This work explores the firm’s supplier selection question that the competitor firm and the third-party supplier can supply the substitutable component. We consider a supply chain with two competing original equipment manufacturers (OEMs) and two third-party suppliers. The two OEMs produce the competing products which are comprised by two main components. Each OEM only can produce one component in-house and each third-party supplier only supplies one component. The OEMs must decide whether to outsource the other component to the competing OEM or to a third-party supplier. We discuss the different supplier selection strategies and compare the OEMs profits in different decision. We find that there are conditions where, while one of the OEMs should outsource to the competing firm, outsourcing to a third-party supplier is the optimal strategy for the other OEM even when the cost of the third-party supplier is more expensive and the competition is intense.