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Understanding networking equipment contracts electronics services

Networking equipment and servers are considered mission critical product categories, with near-shore manufacturing, such as Mexico/North America and Vietnam for finished goods, while motherboards production often takes place in Asia.

Vietnam has made progress in creating a destination attracting both foreign direct investment (FDI) and global manufacturing supply chain operations in the face of challenging economic and policy protections elsewhere.

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Vietnam and South East Asia manufacturing resources page
Vietnam as a tech manufacturing hub: Strengths and challenges

Some challenges companies may face when considering Vietnam for manufacturing operations:

• Low labor skills available if high-end manufacturing is required
• Infrastructure in Vietnam is under-developed. Although the nation has robust infrastructure spending ~6.3% of GDP (on average) over the past 5 years more than twice the average in ASEAN
• Vietnam government is selective regarding FDI policy (against low value add, high-pollution industries)
• Dealing with local government can be tedious

Trends in networking equipment industry

There are various  trends taking shape in the networking equipment industry. From OEM brand manufacturers of networking equipment leveraging cloud-based solutions and the use of artificial intelligence and machine learning to improve network performance and automation, and more, below. (Read: Artificial intelligence use in contract electronics industry)

Some of these trends in electronics networking hardware equipment include the following:

• The use of multi-gigabit Ethernet technology in devices such as routers, switches, and access points to support the growing demand for high-speed internet and data transfer.
• The use of low-power, small form-factor devices such as Internet of Things (IoT) gateways and edge computing devices to support the proliferation of IoT devices and applications.
• The use of artificial intelligence and machine learning algorithms to improve network performance, security, and automation.
• The use of software-defined networking (SDN) and network functions virtualization (NFV) to enable more flexible and dynamic network management.
• The adoption of 5G networks, which require particular innovation with printed circuit board (PCB) development, that can then drive the need for more advanced and powerful networking hardware to support the higher data transfer rates and lower latency.
• The growing focus on cybersecurity in the networking industry, with an increasing emphasis on solutions that can help to protect networks from cyber attacks.
• The use of wireless communication technology including Wi-Fi 6 and Bluetooth 5.2 which is becoming more popular as it offers improved range, speed and security.

Networking smart grids

Meanwhile, the need for intelligence in the energy grid will also drive spending for smart grid (networking) equipment which should help accelerate sales for vendors in the networking equipment industries as the grid is becoming more connected, resilient and secure as a result of distributed and alternative energy resources used to power manufacturing facilities.

Additionally, open communications and networking protocols,  are also positive factors contributing to networking hardware and equipment growth. The Open System Interconnection Model (OSI) is designed to standardize communications and improve the interoperability of disparate systems to be able to communicate with each other, such as smart cities, smart manufacturing networks, and smart homes – with numerous connected devices, such as smart meters, in Internet-of-Things (IoT) environments.

Over the past 8 to 10 years, tons of smart meters have been implemented across the United States and the world. Just take a look at projected smart meter penetration figures from 2018.

To this end, demands from the growth of cloud computing, industrial electronics and advanced robotics environments will also encourage growth for networking equipment companies.

The primary networking industry focus is on network pathing: structuring and managing of multi-node networks, including the addressing, routing, and traffic control of data packs moving from the physical side of the system up through the software stack to the application layer.

In general, networking hardware equipment companies are focused on the physical layer (hardware equipment) and only a few have a vision of moving up the OSI stack. This is similar to what occurred, over time, with leading networking companies in the telecommunications equipment market.

For the foreseeable future, the push will continue to include networking equipment companies allocating R&D cash into initiatives focused on Big Data – with an eye on tight cash management planning – and executing strategies that optimize total landed cost profit and product margin growth protection, to then expand gross margins over time, provided networking equipment firms can manage the growth.

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Trends in cloud computing are also playing a role in networking equipment demand, as well as in the design and manufacturing of the equipment. Predominantly, in the coming years, technologists see five key technology upgrades including new spectrum, massive MIMO, better network slicing, dual connectivity and open radio access network (ORAN), which should improve networking equipment systems in various dimensions.

Networking equipment supply chain professionals can read more about cloud and enterprise resources planning (ERP) sourcing strategies, here.

Your One Stop Electronics Services Directory

Every electronic OEM equipment manufacturer has needs for sourcing, product design, manufacturing and supply chain management specific to its industry. The contract electronics industry is more than just outsourcing manufacturing, it’s about finding the right suppliers and partners and building relationships that add real value and the VentureOutsource.com website can help.

Search Global Directory of Contract Electronics Services | Contract Electronics Services Overview | Design Services | New Product Introduction (NPI) Services | Manufacturing Services | Supply Chain Services | Logistics Services | After Market Services

Manufacturing trends

Below are links to different industry contract electronics manufacturing pages filled with detailed information on trends and best practices.

Aerospace & Avionics | Defense & Military | Industrial | Consumer Devices | Computing | Medical | Clean, Green Technology | Automotive | Networking Equipment | Telecom | Servers & Storage | Peripherals

View Venture Outsource management consulting menu or learn more about our contract electronics industry online training and education and the unique way our consulting services and research projects are set up to better serve our clients here.

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