Electronic Manufacturing Services Market Overview
The global electronic manufacturing services (EMS) market was valued at $463.2 Bn in 2019 and is expected to grow at a CAGR of 7-8% by 2022, reaching $575.69 Bn. In 2017, the market size expanded by 10.7%, majorly driven by the huge growth in the telecom, industrial, and medical sectors.
The EMS market incorporates both EMS and ODM businesses as most manufacturers (ODM and EMS) get involved in other businesses simultaneously. The major end-users of EMS are communication and computer hardware sectors, which hold around 59% of the demand.
Electronic Manufacturing Services Market Analysis and Global Outlook
- Significant decline in the laptop/desktop shipment due to COVID-19 induced stressors is putting a dent in the electronic manufacturing services market size.
- The EMS market in the US and Canada was collectively valued at $66.41 Bn in 2017 and grew at a CAGR of 0.25-0.5% during 2017-2018. The growth rate for 2019-2020 was 1-2%.
- Nowadays, many electronics original equipment manufacturers (OEM) are adopting a regional strategy for manufacturing. The US and Canada are developing their manufacturing capabilities to quench the needs of OEMs.
- Labor rates in China, which were the cheapest in the world about 10 years ago, have increased rapidly in recent times. Thus, Apple is building its new MacPro computer in Texas, the US. GE has moved production of some of its appliances from China to its Appliance Park in Kentucky, the US. Similarly, Lenovo and Google Glass have started shifting their EMS industry needs to the US.
- The Latin America (LATAM) EMS market size in 2019 stood at $54.42 Bn, with a CAGR of 3% during 2019-2020.
- Mexico is the leading exporter of domestic electronic appliances in LATAM and the sixth-largest in the world.
- Mexico’s key strategies are cost savings, the presence of technical talents, excellent transport infrastructure, and developing efficient supply chain processes to improve its position in the world ranking.
- Europe and the Middle East and Africa (EMEA) EMS market revenue size in 2019-2020 was $32.01 Bn, with a 0.5–1% CAGR for the same period.
- EMS revenue in Western Europe reached €13.5 Bn in 2019, from €11.2 billion in 2017, with the market increasingly focussed on end-use industries such as aerospace, defense, automotive, medical, control and instrumentation, and telecom.
- In Western Europe, when there was a visible decrease in revenue of around 1.2%, Eastern and Central Europe, Middle East, and North Africa are balancing the situation by showing 3.4% growth thus stabilizing the European market.
- Taiwan is ground zero for the electronics industry with 75% of the electronic manufacturing service providers from the country. Also, Asia Pacific (APAC) dominated the EMS market in terms of growth prospects until 2018-19.
- Demand for consumer electronic products is on the rise, driven by innovation, price deflation, and growing household incomes, particularly in the emerging countries in Asia.
- APAC’s supply chain starts with product design, semiconductor fabrication and packaging, components and subsystems, final assembly and testing, which is also slowly moving toward low-cost countries in APAC, including India, and Indonesia, for reducing the manufacturing cost.
- The APAC EMS market size in 2019 was $292.46 Bn and was expected to grow at a CAGR of 3-4% during 2019-2020.
- Electric vehicles (EV), hybrid EVs, automotive electronics growth owing to smart cars and industrial electronics are also majorly contributing to the EMS industry revenue.
- As the Asian EMS market is expected to grow equally expensive over western regions, the supply chain trend is expected to gradually shift from APAC to the US and some of the Eastern European regions.
Why should you Buy this Report
The report discusses the regional EMS market overview constituting market size, growth rate and key suppliers in the U.S, Canada, LATAM, EMEA, and APAC regions. The report also highlights Porter's Five Force Analysis including the supplier power, buyer power, barriers to new entrants, intensity of rivalry and threat of substitute. The report covers the global EMS market drivers and constraints, cost and pricing forecast as well as the impact of key price drivers. The report also analyses key global suppliers' profile and provides a SWOT analysis of some of the major industry giants in the EMS market including Foxconn, Pegatron, Flextronics, Jabil Inc., Sanmina etc. It covers procurement best practices comprising of sourcing strategy, engagement models, contract models, and risk analysis.
Methodology for writing this Report
Beroe gathers intelligence through primary sources that include industry experts, researchers, and consultants, as well as current suppliers, producers and distributors. Secondary sources can include business journals, newsletters, magazines, market research data, company sources, and industry associations. Following data collation, analysis, and strategic review, the Final Research Report is published on Beroe LiVE.
Electronic Manufacturing Services - Global Drivers and Constraints
Electronic Manufacturing Services (EMS) Market Trends
Rising Trend of Smart Home
The increasing adoption of smart home devices in developed regions such as the US are setting high hopes for electronic manufacturing service vendors. In the US, the electronic manufacturing services delivered by the companies contain developing optoelectronics services, radio frequency (RF) & wireless devices, and microelectronics devices for the rapidly emerging smart home trend.
Market players are focusing on stepping up their production capacities by integrating cloud computing, artificial intelligence (AI), big data analysis, and 3D printing to manufacture connected devices for smart homes.
Greater Emphasis on Vehicle Electrification
The expansion of EVs owing to rising stringency in government policies to curb carbon footprint will influence automakers to opt for electronic manufacturing services. Also, governments across the world are launching schemes and policies to promote the adoption of EVs.
The EMS expertise in the automotive sector includes box build assembly, PCB assembly services, and module assembly to provide high-volume production units to OEMs. Industry players are creating long-term collaborations with tier-1 suppliers and prominent automakers.
A significant demand for communication and automotive electronics has been one of the key driving factors for EMS growth globally. Severe price competition due to significant fragmentation is expected to shrink the profit margins of the manufacturers.
Drivers
Increasing demand from downstream industries is expected to be the primary driver for the increase in global CEM/EMS industry
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Technological Advancements
Development of new manufacturing technologies and upcoming end-use segments, such as the Internet of Things (IoT), is expected to boost the demand for the EMS market. Major manufacturers are increasing their spending on R&D to differentiate their products and attract new end-use applications.
Constraints
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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
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
Sanmina Corporation says that it has received FDA registration at its manufacturing facilities in Chennai (India) enabling it to manufacture finished medical instruments and devices in the country.
The EMS company has also announced capacity expansion in Thailand, which will have leading-edge customized packaging and assembly capabilities to develop innovative high-speed, optical, and radio frequency (RF) microelectronic products.
Closure
Zytek EMS, a contract electronics assembler, located in Silicon Valley, is closing its factory and selling its assets at auction
Why should you Buy this Report
The report on the electronic manufacturing services market discusses the regional market overview constituting market size, growth rate and key suppliers in the US, Canada, LATAM, EMEA, and APAC. Also, it highlights Porter's Five Force Analysis including the supplier power, buyer power, barriers to new entrants, intensity of rivalry and threat of substitute.
Comprehensive analysis of market drivers and constraints, cost and pricing forecast as well as the impact of key price drivers have been included. The research study scrutinizes key global suppliers' profiles and offers a SWOT analysis of some of the major industry giants including Foxconn, Pegatron, Flextronics, Jabil Inc., and Sanmina. Furthermore, the electronic manufacturing service market study covers procurement best practices such as sourcing strategy, engagement models, contract models, and risk analysis.
