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I'm going to describe the how, why and implications of Fabrinet's (FN) dominance of outsourced optical components manufacturing, but first it's necessary to understand the contract manufacturing life cycle. The question is, why is design separated from manufacturing in some industry sectors, but not others? When do the benefits of outsourced manufacturing outweigh its costs, from the product designer's perspective? A few factors:

  1. IP sensitivity. If your IP is valuable and easy to steal, you prefer to in-source.
  2. Standardization. If your products are ultra specialized, and hard to manufacture at decent yields, then you might choose to in-source.
  3. Industry competitiveness. A company that dominates its niche won't judge the risks of outsourcing worthwhile. But in a tough industry,

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