The market was ready for ‘electronic contract manufacturers’ that specialized in the design and manufacture of specific components that would then be sold to the OEM to be placed in the final product. Narrowing the focusing of a company to just one product or component, allowed them to offer economies of scale in the acquisition of raw materials, talent and expertise in the design process, and equipment for production. This cuts costs for the original manufacturer and frees up their capital.
With this new structure, manufacturing companies were able to produce a better product, more efficiently, and easily scale up or down to customer demand. In the design development process, usually the most complex and difficult part of the process, a contract manufacturer is more likely to accumulate a team of experienced engineers that will focus their expertise on the specific component.