Electronic Manufacturing Services (EMS) Market Size, Share & COVID-19 Impact Analysis, By Service (Electronics Manufacturing Services, Engineering Services, Test & Development Implementation, Logistics Services, and Others), By Industry (Consumer Electronics, Automotive, Heavy Industrial Manufacturing, Aerospace and Defense, Healthcare, IT and Telecom, and Others), and Regional Forecast, 2022-2029

The global electronic manufacturing services (EMS) market was valued at USD 476.88 billion in 2021 and is projected to grow from USD 504.22 billion in 2022 to USD 797.94 billion by 2029, exhibiting a CAGR of 6.8% during the forecast period. Based on our analysis, the global EMS market exhibited a decline of -1.66% in 2020 as compared to 2019.

The global COVID-19 pandemic has been unprecedented and staggering, with electronic manufacturing services experiencing lower-than-anticipated demand across all regions compared to pre-pandemic levels.

The demand for electronics manufacturing services is estimated to grow due to rising healthcare, automotive, and industrial applications. Additionally, the service providers heavily focus on providing functionalities such as sub-assembly manufacturing, testing, designing printed circuit boards (PCBs), and component assembly & re-engineering. It is subsequently driving the market growth over the forecast period.

Electronic manufacturing service companies invest heavily in increasing industrial output and implementing new technologies, contributing to establishing new worldwide standards. Organizations in this industry have adopted several technological transformations, such as virtual reality, the Internet of Things (IoT), and 3D printing, to expand their production capability. To obtain high-value components and mass customization, market participants are now creating partnerships with a variety of original equipment manufacturers (OEMs), original design manufacturers (ODMs), and other partners.

COVID-19 IMPACT

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

The outbreak of coronavirus has impeded the demand for electronic manufacturing services, owing to the pandemic’s severe effect on the global electronics industry's supply chain. The COVID-19 pandemic impacted key market players, with their revenues declining significantly.

The pandemic has adversely impacted the electronics manufacturing industry in 2020 attributed to factors such as disrupted supply chain of components, limited technology movement & worksite coordination, cybersecurity, and under-absorption of fixed costs. For instance, several companies have stated that there have been shortages of certain electronic components, especially for capacitors, connectors, memory (both DRAM and Flash), and LCD panels. As a result, the companies have experienced reduced productivity levels throughout their facilities in the 1st and 2nd quarters of 2020. For instance, Jabil Inc. stated that its factories are running at roughly 65-70% capacity on the verge of the COVID-19 pandemic.

The impact on the electronics manufacturing industry will be far more extensive if the virus impacts other main industrial countries beyond Germany, India, China, and the United States.

However, in the long term, the industry is on the verge of getting back strongly on track seeing an increase in demand across healthcare, automotive, computer, and communication sectors. The key areas include the demand for remote monitoring electronic devices that allow companies to continue working amidst lockdown. For instance, in September 2020, Benchmark Electronics, Inc. partnered with DnaNudge (U.K.-based company) to deliver DnaNudge’s re-engineered lab-free RT-PCR COVID-19 testing system volume production.

LATEST TRENDS

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Increasing Awareness of E-Waste Recycling is a Growing Trend

The growing awareness about e-waste recycling is supporting the market growth. In July 2020, UN’s Global E-waste Monitor 2020 stated that global e-waste volume increased by around 21% in 2019. It is also predicted that, by 2030, the global e-waste discarded products with plug or batteries would reach 74 Mt, almost double in just 16 years. This has led government authorities and OEMs to develop several e-waste recycling strategies and initiatives. For instance, in July 2021, Singapore’s nationwide electronic and electrical waste (e-waste) management system started. It is resulting in inconvenience for recycling of e-waste for consumers. This system acts as a circular economy approach toward being a zero-waste nation.

In the same period, Switzerland and Ghana joined forces to combat and eliminate e-waste. In March 2020, the Europe Commission (EC) presented a new circular economy. The proposal has one of its priorities on reducing electrical and electronic waste. The plan specifically outlines immediate goals such as the “right to repair” and improving overall recycling and reusability. It includes rewards systems to support the recycling of electronics products and an introduction of common chargers. This will aid in reducing overall e-waste and create awareness of reusability and recycling.

DRIVING FACTORS

Improvement of Greener Electronic Devices in Brightening Market Prospects

The emergence of green electronic devices is driving the electronics manufacturing services market growth. These devices are manufactured with recyclable parts, non-toxic chemicals, and reduced carbon emissions during production. It helps reduce carbon footprints, lower energy consumption, and improve process control.

The growing concerns about the rising e-waste across the globe have led to the innovation of greener electronic products. According to the Global E-waste Monitor 2020, a report published in collaboration with the UN Environment Program (UNEP), in 2019, around 53.6 million metric tons of e-waste were produced. Raw materials contained in that e-waste were valued at USD 57 billion.

The increasing carbon emission, primarily while producing electronic devices, leads electronic manufacturing service providers to adopt sustainable plans to reduce emissions. Henceforth, key market players are focusing on strategic planning to manufacture greener electronics devices, thereby driving the global electronic manufacturing services market growth.

RESTRAINING FACTORS

Violation and Lack of Intellectual Property Rights to Hamper Market Growth

Intellectual Property (IP) rights are essential for offering secure legal protection to the innovative creation of electronics devices, as they provide a competitive edge to business owners.

Violation of such rights not only invades the innovator's and investor's privacy policies but also restrains the economic development across the market. Generally, small and medium-sized enterprises (SMEs) focus on rapid growth in the market while avoiding the importance of IP rights (IPR) that promises to offer ample business opportunities within a safer environment. Developing economies encounter issues in devoting resources for strengthening intellectual property systems. Therefore, the key market players need to modify their primary manufacturing process and securely attain IP rights. Thus, violation and lack of such IP rights are expected to hinder the market growth.

SEGMENTATION

By Service Analysis

Engineering Services to Show Strong Growth Backed by Rising R&D by Electronic Assembly Materials Manufacturers

By service, the market is segmented into electronics manufacturing services, engineering services, test & development implementation, logistics services, and others.

Amongst them, engineering services are best positioned to capture the highest CAGR during the forecast period. It is attributed to manufacturers' increasing R&D of superior performance electronic assembly materials. The electronics manufacturing services segment has captured the highest market share in 2021. It is attributed to the growing importance of circuit boards across tablets and other electronic devices.

Test & development implementation and logistics services segments are growing substantially. The market players are adopting outsourcing services to improve flexibility and reduce cost. The upsurge in electric vehicles has also increased the outsourcing of component manufacturing, thereby propelling the market growth.

By Industry Analysis

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IT and Telecom Industry to Experience High Growth

Based on industry, the market is classified into consumer electronics, automotive, heavy industrial manufacturing, aerospace and defense, healthcare, IT and telecom, and others.

The IT and telecom industry is expected to lead the market with the highest CAGR during the forecast period due to initiatives enforced by governmental bodies across the U.S., India, and other countries. Additionally, this initiative has accelerated the demand for consumer electronics, computers, and communication devices, thus driving this market in IT and telecom applications.

The automotive and aerospace & defense segments have been boosted due to rising digitization, increasing IoT-enabled cars, and growing purchase of electric vehicles over the forecast period. For instance, the International Energy Agency (IEA) stated that electric cars reached 3 million sales in 2020, which is 40% up from 2019 and in 2020. Europe leads the electric car market, followed by China and the U.S.

REGIONAL INSIGHTS

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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 2021, Asia Pacific accounted for the largest electronic manufacturing services market share, and it is projected to continue to expand significantly throughout the forecast period. China is one of the most important markets for electronic manufacturing services worldwide, owing to its substantial consumer electronics, semiconductors, and other telecommunications devices and machinery manufacturing. According to a Statista April 2021 report, the total semiconductor sale in the Asia Pacific area, China, and Japan was around USD 28.11 billion in February 2021, with China accounting for slightly under half of all sales in the region. In addition, the rising growth of India’s manufacturing industries could become an engine for electronic equipment manufacturing in the coming years.

The market for electronics manufacturing services in Europe is predicted to increase substantially during the forecast period. Electronic manufacturing service companies cooperate with major European automobile manufacturers such as Volkswagen, BMW, and Renault for PCBA assembly, research, prototype, and building. For instance, in January 2020, Fiat Chrysler Automobiles (FCA) and Foxconn collaborated to produce and construct electric automobiles for the China market.

In 2020, the North America EMS market experienced significant growth, with plenty of opportunities for future expansion. The region's urban growth and stable population growth drive consumer electronics consumption in middle and high-income households. The availability of low-cost consumer electronic products for including smart home products, smartphones, and televisions from a range of local manufacturers is helping to increase their adoption among low-income individuals. The youth's familiarity with new technology also boosts the demand in this region. North America's strong financial position also allows it to make significant investments in R&D. The region's increased structural electronics penetration and the rapid application of structural electronics in conductors, solar devices, and sensors in high-end autos and space vehicles are also expected to contribute to the market growth in future.

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The Middle East & Africa and South America electronic manufacturing service markets are primarily driven by extensive R&D, adoption of electric cars, and rise of consumer and automotive electronics. Further, the increased use of IoT and 3D technologies across several industries is expected to strengthen structural electronics demand over the projected period. Also, due to the small number of automotive electronics manufacturers, worldwide suppliers have a great opportunity to focus on local demand, making the Middle East and South America appealing to investors.

KEY INDUSTRY PLAYERS

Key Players are Focusing on Developing Advanced EMS to Strengthen Competition

Global electronics manufacturers such as Hon Hai Precision Industry Co. Ltd (Foxconn), Jabil Inc., Sanmina Corporation, Flex Ltd, and Benchmark Electronics, Inc. are launching distinctive solutions with modern technologies such as AI, ML, and others. In addition, the market's intense competition prompts service providers to focus on acquisition methods to enhance their positions.

• March 2021: Jabil Healthcare, a Jabil Inc.’s division, strategically collaborated with E3D, a drug delivery device company, to expand its pharmaceutical offerings and services. The agreement agrees Jabil Healthcare to develop related auto-injectors for dosing volumes and patient-centric benefits by designing and engineering innovative digital drug delivery devices in the market.


• March 2021: Ouster, Inc. partnered with Benchmark Electronics, Inc. to scale up the production of its high-resolution digital LIDAR sensors for smart infrastructure, robotics, industrial automation, and automotive industries. The company is utilizing Benchmark Electronics, Inc.’s expertise in PCB assemblies, optics, microelectronics, and automated testing to scale production.

KEY INDUSTRY DEVELOPMENTS:

• November 2021: Hon Hai Precision Industry Co., Ltd. and Lordstown Motors Corp. entered into an asset purchase agreement with a strategic partnership. The Lordstown Motors Corp. sold the Lordstown facility to the company for USD 230.0 million.


• March 2021: Plexus Corp. declared the construction of 400,000 feet square manufacturing facility with production and warehouse space of 2-levels and office space of 4-levels in Bangkok, Thailand. With this, the company targets future growth projections in Asia Pacific.

LIST OF KEY COMPANIES PROFILED:

• Sanmina Corporation (U.S.)


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


• Benchmark Electronics Inc. (U.S.)


• Flex Ltd (Singapore)


• Jabil Inc. (U.S.)


• Celestica Inc. (Canada)


• Wistron Corporation (Taiwan)


• Plexus Corporation (U.S.)


• Fabrinet (Thailand)


• COMPAL Inc. (Taiwan)

REPORT COVERAGE

An Infographic Representation of Electronic Manufacturing Services (EMS) Market

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The market research report provides an in-depth examination of the market. It focuses on key areas such as prominent firms, products, and product applications. Further, the study provides an insight into market trends as well as highlights major industry advancements. In addition to the aspects mentioned above, the research includes a number of critical variables that have contributed to the market's rise in recent years.

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