs of<br />
Ch<strong>in</strong>a’s grow<strong>in</strong>g <strong>in</strong>dustrial sector.<br />
Accord<strong>in</strong>g to the survey results, IDHs are most active <strong>in</strong> <strong>in</strong>dustrial controls,<br />
subassemblies, <strong>in</strong>strumentation, and are present <strong>in</strong> virtually all major end markets<br />
<strong>in</strong>clud<strong>in</strong>g communications, automotive, medical and aerospace <strong>in</strong> addition to<br />
consumer electronics. (See Chart E.4.)<br />
Market Segments IDHs serve<br />
multiple responses<br />
Industrial controls, systems, equipment and robotics<br />
Electronic sub-assemblies (boards, modules, hybirds, and power<br />
Electronic <strong>in</strong>struments, ATE systems, design & test equipment<br />
Consumer electronics<br />
Computers and computer systems<br />
Wireless communication systems and equipment<br />
Computer peripherals, disk drives, term<strong>in</strong>als, pr<strong>in</strong>ters/plotters<br />
Consumer appliances<br />
Automotive and other ground vehicles<br />
Medical electronic equipment<br />
Avionics, mar<strong>in</strong>e, space, and military electronics<br />
Wired communication systems and equipment<br />
Government and/or military equipment<br />
Office and bus<strong>in</strong>ess mach<strong>in</strong>es<br />
Light<strong>in</strong>g equipment<br />
CAE/CAD/CAM systems<br />
Other<br />
9.8%<br />
9.6%<br />
8.6%<br />
7.1%<br />
5.0%<br />
5.0%<br />
4.8%<br />
4.8%<br />
4.2%<br />
3.3%<br />
1.9%<br />
1.3%<br />
1.3%<br />
0.4%<br />
1.0%<br />
E M B E D D E D D E V E L O P E R • 2 0 1 2 C H I N A I D H R E P O R T<br />
17.5%<br />
14.4%<br />
Chart E.4: IDHs are active <strong>in</strong> virtually all the major sectors of Ch<strong>in</strong>a’s electronics <strong>in</strong>dustry.<br />
e IDH Bus<strong>in</strong>ess Model<br />
The IDH bus<strong>in</strong>ess model is a work <strong>in</strong> progress with the potential for companies to<br />
develop a variety of revenue streams from services provided to their customers.<br />
In addition, there’s the opportunity for Ch<strong>in</strong>a’s IDHs to build revenue-generat<strong>in</strong>g<br />
relationships with their key supplier and distributor partners.<br />
Today, IDH revenue from their customers is a comb<strong>in</strong>ation of non-recurr<strong>in</strong>g<br />
eng<strong>in</strong>eer<strong>in</strong>g (NRE) costs, fixed fee for services, cost-plus contracts and royalties.<br />
(See Chart E.5.) In the cases where there’s a formal contractual relationship<br />
between an IDH and an OCM or distributor, IDH revenue is based on a percent<br />
of component sales generated from evaluation board sales and production volume<br />
result<strong>in</strong>g from an IDH’s design w<strong>in</strong>, accord<strong>in</strong>g to <strong>in</strong>terviews with IDHs, OCMs and<br />
distributors.<br />
Types of compensation reported by IDHs<br />
multiple responses<br />
Nonrecurr<strong>in</strong>g Eng<strong>in</strong>eer<strong>in</strong>g (NRE)<br />
Royalties on customers’ product<br />
Fixed-fee<br />
Cost-plus contract<br />
Other<br />
3.9%<br />
11.0%<br />
26.7%<br />
25.1%<br />
33.3%<br />
Chart E.5: IDHs rely primarily on NRE, fixed fee and cost-plus contracts for the<br />
design work they perform for their customers. However, 27% earn royalties based<br />
on the sale of their customer’s products.<br />
e Future of Ch<strong>in</strong>a’s IDH Sector<br />
The five sections of this report provide <strong>in</strong>sight <strong>in</strong>to the evolv<strong>in</strong>g bus<strong>in</strong>ess model of<br />
Ch<strong>in</strong>a’s IDH sector, the opportunities and challenges for growth ahead and the<br />
leadership role that 21IDH will play <strong>in</strong> that growth. Based on the survey results,<br />
there are three key factors that will shape IDH growth <strong>in</strong> the next few years:<br />
• High expectations. Across the board, customers gave their IDHs high marks<br />
<strong>in</strong> 14 areas of service. Assum<strong>in</strong>g they cont<strong>in</strong>ue to execute on the<br />
fundamentals, nearly three quarters of all respondents expect the number of<br />
IDHs to <strong>in</strong>crease over the next two years <strong>in</strong> the range of 10 to 24 percent<br />
growth a year.<br />
• Fierce competition. The majority of IDH respondents said their competitors<br />
present the biggest challenge to their future growth. They view their success<br />
as rely<strong>in</strong>g primarily on their ability to differentiate themselves from<br />
competitors through superior technology solutions, and quality and<br />
competitive pric<strong>in</strong>g. As more IDHs enter the market, competition will only<br />
<strong>in</strong>crease.<br />
• Global expansion. A majority of IDHs expect their growth to come not only<br />
from the Ch<strong>in</strong>a electronics market but from new bus<strong>in</strong>ess opportunities<br />
across Asia, and <strong>in</strong> North America and Europe.
Section 1<br />
e IDH Role <strong>in</strong> Ch<strong>in</strong>a’s Electronics<br />
Value Cha<strong>in</strong><br />
Ch<strong>in</strong>a’s IDH sector adds value to every l<strong>in</strong>k <strong>in</strong> the electronics extended value<br />
cha<strong>in</strong>, from seed<strong>in</strong>g component demand for OCMs and distributors, to sell<strong>in</strong>g<br />
evaluation boards and customized reference designs, to provid<strong>in</strong>g product design<br />
services, prototyp<strong>in</strong>g and <strong>in</strong> some cases provid<strong>in</strong>g manufactur<strong>in</strong>g support to their<br />
OEM, ODM and EMS customers. Ch<strong>in</strong>a’s IDHs are uniquely positioned to provide<br />
small and mid-size customers with cost effective design solutions that complement<br />
the services provided by OCMs and distributors to the larger customer base.<br />
While the service offer<strong>in</strong>gs and relationships are similar across all markets,<br />
Ch<strong>in</strong>a’s IDH sector is matur<strong>in</strong>g at different rates depend<strong>in</strong>g on the end market.<br />
For <strong>in</strong>stance, IDHs have been serv<strong>in</strong>g the consumer sector (for example, provid<strong>in</strong>g<br />
set-top box, MP3, DVD and handset design services) for many years so both the<br />
supplier and customer relationships are more mature. However, the IDH presence<br />
is not as well established <strong>in</strong> the <strong>in</strong>dustrial sector so relationships are less formalized.<br />
Based on survey results and <strong>in</strong>terviews, IDHs have an opportunity to build<br />
deeper and more substantial relationships with both suppliers and customers <strong>in</strong><br />
these emerg<strong>in</strong>g areas and grow as their customers grow.<br />
Figure 1 on page 5 captures the value to both parties at each l<strong>in</strong>k <strong>in</strong> the value<br />
cha<strong>in</strong>. Start<strong>in</strong>g at the front end, IDHs offer demand creation services for OCMs<br />
through the development of customized reference designs and evaluation boards<br />
built around the OCM’s components. As such, IDHs have the potential to act as an<br />
extension of the OCM’s <strong>in</strong>-house sales force and add services to the OCM’s<br />
exist<strong>in</strong>g distribution network. In some cases, IDHs have established formal relationships<br />
with OCMs and act as value-added resellers (VARs) for the OCM’s<br />
products and tools target<strong>in</strong>g small and mid-sized customers.<br />
When asked how important their relationships is to the success of their company,<br />
the small sample of OCMs surveyed gave their IDHs an average rat<strong>in</strong>g of 3.4 out<br />
of 5, where 5 is “very important.” IDHs gave their OCMs a rat<strong>in</strong>g of 3.7 to the<br />
same question. And distributors gave their IDHs an average rat<strong>in</strong>g of 3.7. Numbers<br />
above 3 <strong>in</strong>dicate the relationship provides positive value and suggest the<br />
companies are motivated to cont<strong>in</strong>ue to build the relationship.<br />
Over 70 percent of IDHs say the most important value an OCM provides is access<br />
to design support, tra<strong>in</strong><strong>in</strong>g and <strong>in</strong>formation services. (See Chart 1.1.)<br />
The IDH offers their OEM, ODM and EMS customers services that complement<br />
their own <strong>in</strong>-house capabilities, either by provid<strong>in</strong>g technical expertise they don’t<br />
possess or by add<strong>in</strong>g design capacity when needed. Over 60 percent of IDH<br />
customers surveyed said the primary benefit of work<strong>in</strong>g with an IDH is to speed<br />
the product development cycle and shorten time to market. Thirty-one percent<br />
said IDHs contribute to reduc<strong>in</strong>g the cost of product development. (See Chart 1.2.)<br />
When asked how important their IDH was to their company’s success, the<br />
comb<strong>in</strong>ed set of OEM, ODM and EMS customers gave their IDHs an average of<br />
E M B E D D E D D E V E L O P E R • 2 0 1 2 C H I N A I D H R E P O R T<br />
Criteria IDHs use when evaluat<strong>in</strong>g a relationship with a OCM<br />
multiple responses<br />
Access to supplier support/<strong>in</strong>formation service<br />
Price<br />
Brand awareness<br />
Ready supply of chip samples<br />
Access to software tools<br />
Access to a design forum/community<br />
Other<br />
4.1%<br />
0.8%<br />
14.7%<br />
13.4%<br />
29.7%<br />
37.3%<br />
Chart 1.1: The most important value an OCM provides the IDH is access to<br />
<strong>in</strong>formation, support and tra<strong>in</strong><strong>in</strong>g.<br />
#1 bus<strong>in</strong>ess value the IDH provides its customers<br />
Speed up the design process – improve<br />
efficiency of design and time-to-market<br />
Cost sav<strong>in</strong>gs <strong>in</strong> product development<br />
Reduce headcount of <strong>in</strong>-house<br />
eng<strong>in</strong>eer<strong>in</strong>g staff<br />
Access to world-class silicon suppliers<br />
for FPGAs, microprocessors,<br />
microcontrollers, DSPs, etc.<br />
Other<br />
8.6%<br />
4.9%<br />
0.3%<br />
31.0%<br />
60.3%<br />
Chart 1.2: OEMs, ODMs and EMS providers place the highest value on the IDH’s<br />
ability to accelerate their design process and time to market.<br />
5 = Very important<br />
4<br />
3<br />
2<br />
1 = Not important<br />
The importance of the IDH relationship<br />
to the success of the OEM, ODM and EMS<br />
Don’t know<br />
3%<br />
3%<br />
10%<br />
Chart 1.2: OEMs, ODMs and EMS providers place the highest value on the IDH’s<br />
ability to accelerate their design process and time to market.<br />
3.5 out of 5, where 5 is “very important.” Fifty three percent of respondents gave<br />
their IDH a rat<strong>in</strong>g of 4 or 5. (See Chart 1.3 on page 5) Customers gave similar<br />
high rat<strong>in</strong>gs when asked how well their IDHs performed <strong>in</strong> 14 specific areas,<br />
<strong>in</strong>clud<strong>in</strong>g overall quality of services, quality of reference designs and evaluation<br />
boards, day-to-day work<strong>in</strong>g relationships, access to OCMs and speed of delivery<br />
of service. (This data is available upon request from Embedded Developer Ch<strong>in</strong>a.)<br />
24%<br />
29%<br />
31%<br />
4<br />
71.9%
5<br />
One reason the rat<strong>in</strong>gs are consistently high is that competition among IDHs is<br />
stiff, which drives performance. Indeed, the top ranked challenge to revenue<br />
growth identified by IDH respondents was competition from other IDHs. Provid<strong>in</strong>g<br />
fast service and be<strong>in</strong>g technically sophisticated are essential to the IDH’s success.<br />
Accord<strong>in</strong>g to survey results, IDHs appear to be ris<strong>in</strong>g to the challenge of both<br />
faster service and sophisticated design solutions:<br />
IDH services to the electronics value cha<strong>in</strong><br />
SUPPLIERS Services provided by IDH Value derived by IDH<br />
OCM Demand creation services (e.g. Tra<strong>in</strong><strong>in</strong>g and support from OCM<br />
reference designs and evaluation<br />
boards to seed the market)<br />
Identify<strong>in</strong>g new customers Preferred access to the OCM’s design tools,<br />
reference designs, evaluation boards and<br />
product.<br />
Provid<strong>in</strong>g customized designs built Advanced brief<strong>in</strong>gs on technology and<br />
around OCM products product road maps<br />
Component sales to the IDH Revenue potential from demand creation<br />
and their customers (uncommon)<br />
Average rat<strong>in</strong>g of the OCM rat<strong>in</strong>g of IDH 3.4 IDH rat<strong>in</strong>g of OCM 3,7<br />
importance to the<br />
success of their company<br />
by OCM and IDH. Scale<br />
1-5, with 5 be<strong>in</strong>g "very<br />
important."<br />
CUSTOMERS Services provided by IDH Value derived by IDH<br />
OEM, ODM and Customized reference designs and Revenue from NRE, fixed fee for services,<br />
EMS Providers evaluation boards royalties on product sales<br />
Customized design services Access new markets<br />
Complement <strong>in</strong>ternal design team<br />
to speed design process and<br />
time-to-market<br />
New design ideas<br />
Reduce overall cost of design Grow with the customer<br />
Provide post-design services<br />
<strong>in</strong>clud<strong>in</strong>g prototyp<strong>in</strong>g, PCB<br />
assembly, EMS selection for<br />
OEMs and ODMs, BOM analysis<br />
Ga<strong>in</strong> market expertise<br />
Average rat<strong>in</strong>g of value<br />
of relationship by OEM<br />
3.5 N/A<br />
Average rat<strong>in</strong>g of value<br />
of relationship by ODM<br />
3.7 N/A<br />
Average rat<strong>in</strong>g of value<br />
of relationship by EMS<br />
3.8 N/A<br />
DISTRIBUTORS Services provided by IDH Value derived by IDH<br />
Distributors and Traders Demand creation (e.g. reference Revenue from design w<strong>in</strong>s from component<br />
designs and evaluation boards) sales<br />
Custom design services for<br />
customers<br />
Component samples<br />
Component sales to IDH and their Access to new customers<br />
customers<br />
Prototyp<strong>in</strong>g, BOM management,<br />
PCB assembly services to<br />
customers<br />
Average rat<strong>in</strong>g of value<br />
of relationship by<br />
distributors<br />
3.7 N/A<br />
Figure 1: Summarizes the value that the IDH provides and the value the IDH derives<br />
from its relationships with suppliers, customers, and distributors. In all cases, IDHs<br />
received above average rat<strong>in</strong>gs for the services they provide.<br />
E M B E D D E D D E V E L O P E R • 2 0 1 2 C H I N A I D H R E P O R T<br />
• 50 percent <strong>in</strong>dicated they can produce a new standard design <strong>in</strong> less than six<br />
months.<br />
• 70 percent can design a custom board <strong>in</strong> less than six months.<br />
• Over 40 percent are design<strong>in</strong>g with 32-bit processors and microcontrollers.<br />
Section 2<br />
e Evolv<strong>in</strong>g Bus<strong>in</strong>ess Model<br />
Today, IDH revenue comes primarily for the sale of services and products to OEMs,<br />
ODMs and EMS customers. The most common form of compensation reported by<br />
IDHs <strong>in</strong> the survey was non-recurr<strong>in</strong>g eng<strong>in</strong>eers (NRE) fees for product design,<br />
followed by royalties, fixed-fee and cost-plus contracts, <strong>in</strong> descend<strong>in</strong>g order. These<br />
results were confirmed by customers. (See Charts 2.1 and 2.2.)<br />
Types of compensation reported by IDHs<br />
multiple responses<br />
Nonrecurr<strong>in</strong>g Eng<strong>in</strong>eer<strong>in</strong>g (NRE) fees<br />
Royalties on customers’ product sales<br />
Fixed-fee<br />
Cost-plus contract<br />
Other<br />
3.9%<br />
11.0%<br />
26.7%<br />
25.1%<br />
Types of compensation reported by customers<br />
multiple responses<br />
Pay NRE fees<br />
Fixed fee for services<br />
Pay royalties on product sales<br />
Other<br />
3%<br />
33.3%<br />
Charts 2.1 and 2.2: The view is consistent among IDHs and customers regard<strong>in</strong>g<br />
forms of payment for services. NRE fees are the most common, with royalty<br />
payments reported by about one quarter of all respondents.<br />
In many cases, royalty revenue complements NRE and other fees. However, for<br />
a m<strong>in</strong>ority of IDH respondents, royalty revenue was their exclusive source of<br />
revenue. In these cases, the customer is typically a small startup with limited<br />
capital and is unable to cover the NRE cost of the design. The IDH agrees to defer<br />
compensation and provide the design services <strong>in</strong> exchange for a percent of future<br />
sales. IDHs are will<strong>in</strong>g to take this bus<strong>in</strong>ess risk <strong>in</strong> order to access a new market<br />
and potentially grow their bus<strong>in</strong>ess as the new customer grows. This was captured <strong>in</strong><br />
the survey results, as 41 percent of IDH respondents said they select new customers<br />
based on their ability to provide access to new markets. (See Chart 2.3. on page 6)<br />
The fees IDHs charge customers for design services range fairly widely and depend<br />
on a number of factors, <strong>in</strong>clud<strong>in</strong>g complexity of the design, hours required,<br />
and <strong>in</strong>dustry knowledge. To ga<strong>in</strong> <strong>in</strong>sight <strong>in</strong>to how variable pric<strong>in</strong>g is, IDHs were<br />
asked what they charge for a typical microcontroller-based evaluation board and<br />
reference design for both an 8- or 16-bit system and a 32-bit system. (See<br />
Charts 2.4 and 2.5.on page 6) The results <strong>in</strong>dicate a wide range of pric<strong>in</strong>g for<br />
both systems.<br />
23%<br />
23%<br />
51%
Criteria IDHs use to decide whether to work with a customer<br />
multiple responses<br />
Opportunity to penetrate a new market<br />
Market share position<br />
Brand awareness<br />
F<strong>in</strong>ancial stability<br />
Other<br />
1.0%<br />
17.2%<br />
14.9%<br />
In addition to revenue derived from customers, IDHs have the potential to earn<br />
revenue through direct relationships with OCMs and distributors as a result of<br />
demand creation services. While these relationships are fairly common <strong>in</strong> North<br />
America and Europe they are not standard practice <strong>in</strong> Ch<strong>in</strong>a and are only now<br />
start<strong>in</strong>g to emerge <strong>in</strong> the <strong>in</strong>dustrial sector.<br />
21IDH is provid<strong>in</strong>g IDHs with a channel to build formal relationships with OCMs<br />
and their distributors. For <strong>in</strong>stance, 21IDH provides OCMs and distributors leads<br />
to eng<strong>in</strong>eers who are purchas<strong>in</strong>g reference designs and boards, the ability to<br />
track design w<strong>in</strong>s, and a mechanism to provide procurement services. As these<br />
relationships mature, the IDH will play a larger and more important role <strong>in</strong> the<br />
OCM’s strategy <strong>in</strong> Ch<strong>in</strong>a.<br />
E M B E D D E D D E V E L O P E R • 2 0 1 2 C H I N A I D H R E P O R T<br />
26.0%<br />
40.9%<br />
Charts 2.3: Besides revenue generation, the most important reason IDHs choose to<br />
work with a new customer is the opportunity to enter a new market.<br />
Standard fee an IDH charges its customers for an 8- or 16-bit<br />
MCU evaluation board and reference design exclud<strong>in</strong>g the cost<br />
of the hardware and software<br />
15,000 or more RMB<br />
10,000-15,000 RMB<br />
7,000-10,000 RMB<br />
4,000-7,000 RMB<br />
0-4,000 RMB<br />
7.5%<br />
19.7%<br />
19.7%<br />
21.1%<br />
31.9%<br />
Standard fee an IDH charges its customers for a 32-bit<br />
MCU evaluation board and reference design exclud<strong>in</strong>g the cost<br />
of the hardware and software<br />
15,000 or more RMB<br />
10,000-15,000 RMB<br />
7,000-10,000 RMB<br />
4,000-7,000 RMB<br />
0-4,000 RMB<br />
12.3%<br />
14.8%<br />
20.7%<br />
25.1%<br />
27.1%<br />
Charts 2.4 and 2.5: There is a wide range of prices IDHs charge their customers for<br />
evaluation boards.<br />
The series of <strong>in</strong>terviews with IDHs, OCMs and distributors revealed how these<br />
relationships are structured <strong>in</strong> Ch<strong>in</strong>a today. A typical process is for the OCM to<br />
contract with an IDH to provide tools, tra<strong>in</strong><strong>in</strong>g and service <strong>in</strong> exchange for the<br />
IDH act<strong>in</strong>g as a value-added reseller (VAR) for the OCMs products. The IDH may<br />
have a few complementary VAR relationships with OCMs to serve a specific end<br />
market. When an IDH sells a design to a customer and the product goes <strong>in</strong>to<br />
volume production, the IDH receives payment from the OCM on component sales.<br />
In some cases the OCM’s distributor fulfills the order.<br />
Some IDHs prefer not to establish exclusive relationships with OCMs as they<br />
believe these relationships limit their bus<strong>in</strong>ess opportunities <strong>in</strong> the marketplace.<br />
In these cases, revenue is derived exclusively from the customer.<br />
Section 3<br />
Aspirations, Growth and Challenges<br />
for the IDH<br />
Ch<strong>in</strong>a’s first generation of IDHs emerged a decade ago <strong>in</strong> the high-volume<br />
mass-market consumer electronics sector. This is the most mature segment of<br />
Ch<strong>in</strong>a’s IDH market and where the VAR model is most prevalent. In comparison,<br />
Ch<strong>in</strong>a’s <strong>in</strong>dustrial markets – <strong>in</strong>strumentation, medical, automotive, aerospace and<br />
others – are not as mature and the IDH sector is <strong>in</strong> a formative stage of development.<br />
Based on <strong>in</strong>terviews, the expectation is that IDHs <strong>in</strong> the <strong>in</strong>dustrial sector<br />
will mature <strong>in</strong> a similar way as they have <strong>in</strong> the consumer market. That is, they<br />
will develop formal relationships with OCMs and distributors, the sector will<br />
consolidate through acquisitions and mergers, and some IDHs will emerge as<br />
OEMs and ODMs.<br />
Accord<strong>in</strong>g to the survey results, the vast majority of IDHs aspire to sell their own<br />
branded products. That is, they want to become OEMs. (See Chart 3.1.) Indeed,<br />
the majority of IDHs <strong>in</strong>terviewed said they are already sell<strong>in</strong>g their own branded<br />
products.<br />
IDH: Is your company’s goal to sell your own branded products?<br />
Yes<br />
No<br />
Don’t know<br />
2.2%<br />
15.2%<br />
Chart 3.1: 83% of IDHs aspire to become OEMs.<br />
82.6%<br />
However, customers don’t take the threat too seriously as most IDHs are still<br />
small. Indeed, only 15 percent of OEMs, ODMs and EMS providers believe IDHs<br />
will pose a competitive threat <strong>in</strong> the next two years. Fifty six percent expect IDHs<br />
to become more like ODMs over the next few years and 23 percent expect they<br />
will rema<strong>in</strong> as IDHs. (See Chart 3.2 on page 7)<br />
6
7<br />
Customer view of how IDH will evolve over the next few years<br />
Will become more like ODMs<br />
No changes <strong>in</strong> the IDH model<br />
Will become a competitor<br />
Comb<strong>in</strong>ed EMS ODMs OEMs<br />
Don’t know, other<br />
Chart 3.2: In general, customers don’t see IDHs as a competitive threat.<br />
89% believe they will either evolve <strong>in</strong>to ODMs or stay as IDHs.<br />
11%<br />
As for growth <strong>in</strong> the IDH sector, there’s broad consensus among IDHs, customers,<br />
suppliers and distributors that the number of IDHs will <strong>in</strong>crease over the next<br />
two years.<br />
Seventy percent of all customers expect the number of IDHs to <strong>in</strong>crease over the<br />
next two years. And 55 percent expect the annual growth rate to be <strong>in</strong> the 10 to<br />
24 percent range. (See Chart 3.3.) Similar figures were reported by OCMs and<br />
distributors. The implication is that currently, demand for IDH services exceeds<br />
supply and there is room for more companies to enter the market.<br />
Less than 10%<br />
Between 10% and 24%<br />
Between 25% and 49%<br />
Between 50% and 74%<br />
Over 75%<br />
Don’t Know<br />
5%<br />
4%<br />
15%<br />
14%<br />
11%<br />
6%<br />
By how much do you expect the number of IDHs to <strong>in</strong>crease a year?<br />
OEMs, ODMs, EMS<br />
2.3%<br />
0.4%<br />
12.8%<br />
12.8%<br />
Chart 3.3: 70% of OEMs, ODMs and EMS providers expect the number of IDHs to<br />
grow <strong>in</strong> the next two years and over half predict the rate of growth to be between<br />
10% and 25%.<br />
Asia/Pac<br />
Europe<br />
North America<br />
Other<br />
17%<br />
19%<br />
17.1%<br />
Regions outside Ch<strong>in</strong>a IDHs are currently sell<strong>in</strong>g<br />
products and services<br />
7.8%<br />
23%<br />
26.7%<br />
23.9%<br />
30%<br />
31%<br />
41.7%<br />
41%<br />
E M B E D D E D D E V E L O P E R • 2 0 1 2 C H I N A I D H R E P O R T<br />
51%<br />
56%<br />
66%<br />
54.7%<br />
Chart 3.4: 37% of IDHs are currently sell<strong>in</strong>g products and services outside Ch<strong>in</strong>a <strong>in</strong><br />
all the major regions and 40% said they plan to sell overseas <strong>in</strong> the near future.<br />
This trend is reflected <strong>in</strong> current registrations at 21IDH, which listed over 250<br />
IDHs and over 740 evaluation board as of January 2012. IDH registrations at the<br />
market-lead<strong>in</strong>g website have been averag<strong>in</strong>g 12 to 15 a month and the pace is<br />
accelerat<strong>in</strong>g, with more than 30 new evaluation boards added every month. It is<br />
estimated that by the end of 2012, 21IDH will <strong>in</strong>clude over 500 registered IDHs<br />
and over 2,000 evaluation boards.<br />
For a majority of IDHs, part of that growth is expected to come from outside<br />
Ch<strong>in</strong>a. Indeed, 37 percent of IDHs surveyed <strong>in</strong>dicated they are currently sell<strong>in</strong>g to<br />
customers <strong>in</strong> Asia, North America and Europe. (See Chart 3.4.) And nearly 40<br />
percent said their goal is to sell overseas <strong>in</strong> the future.<br />
There are a few challenges IDHs face <strong>in</strong> their quest for growth. At the top of the<br />
list is competition from other IDHs, followed closely by the quality and cost of the<br />
products and services they sell. Interest<strong>in</strong>gly, IDHs do not see relationships with<br />
OCMs or potential competition from ODMs as a major threat to their growth. (See<br />
Chart 3.5.)<br />
Competition from other <strong>in</strong>dependent <strong>Design</strong> <strong>Houses</strong> (IDHs) or third-party designers<br />
Quality of the product and/or service we provide<br />
Cost of the product and/or service we provide<br />
Relationships with Orig<strong>in</strong>al Component Manufacturers (OCMs)<br />
Competition from ODMs<br />
Chart 3.5: IDHs’ biggest challenge is the fierce competition they face from other<br />
IDHs. Their success is determ<strong>in</strong>ed by the quality and cost of the products and<br />
services they provide.<br />
Other<br />
In a fiercely competitive market with many small companies, the IDH’s objective is<br />
to create differentiation <strong>in</strong> terms of quality, cost and technical prowess. Through<br />
differentiation they establish trust and build stronger relationships. And it’s the<br />
relationship with suppliers and customers that will enable IDHs to rema<strong>in</strong> competitive<br />
and grow. Indeed, the most important source for new design ideas – an<br />
important component of future growth – is the IDH’s customer. (See Chart 3.6.)<br />
Customers<br />
Conferences/events<br />
Onl<strong>in</strong>e publications<br />
Research Institutes<br />
Company websites<br />
Universities<br />
Pr<strong>in</strong>t publications<br />
Government m<strong>in</strong>istries<br />
Other<br />
The IDH’s #1 challenge for revenue growth<br />
5.2%<br />
6.2%<br />
4.4%<br />
1.8%<br />
11.4%<br />
9.8%<br />
10.1%<br />
Chart 3.6: More than any other source, IDHs rely on their customers to provide<br />
them with new designs ideas, which spur growth and help solidify relationships.<br />
1.3%<br />
6.1%<br />
6.1%<br />
Where IDHs go to research and identify new design ideas<br />
multiple responses<br />
17.6%<br />
21.5%<br />
28.9%<br />
36.0%<br />
33.4%
Section 4<br />
Leverag<strong>in</strong>g the Power of 21IDH:<br />
Provid<strong>in</strong>g Global Suppliers Greater Access<br />
to Ch<strong>in</strong>a’s Eng<strong>in</strong>eer<strong>in</strong>g Community<br />
Embedded Developer Ch<strong>in</strong>a (21Embed) believes that Ch<strong>in</strong>a’s <strong>in</strong>dependent design<br />
houses hold great promise for accelerat<strong>in</strong>g the pace of product design and<br />
spurr<strong>in</strong>g growth <strong>in</strong> Ch<strong>in</strong>a’s electronics <strong>in</strong>dustry. We commissioned this path-break<strong>in</strong>g<br />
study to document the role the IDH sector is play<strong>in</strong>g <strong>in</strong> the <strong>in</strong>dustry and to<br />
quantify just how important the IDH sector is to the success of the OEM, ODM<br />
and EMS customer community as well as component suppliers and distributors.<br />
Periodically, we will conduct follow-on release to ensure we stay on top of the<br />
trends and developments with<strong>in</strong> Ch<strong>in</strong>a’s IDH sector.<br />
With confirmation of the value IDHs br<strong>in</strong>g for the market, Embedded Developer<br />
LLC launched 21IDH <strong>in</strong> late 2011 to provide Ch<strong>in</strong>ese eng<strong>in</strong>eers with a domestic<br />
design resource that leverages the potential of the grow<strong>in</strong>g Ch<strong>in</strong>ese IDH sector.<br />
“Our record of tools transactions <strong>in</strong> Ch<strong>in</strong>a through Embedded Developer <strong>in</strong>dicates<br />
a strong trend with<strong>in</strong> the Ch<strong>in</strong>ese eng<strong>in</strong>eer<strong>in</strong>g community towards buy<strong>in</strong>g<br />
<strong>in</strong>digenous tools over tools those available from tools suppliers outside Ch<strong>in</strong>a,”<br />
said Glenn ImObersteg, CEO of Embedded Developer LLC and publisher of<br />
Embedded Developer Ch<strong>in</strong>a (21Embed) and 21IDH. “The reasons <strong>in</strong>clude familiarity,<br />
price, shared access, and application-specific and targeted Ch<strong>in</strong>ese solutions.”<br />
S<strong>in</strong>ce its launch, 21IDH has emerged as the premier platform for IDH activity <strong>in</strong><br />
Ch<strong>in</strong>a. As of January, 2012, 21IDH lists over 230 IDHs and 740 evaluation boards.<br />
The site has been averag<strong>in</strong>g 6-10 new IDH registrations and more than 30 new<br />
evaluation boards every month, and the pace is accelerat<strong>in</strong>g. By the end of the<br />
year, 21IDH expects to <strong>in</strong>clude over 500 registered IDHs and over 2,000<br />
evaluation boards.<br />
The website is a powerful and unique source for reference designs, evaluation<br />
boards and other services designed specifically to serve the needs of the<br />
eng<strong>in</strong>eer<strong>in</strong>g community at small and mid-sized OEMs, ODMs and EMS providers<br />
across all market segments. 21IDH provides a bridge that allows these eng<strong>in</strong>eers<br />
to engage with the IDH community and, through association, with the component<br />
suppliers and distributors that support their services.<br />
In 2012, 21IDH is offer<strong>in</strong>g component manufacturers and distributors customized<br />
micro-sites with<strong>in</strong> the 21IDH Platform so they can actively participate with IDHs<br />
to engage the community of design eng<strong>in</strong>eers <strong>in</strong> the new product design process.<br />
This unique service <strong>in</strong>cludes build<strong>in</strong>g custom branded land<strong>in</strong>g pages for component<br />
manufacturers and distributors that list the products and services provided<br />
by the registered IDHs that design with their products. Align<strong>in</strong>g their brand with<br />
this set of IDHs provides an opportunity to accelerate growth for IDHs, OCMs<br />
and distributors.<br />
E M B E D D E D D E V E L O P E R • 2 0 1 2 C H I N A I D H R E P O R T<br />
In addition to serv<strong>in</strong>g Ch<strong>in</strong>a’s domestic design eng<strong>in</strong>eer<strong>in</strong>g community, 21IDH is<br />
<strong>in</strong>vest<strong>in</strong>g to grow the program <strong>in</strong>ternationally. This <strong>in</strong>cludes open<strong>in</strong>g channels <strong>in</strong><br />
North America and Europe to provide Ch<strong>in</strong>ese IDHs access to the global design<br />
community. In addition, Embedded Developer is plann<strong>in</strong>g an IDH test laboratory<br />
<strong>in</strong> the US that will provide a certification process to qualify evaluation boards for<br />
sale outside Ch<strong>in</strong>a.<br />
“We will cont<strong>in</strong>ue to encourage the <strong>in</strong>genuity shown by Ch<strong>in</strong>ese IDHs and will<br />
assist them <strong>in</strong> grow<strong>in</strong>g their programs <strong>in</strong> North America, Europe and across Asia,”<br />
said ImObersteg. “We encourage component suppliers and distributors to jo<strong>in</strong> us<br />
as we build the platform that will connect Ch<strong>in</strong>a’s IDH sector with the world.”<br />
For your copy of the complete IDH survey results and <strong>in</strong>formation regard<strong>in</strong>g<br />
participation <strong>in</strong> the 21IDH program contact Bruce Rayner, 21IDH Bus<strong>in</strong>ess<br />
Development Manager at Bruce@EmbeddedDeveloper.com, or Glenn ImObersteg,<br />
CEO, Embedded Developer LLC, at Glenn@EmbeddedDeveloper.com.<br />
For additional <strong>in</strong>formation, please visit www.embeddeddeveloper.com/21IDH<br />
8
9<br />
Appendix<br />
Survey Description and Demographics<br />
In August and September, 2011, Embedded Developer, <strong>in</strong> cooperation with 21IC,<br />
fielded two onl<strong>in</strong>e surveys <strong>in</strong> Ch<strong>in</strong>a: one to <strong>in</strong>dependent design houses (IDHs)<br />
and the other to their customers (OEMs, ODMs, and EMS providers). In addition,<br />
orig<strong>in</strong>al components manufacturers (OCMs) and distributors also responded to the<br />
customer survey. Comb<strong>in</strong>ed, the study <strong>in</strong>cluded 245 IDH respondents and 504<br />
customer respondents, as well as 17 suppliers and 62 distributors and traders.<br />
In addition to the onl<strong>in</strong>e survey, Embedded Developer conducted two dozen<br />
<strong>in</strong>terviews with IDHs, OCMs and distributors. These <strong>in</strong>terviews complemented the<br />
survey results and were conducted to ga<strong>in</strong> additional <strong>in</strong>sight <strong>in</strong>to the bus<strong>in</strong>ess<br />
strategies of the IDH and the valuable role they play <strong>in</strong> the new product design<br />
process. Across the board the <strong>in</strong>terviews supported and confirmed the survey<br />
results.<br />
Below are highlights of the respondent demographics.<br />
Job function. (See Charts A.1 and A.2)<br />
• Fifty-five percent of IDH respondents were eng<strong>in</strong>eers and 35 percent were<br />
corporate or sales and market<strong>in</strong>g managers. The average age of the IDH<br />
respondent was 31.<br />
• Eighty two percent of customers (OEMs, ODMs, and EMS providers) were<br />
eng<strong>in</strong>eers and 13 percent were either manufactur<strong>in</strong>g or corporate<br />
management. The average age of the customer was 34.<br />
Eng<strong>in</strong>eer<strong>in</strong>g<br />
General management and Sales & Market<strong>in</strong>g<br />
Manufactur<strong>in</strong>g and Procurement<br />
Test & Measurement and QC<br />
Academic and other<br />
Chart A.1<br />
Chart A.2<br />
Eng<strong>in</strong>eer<strong>in</strong>g<br />
Manufactur<strong>in</strong>g and Procurement<br />
General management and Sales & Market<strong>in</strong>g<br />
Test & Measurement and QC<br />
Academic and other<br />
IDH job function<br />
4.8%<br />
3.0%<br />
2.6%<br />
OEM, ODM, EMS job Function<br />
1.4%<br />
7.5%<br />
5.2%<br />
4.2%<br />
Location. (See Chart A.3 and A.4)<br />
• Virtually all of Ch<strong>in</strong>a’s prov<strong>in</strong>ces and municipalities were represented <strong>in</strong><br />
the survey, with the highest concentration of both IDH and customer<br />
respondents based <strong>in</strong> Guangdong prov<strong>in</strong>ce, and Beij<strong>in</strong>g and Shanghai<br />
municipalities.<br />
• Comb<strong>in</strong>ed, 34 percent of OEMs, ODMs and EMS providers and over 50<br />
percent of IDHs were located <strong>in</strong> Guangdong, primarily Shenzhen and<br />
Guangzhou.<br />
E M B E D D E D D E V E L O P E R • 2 0 1 2 C H I N A I D H R E P O R T<br />
34.8%<br />
81.7%<br />
54.8%<br />
Guangdong<br />
Beij<strong>in</strong>g<br />
Shanghai<br />
Jiangsu<br />
Zhejiang<br />
Shenzhen<br />
Chart A.3<br />
Hebei<br />
Shanxi<br />
Shandong<br />
Tianj<strong>in</strong><br />
Sichuan<br />
Hunan<br />
Jil<strong>in</strong><br />
Chongq<strong>in</strong>g<br />
Liaon<strong>in</strong>g<br />
Hangzhou<br />
Chengdu<br />
Anhui<br />
Fujian<br />
Nanj<strong>in</strong>g<br />
Q<strong>in</strong>gdao<br />
Hefei<br />
Henan<br />
Yunnan<br />
Changsha<br />
3.5%<br />
2.6%<br />
2.6%<br />
2.6%<br />
1.3%<br />
1.3%<br />
1.3%<br />
0.9%<br />
0.9%<br />
0.9%<br />
0.4%<br />
0.4%<br />
0.4%<br />
0.4%<br />
0.4%<br />
0.4%<br />
0.4%<br />
Location of IDH facilities<br />
5.7%<br />
5.2%<br />
4.3%<br />
3.5%<br />
3.5%<br />
8.3%<br />
25.2<br />
23.5%
Guangdong<br />
Beij<strong>in</strong>g<br />
Shanghai<br />
Jiangsu<br />
Zhejiang<br />
Hubei<br />
Shandong<br />
Henan<br />
Sichuan<br />
Fujian<br />
Shaanxi<br />
Tianj<strong>in</strong><br />
Liaon<strong>in</strong>g<br />
Hebei<br />
Chongq<strong>in</strong>g<br />
iangxi<br />
Hunan<br />
Anhui<br />
Inner Mongolia<br />
Shanxi<br />
X<strong>in</strong>jiang<br />
Guangxi<br />
Jil<strong>in</strong><br />
Guizhou<br />
Ha<strong>in</strong>an<br />
Heilongjiang<br />
Chart A.4<br />
4.2%<br />
3.8%<br />
3.6%<br />
3.0%<br />
3.0%<br />
2.8%<br />
2.4%<br />
2.2%<br />
2.0%<br />
1.2%<br />
1.0%<br />
0.8%<br />
0.6%<br />
0.6%<br />
0.6%<br />
0.4%<br />
0.4%<br />
0.4%<br />
0.2%<br />
0.2%<br />
0.2%<br />
10.2%<br />
9.0%<br />
7.4%<br />
6.2%<br />
Size of company. (See Charts A.5 and A.6)<br />
• Eighty-seven percent of IDH respondents worked for companies with fewer<br />
than 500 employees. Fifty-seven percent of these companies had five or<br />
fewer facilities.<br />
• Sixty-five percent of OEMs, ODMs and EMS providers surveyed were<br />
employed by companies with 500 or fewer employees and 77 percent of the<br />
companies had fewer than five facilities. However, 12 percent of respondents<br />
worked for companies with 5,000 or more employees and 21 percent of the<br />
companies had five or more facilities, imply<strong>in</strong>g that IDHs services are not<br />
exclusive to the small and mid-sized market.<br />
E M B E D D E D D E V E L O P E R • 2 0 1 2 C H I N A I D H R E P O R T<br />
Location of customer facilities Number of full-time employees IDHs<br />
33.7%<br />
Chart A.5<br />
Under 100<br />
100 - 500<br />
500 - 1,000<br />
1,000 - 5,000<br />
5,000 - 10,000<br />
10,000 - 25,000<br />
More than 25,000<br />
Chart A.6<br />
Don’t know<br />
Under 100<br />
100 - 500<br />
500 - 1,000<br />
1,000 - 5,000<br />
5,000 - 10,000<br />
10,000 - 25,000<br />
More than 25,000<br />
Don’t know<br />
4.8%<br />
3.5%<br />
0.9%<br />
0.0%<br />
2.2%<br />
1.7%<br />
4%<br />
2%<br />
6%<br />
1%<br />
8%<br />
14%<br />
31.3%<br />
End Markets. (See Chart A.7 and A.8 on page 11)<br />
• Both IDHs and their customers were well represented <strong>in</strong> all the major<br />
electronics end markets with the greatest concentrations <strong>in</strong> the areas of<br />
<strong>in</strong>dustrial controls, systems, equipment and robotics<br />
28%<br />
37%<br />
10<br />
55.7%<br />
Number of full-time employees OEMs, ODMs, EMS providers
11<br />
Industrial controls, systems, equipment and robotics<br />
Consumer electronics<br />
Wireless communication systems and equipment<br />
Electronic <strong>in</strong>struments, ATE systems, design & test equipment<br />
Electronic sub-assemblies (boards, modules, hybirds, and power<br />
Wired communication systems and equipment<br />
Medical electronic equipment<br />
Automotive and other ground vehicles<br />
Consumer appliances<br />
Computers and computer systems<br />
Light<strong>in</strong>g equipment<br />
Computer peripherals, disk drives, term<strong>in</strong>als, pr<strong>in</strong>ters/plotters<br />
Avionics, mar<strong>in</strong>e, space, and military electronics<br />
Office and bus<strong>in</strong>ess mach<strong>in</strong>es<br />
CAE/CAD/CAM systems<br />
Government and/or military equipment<br />
Other<br />
Chart A.7<br />
Industrial controls, systems, equipment and robotics<br />
Electronic sub-assemblies (boards, modules, hybirds, and power<br />
Electronic <strong>in</strong>struments, ATE systems, design & test equipment<br />
Consumer electronics<br />
Computers and computer systems<br />
Wireless communication systems and equipment<br />
Computer peripherals, disk drives, term<strong>in</strong>als, pr<strong>in</strong>ters/plotters<br />
Consumer appliances<br />
Automotive and other ground vehicles<br />
Medical electronic equipment<br />
Avionics, mar<strong>in</strong>e, space, and military electronics<br />
Wired communication systems and equipment<br />
Government and/or military equipment<br />
Office and bus<strong>in</strong>ess mach<strong>in</strong>es<br />
Light<strong>in</strong>g equipment<br />
CAE/CAD/CAM systems<br />
Other<br />
Chart A.8<br />
E M B E D D E D D E V E L O P E R • 2 0 1 2 C H I N A I D H R E P O R T<br />
Primary end products of OEMs, ODMs, and EMS providers<br />
multiple responses<br />
3%<br />
2%<br />
2%<br />
2%<br />
2%<br />
2%<br />
5%<br />
5%<br />
5%<br />
4%<br />
4%<br />
Typical products designs and services provided by IDHs<br />
multiple responses<br />
7%<br />
9.8%<br />
9.6%<br />
8.6%<br />
7.1%<br />
5.0%<br />
5.0%<br />
4.8%<br />
4.8%<br />
4.2%<br />
3.3%<br />
1.9%<br />
1.3%<br />
1.3%<br />
0.4%<br />
1.0%<br />
12%<br />
11%<br />
10%<br />
9%<br />
14.4%<br />
17.5%<br />
16%