Electronic Manufacturing Services - Global Drivers and Constraints

Drivers

  • Downstream Demand

Increasing demand from downstream industries is expected to be the primary driver for the 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 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 acquisitions, 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

The increasing 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

Closure

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