Kasey and Nick from Chip Stock Investor discuss original equipment manufacturers (OEMs) and original design manufacturers (ODMs), defining each and explaining their roles in the electronics manufacturing supply chain. They highlight the massive revenue potential in this sector, driven by the AI boom, but also point out the challenges in achieving consistent profitability. They compare companies like Foxconn, Amphenol, and Celestica, noting that while OEMs and ODMs handle trillions in sales, their profit margins can be thin, making them less attractive investments compared to companies like Arista and Pure Storage, which operate on a fabless model with higher profit margins due to their focus on design and software. They also touch on electronic manufacturing service companies (EMS) and how some are expanding into OEM/ODM territory.
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