Original Equipment Manufacturer (OEM): Overview and Examples

By Rachel Warren – Updated Jun 27, 2025 at 9:34 PM | Fact-checked by Frank Bass

Key Points

Original equipment manufacturers produce specialized parts, letting companies outsource production and save costs.
OEM parts ensure high quality and reliability, making them more appealing to businesses than aftermarket alternatives.
By using OEMs, firms avoid the costs of setting up manufacturing operations themselves.

Original equipment manufacturers (OEMs) produce components or products that are then integrated into the final products of other companies. OEMs often focus on specialized manufacturing, allowing other companies to outsource their production and reduce costs while maintaining high-quality standards in their own products.

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Two people working in manufacturing facility. — Image source: Getty Images.

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For example, the food and beverage industry uses OEMs for sourcing production and packaging machinery. Likewise, OEMs also provide hardware components, such as servers, storage devices, and networking equipment, to some of the world's largest IT companies.

OEMs often work with value-added resellers (VARs), which are businesses that purchase products from OEMs and enhance them with additional services, features, or customizations before reselling them to end-users. OEMs also may provide replacement parts for their products, which can be purchased through VARs or directly from the OEM in some cases.

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About the Author

Rachel Warren is a contributing Motley Fool stock market analyst covering pharmaceuticals, biotechnology, medical devices, information technology, and consumer goods. Prior to The Motley Fool, Rachel was a paralegal and legal administrator. She holds a bachelor’s degree in paralegal studies from Liberty University School of Law.

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Rachel Warren has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.