Global Market Outlook on Electronic Manufacturing Services 

  • Taiwan positioned as a core for electronics industry with 75 percent of the global EMS industry are Taiwanese companies. Also, APAC is expected to dominate the market in terms of growth prospects until 2018-19. 
  • EV, hybrid EV smartphone innovations, automotive electronics growth due to smart cars and industrial electronics are the major driving factors for the EMS industry 
  • As the Asian market is expected to grow equally expensive over western regions, the supply chain trend is expected to gradually shift from APAC regions to US and some of the Eastern European regions

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EMS Market Overview - Global

  • The global EMS market is expected to grow at a CAGR of 4-5 percent from 2017 to 2022. This is due to the significant decline in laptop/desktop shipment, which is expected to drop further, in addition to the sluggish recovery of the global economy since 2013.
  • The EMS market comprises of both EMS and ODM businesses because most manufacturers (in ODM and EMS) get involved in the other business simultaneously. The major end-use industries are communication and computer hardware sectors, which holds around 65 percent of the demand

Global EMS Drivers and Constraints

  • A significant demand for communication and automotive electronics have been one of the key driving factors for EMS’s growth globally
  • Severe price competition due to significant fragmentation is expected to shrink the profit margins of the manufacturers

Drivers

  • Downstream Demand: Increasing demand from downstream industries is expected to be the primary driver for increase in global CEM/EMS industry
  • Technological Advancements: Development of new manufacturing technologies and upcoming end-use segments, like IoT, is expected to boost the demand for the EMS market. Major manufacturers are increasing their spend on R&D so as to differentiate their products, to attract new end-use applications

Constraints

  • Regulations & Violation of IP: Compliance with domestic stringent regulations and trade tariffs is impacting the EMS industry and forcing OEMs to build in house manufacturing capabilities. Also, increasing case of violation of Intellectual Property Rights (IP) is significantly impacting the Contract manufacturers
  • Industry Profit Margins: High competition among EMS providers leads to low profit margins within the industry. This restricts the growth of smaller manufacturers, especially in emerging markets. Such suppliers typically compete on price terms, which affects the quality of the products they manufacture
     

Industry Events

The EMS industry has witnessed a continuous and strategic growth, due to which various industry events take place, in order to sustain the growth.Some of the major industry events include mergers and acquisions, capacity additions, exhibitions and trade conferences, and technology-driven manufacturing

Plant Expansion

TKR Corp., the EMS business of Nippon Manufacturing Services, has expanded their production facilities in Vietnam, as the need for local production for local consumption is increasing, with a growing necessity to enhance production in the ASEAN region

M&A

TT Electronics Plc has completed its acquisition of Stadium Group plc, a supplier of design-led technologies with product capabilities

Components Shortages

Increasingly serious shortfall in the supply of passive components has disrupted production at some major EMS firms in Taiwan. This has affected the supply to brand clients, with consumers facing possible price hikes in end markets

Service Expansion

EMS provider, Sanmina, says that it has received FDA registration at its manufacturing facilities in Chennai, India, enabling Sanmina to manufacture finished medical instruments and devices in India

Clousure

Zytek EMS, a contract electronics assembler, located in Silicon Valley, is closing its factory and selling its assets at auction