SCI

"SCI’s founder CEO Olin B. King then did something that would set a template for an entire industry. Adding to his knowledge of circuit boards, he had SCI take on adjacent tasks: it learned more about assembly operations, caught up with the latest methods in distribution, and started to win orders for subassembly and, later, to build entire computers—including for the PC clones that mimicked IBM. When SCI was building only circuit boards, it was just a supplier; when it started making another company’s designs, it gave birth to a new industry: electronics contract manufacturing."

"SCI was joined by the likes of Solectron, Flextronics, Celestica, and Jabil—all North America–based contract manufacturers who collectively killed off the entire concept of the do-it-yourself, vertically integrated computer company."

"The 1990s had seen an incredible stock-market boom among US-headquartered contract manufacturers that had followed in the wake of SCI. There was massive consolidation as companies few people had ever heard of merged in a battle for scale. Solectron alone acquired some twenty companies in the decade, and in the five years leading up to 1999 its market value grew tenfold. Revenue at Flextronics, a rival, experienced average annual growth of 78 percent in the late nineties, aided by mergers."

"A practical compromise was reached. Apple took care of the guts inside the computer—basically the same circuit boards that were in its G3 desktop—but it would rely on a supplier to build the CRT. Then units would be sent to an Apple site for final assembly, test, and pack out, or FATP. That way, Apple had the last look before any computer was shipped, giving Jobs the level of control he desired. “Steve was adamant that we would manufacture the iMac internally,” says Joe O’Sullivan, who was by then leading operations in Singapore. Jobs asked O’Sullivan to kill the partnership with SCI in Colorado, a cancellation that cost Apple $5 million and infuriated SCI. Instead, Jobs asked O’Sullivan to turn Singapore into a pilot plant for iMac manufacturing. “It was our best, our cheapest manufacturing plant,” the Irishman says. “And I was running it. So he had a throat to grasp.”"

"Yet it’s worth highlighting how recently Foxconn developed this reputation. In 1999, it was a company with $1.8 billion of revenue, far smaller than Solectron, SCI, or Flextronics, its US rivals. By 2010, Foxconn revenues were $98 billion, more than those of its five biggest competitors combined. And Foxconn’s extraordinary growth in those eleven years is the consequence of one client more than any other: Apple."