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Electronic Manufacturing Services (EMS) Market Size, Share & COVID-19 Impact Analysis, By Services (Electronic Design & Engineering, Electronics Assembly, Electronic Manufacturing, Supply Chain Management, and Others), By Industry (Automotive, Communications, Computer, Consumer Electronics, Industrial, Healthcare, Commercial Aviation, and Others), and Regional Forecast, 2021-2028

Region : Global | Format: PDF | Report ID: FBI105519

 

KEY MARKET INSIGHTS

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The global electronic manufacturing services (EMS) market size was USD 468.90 billion in 2020. The global impact of COVID-19 has been unprecedented and staggering, with electronic manufacturing services witnessing a negative impact on demand across all regions amid the pandemic. Based on our analysis, the global market exhibited a lower growth of 6.5% in 2020 as compared to the average year-on-year growth during 2017-2019. The market is projected to grow from USD 500.26 billion in 2021 to USD 849.72 billion in 2028 at a CAGR of 7.9% in the 2021-2028 period. The rise in CAGR is attributable to this market’s demand and growth returning to pre-pandemic levels once the pandemic is over.


The demand for outsourcing manufacturing services to third-party manufacturing service providers has risen as businesses aim to reduce inventory, warehouses, and infrastructure as part of their manufacturing operations, and move the balance of their capital assets toward sales and marketing, as well as R&D. Electronic manufacturing services providers spend actively to boost factory production and implement emerging technology, assisting in the achievement of new global norms. The increasing competition in the EMS industry has prompted businesses to adopt many technical transformations, including virtual reality, the Internet of Things (IoT), and 3D printing, to increase their manufacturing capability. Market participants are now forming partnership relationships with many original design manufacturers (ODMs), original equipment manufacturers (OEMs), and other partners in order to achieve high-value components and mass customization.


COVID-19 Impact


Widespread Supply Chain Disruptions in Electronics amid COVID-19 to Stall Market Growth


The global electronics industry's supply chain has been severely affected by the COVID-19 pandemic. The halt and delay in the raw materials required for automotive and communication electronics have negatively affected the market. According to the latest surveys conducted by the Organization for Economic Co-operation and Development (OECD), in March and April 2020, 43% of global electronics manufacturers and suppliers are negatively affected due to the effect of the coronavirus.


The pandemic hampered the sector's overall development in 2020, as major automakers including Fiat, Volkswagen, PSA Group, General Motors, and BMW had to halt production due to COVID-19 during the first two quarters of the year. In the first two quarters of 2020, businesses experienced supply chain delays as a result of stringent lockdowns imposed in many parts of the world. This scenario has an impact on the global EMS market, especially in European and North American countries, since the growth of this market is associated with the demand for electronics in developed economies. However, seeing 2021 as the turnaround time, when the automotive sector is projected to display growth, industry analysts predict that the demand for electronic manufacturing services will increase.


The escalating trade war between China and the United States has prompted many Asian factories to relocate their operations from China to Southeast Asian countries in order to escape tariffs. According to the Thailand Development Research Institute (TDRI), the majority of companies have relocated their manufacturing plants to Vietnam because of its low labor costs and high-tech industries. However, as a result of the COVID-19 pandemic, the demand for computers and laptops has increased, driving the competition for electronic manufacturing services in computer applications in the longer term.


LATEST TRENDS


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Rising Trend towards Smart and Connected Devices Will be a Key Trend


IoT-based technologies are increasingly being deployed in production plants, reflecting the overall growth in networking across the globe. According to a survey conducted by ZDNet on industrial IoT in January 2019, 82% of survey respondents stated that they have implemented IIoT or are running a pilot project. These service providers are best able to monitor the extensive production chain involved in today's complicated electronics manufacturing industry, owing to streamlined asset monitoring and connected networks that maintain a steady stream of data during production. According to IoT analytics, global active IoT devices were 9.5 billion and are expected to continue with their robust growth.


Despite the fact that corporate processes worldwide have greatly changed since the outbreak of the COVID-19 pandemic, the Internet of Things is radically transforming the way companies operate in the 21st century. The disruptions and delays caused by this disaster, especially in the electronics manufacturing industry, have prompted players to introduce new services to meet the growing demand in the electronics and manufacturing industries.


Manufacturers have been forced to re-evaluate their operations, employee protection, and contingency measures in an effort to deal with the pandemic’s demoralizing setbacks. They have been able to do this by using digital technology to combat the pandemic's problems. The arrival of IoT in the world of electronic manufacturing would not change the underlying processes of operations, but it will undoubtedly change the way manufacturing processes are managed and operated. Electronic component design and assembly have been revolutionized with the introduction of miniaturization and implementation of new developments in the Industrial Internet of Things (IIoT) and improved connectivity presented by 5G. For instance, in May 2021, Qualcomm Technologies, Inc. launched Qualcomm 315 5G IoT Modem-RF System, a comprehensive IoT modem with 5G connectivity for optimized IIoT applications. With the introduction of IoT technologies, this market is experiencing strong expansion.


DRIVING FACTORS


Significant Demand for Automotive and Communication Electronics is a Key Driving Factor


Electronic devices and appliances have become indispensable components of the global manufacturing sector. Electronic manufacturing services are becoming more important as the complexity of these electronic devices grows. Manufacturers are looking for more advanced and sophisticated technical technologies to streamline their manufacturing processes as the demand for novel features and goods has increased in recent years. For example, smart technology is being introduced across the industrial spectrum, opening up numerous lucrative opportunities for electronics manufacturers.


Due to the increasing connectivity among its different products, ranging from audio products to wearables and even virtual reality, electronics manufacturing services are expected to see substantial adoption in the consumer electronics and automotive industries. Designing, innovation, and prototyping, as well as mass development and end-to-end product lifecycle solutions, are all part of high-end electronic manufacturing solutions for consumer electronics. Furthermore, policymakers are taking steps to increase electric car demand in order to reduce fuel consumption and pollution-related problems, which would boost the adoption of electronic manufacturing services in the long term. For instance,



  • European countries are focusing their efforts on eliminating diesel-combustion and gasoline engines by 2030 and rolling out an efficient electric vehicles (EV) framework.

  • The Indian government's FAME scheme (Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles) has chosen 11 cities across the country to pilot electric vehicles in their public transportation systems, opening up new markets for automotive electronics in the region.


Such initiatives by governments and automotive associations are expected to boost the market growth.


RESTRAINING FACTORS


Lack of Skilled Workforce to Limit Market Growth


The growing need to optimize resources, boost productivity, and lower manufacturing costs are some of the factors responsible for the increasing demand for electronic manufacturing services platforms in manufacturing facilities. Manufacturers are integrating these services to automatically capture and process data in order to make better decisions. IoT technology is used to send data from computers and sensors to the cloud. Several businesses around the world have made significant investments in R&D and are implementing IoT technology to simplify their production processes. However, due to a shortage of qualified workers familiar with IoT technologies, some businesses are also using conventional manufacturing methods, resulting in the limited adoption of EMS.


SEGMENTATION


By Service Analysis


Electronic Manufacturing to Show Strong Growth Backed by High Demand from Automotive Sector


Based on service, the market is segmented into electronic design & engineering, electronics assembly, electronic manufacturing, supply chain management, and others.


In terms of revenue, the electronic manufacturing segment led the global market in 2020. The rise in the adoption of smart home products in developing economies, with China capturing the bulk of the market, is largely responsible for the segment’s growth. To build mobile technologies for smart homes, industry leaders are inclined to integrate Artificial Intelligence (AI), cloud computing, 3D printing, and big data processing to improve their manufacturing and factories. Market players in the electronics manufacturing services sector are widening their manufacturing locations in order to incorporate emerging products to meet the industry's high demand for smart home services. For example, Sanmina Corporation announced the opening of a new factory in Thailand in March 2020, which will produce high-speed RF microelectronics and optical services and will automate assembly and custom packaging facilities.


Over the projected period, the electronic assembly segment is expected to rise at the fastest CAGR. Contract manufacturers have been compelled to rethink their existing corporate strategies and focus on the bottom line as a result of the volatile economy. The majority of executives see contract assembly as a way to save money, increase flexibility, and streamline their manufacturing processes.


By Industry Analysis


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Communications Industry to Experience High Growth


Based on industry, the market is segregated into automotive, communications, computer, consumer electronics, industrial, healthcare, commercial aviation, and others.


The communications segment is expected to be the leading segment, propelling the growth of this market during the forecast period. The increased adoption of networking and wearable technologies, as well as increasing cell phone penetration, is driving the development of the communications electronic market. The digitalization of the market necessitates the use of sophisticated electronics and capabilities, as well as high-level networking. As a result, electronic manufacturing services are being more widely used in the communication electronics industry.


The healthcare segment is expected to witness the highest CAGR over the forecast period. Electronics such as printed circuit boards (PCBs) have become particularly important in the medical industry, from X-ray devices to pacemakers, offering vastly better diagnostics and therapies for patients. Medical device manufacturers (MDMs) are taking advantage of the fast-growing and data-driven consumer markets by integrating real-time solutions into their healthcare devices because many of the technological advancements in the medical device industry are electronics-related. The digital health sector (particularly point-of-care products and devices), which is expected to drive the growth rate of the healthcare EMS market, is driving this push.


REGIONAL INSIGHTS


North America Electronic Manufacturing Services (EMS) Market Size, 2020 (USD Billion)

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In terms of geography, the market is segmented into North America, Europe, Asia Pacific, the Middle East & Africa, and South America.


In 2020, the Asia Pacific region accounted for the largest electronic manufacturing services market share and it is projected to continue to expand significantly throughout the forecast period. Due to its strong presence in the consumer electronics, semiconductors, and other telecommunications products and machinery manufacturing sectors, China is one of the most important markets for EMS in the world. The country manufactures and assembles approximately 60-70% of the world's electronics. Semiconductor revenues in the country grew from USD 82.4 billion in 2015 to USD 143.7 billion in 2019, according to the Semiconductor Industry Association (SIA). China also leads the world in 5G technologies, with 50 cities expected to have complete coverage by late 2020. The region's emphasis on improving telecommunications and navigation equipment is creating prospects for the market's vendors. Government-owned orbital robotic spy systems, as well as advancements in radar and optical imaging variants, are further driving the market growth.


The Europe electronics manufacturing services market is expected to witness strong growth. For PCBA assembly, research, prototyping, and construction, major European automotive manufacturers such as Volkswagen, BMW, and Renault are partnering with electronic manufacturing service providers. For example, Fiat Chrysler Automobiles (FCA) and Foxconn partnered for the production and construction of electric vehicles for the Chinese market in January 2020.


The North American market showcased strong growth in 2020 with great potential for future growth. The use of consumer electronics in middle- and high-income households is being driven by the region's rapid urbanization and steady population growth. The availability of low-cost consumer electronic devices, such as smartphones and televisions, from a variety of local brands, is assisting in their acceptance by low-income people. The demand in this region is also being boosted by the youth’s understanding of upcoming technologies. North America’s effective financial position also enables it to invest in R&D activities heavily. The fast use of structural electronics in conductors, photovoltaic devices, and sensors in high-end cars and space vehicles can be due to the region's higher structural electronics penetration.


The growth of the Middle East & Africa and South American market is mainly propelled by vast R&D activities, the adoption of electric vehicles, and the growth of consumer and automotive electronics. Furthermore, the growing adoption of IoT and 3D technologies across a variety of industries is also expected to boost the structural electronics demand over the forecast era. However, due to the small number of automotive electronics producers, global vendors have an excellent opportunity to focus on local demand, rendering the MEA and South America attractive to investors.


KEY INDUSTRY PLAYERS


Emphasis of Key Players Toward Developing Advanced EMS to Strengthen Competition


Companies operating in the market such as Vinatronic Inc., Hon Hai Precision Industry Co. Ltd (Foxconn), Flex Ltd, Sanmina Corporation, and Nortech Systems Incorporated are launching differentiated solutions with advanced technologies such as AI, ML, and others. Also, the high competition in the market is forcing service providers to focus on acquisition strategies for strengthening their positions.



  • February 2020 - Jabil Inc., a leading electronic manufacturing service industry player launched its healthcare manufacturing company Jabil Healthcare to strengthen its footprint in global healthcare manufacturing services. The newly unveiled firm would work in medical devices, diagnostics, orthopedics, pharmaceutical delivery, and consumer health.


LIST OF KEY COMPANIES PROFILED:



  • Vinatronic Inc. (California, United States)

  • Sanmina Corporation (California, United States)

  • Hon Hai Precision Industry Co. Ltd (Foxconn) (Taipei, Taiwan)

  • Benchmark Electronics Inc. (Arizona, United States)

  • Flex Ltd (Singapore)

  • Jabil Inc. (Florida, United States)

  • SIIX Corporation (Tokyo, Japan)

  • Celestica Inc. (Toronto, Canada)

  • Creation Technologies LP (Burnaby, Canada)

  • Wistron Corporation (Taipei, Taiwan)

  • Plexus Corporation (Wisconsin, United States)


KEY INDUSTRY DEVELOPMENTS:



  • May 2021 - Foxconn Technology Group, an electronic manufacturing services company, partnered with global automaker Stellantis NV to develop inter-connected vehicles and build electric cars in the Chinese market.


REPORT COVERAGE


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The global market research report provides an in-depth analysis of the market. It focuses on key aspects such as leading companies, products, and leading product applications. Besides this, the report offers insights into electronic manufacturing services market trends and highlights key industry developments. In addition to the factors mentioned above, the report encompasses several key factors that have contributed to the market's growth over recent years.


Report Scope and Segmentation














































  ATTRIBUTE



  DETAILS



Study Period



  2017 – 2028



Base Year



  2020



Forecast Period



  2021 – 2028



Historical Period



  2017 – 2019



Unit



  Value (USD Billion)



Segmentation



  By Services; Industry; Region



By Services




  • Electronic Design & Engineering

  • Electronics Assembly

  • Electronic Manufacturing

  • Supply Chain Management

  • Others



By Industry




  • Automotive

  • Communications

  • Computer

  • Consumer Electronics

  • Industrial

  • Healthcare

  • Commercial Aviation

  • Others (Defense, etc.)



By Region


 




  • North America (By Services, Industry; and Country)

    • The United States

    • Canada



  • South America (By Services, Industry; and Country)

    • Brazil

    • Mexico

    • Rest of South America



  • Europe (By Services, Industry; and Country)

    • The U.K.

    • Germany

    • France

    • Italy

    • Russia

    • Nordic

    • Rest of Europe



  • The Middle East & Africa (By Services, Industry; and Country)

    • Turkey

    • Saudi Arabia

    • UAE

    • Rest of MEA



  • Asia Pacific (By Services, Industry; and Country)

    • China

    • Japan

    • South Korea

    • Southeast Asia

    • India

    • Australia

    • Rest of Asia





Frequently Asked Questions

According to Fortune Business Insights, the global market is expected to reach USD 849.72 billion by 2028.

Fortune Business Insights says that the market stood at USD 468.90 billion in 2020.

The market is expected to grow at a CAGR of 7.9% during the forecast period (2021-2028).

Based on services, the electronic manufacturing segment is expected to lead the market during the forecast period.

The significant demand for automotive and communication electronics is one of the key drivers for market growth.

Vinatronic Inc., Hon Hai Precision Industry Co. Ltd (Foxconn), Flex Ltd, Sanmina Corporation, and Nortech Systems Incorporated are the top companies in the market.

The communication industry segment holds the major market share.

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Electronic Manufacturing Services (EMS) Market Size, Share and Global Industry Trend Forecast till 2026
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