Electronic Manufacturing Services (EMS) Market size worth $650bn by 2026
Published Date: August 4, 2020 Authors: Preeti Wadhwani, Shubhangi Yadav
Electronic Manufacturing Services Market size is set to surpass USD 650 billion by 2026, according to a new research report by Global Market Insights, Inc.
The electronic manufacturing services (EMS) market growth is propelled by increasing penetration of Original Design Manufacturers (ODMs) across the globe. The outsourcing of electronic manufacturing services through ODMs has witnessed high growth as major electronics players, such as Dell, Hewlett-Packard, Sony, Philips, and Apple, demand technical solutions from ODMs. ODMs offer high-end manufacturing services such as engineering, logistics, re-engineering, and manufacturing as well as intellectual proprietary rights (IP) including patents and original design rights.
The growing digitization and advancements in medical devices are creating the need for electronic contracting manufacturing services to provide safe & secure machinery across the globe. Technical advancement in sensor technology and increasing adoption of remote health-monitoring devices are creating new growth opportunities for EMS service providers. Companies in the healthcare sector are building strategic partnership to achieve high-quality and high-precision medical equipment. For instance, in March 2019, Sanmina partnered with Soliton, a medical device company, to provide design and testing services to the company’s Rapid Acoustic Pulse (RAP) device. This device will be used for future clinical trials in the medical sector using acoustic technology.
The major factor hindering the electronic manufacturing services market growth is inefficiency to deliver high volume of production due to limitation in the supply of raw materials and electronic components from the supplier. Mass production requires large space, extensive infrastructure, and equipment, which incur high costs. In addition, it also limits the ability of EMS providers to make custom products that meet the specific desires of clients. Moreover, high-volume products are sometimes viewed as being of low quality or generic. In such a scenario, outsourcing manufacturing services is not a preferred option for a company.
Stringent government regulations pertaining to safety for electronic devices will increase the adoption of test & development implementation in the market
The test & development implementation segment valuation in the EMS market was over 50 billion in 2019 and is projected to showcase growth of around 4% through 2026The growth is attributed to increasing safety and quality guidelines directed by several governments for service manufacturing companies.
Test & development implementation plays a crucial role in the overall manufacturing process owing to growing need for developing products with appropriate components to avoid failures and improper functioning. Additionally, these services are also becoming popular due to the emergence of electronic devices comprising hardware & software capabilities. In order to facilitate correct functioning of these devices, companies are increasingly adopting testing & implementation services to gain manufacturing benefits. Increasing device complexities and the development of IoT-based devices are majorly driving the need for test & development implementation. Service providers offer trained employees, testers, and testing software to carry out the required process.
Surging adoption of AI and IoT technologies in the consumer electronics sector will propel the EMS market demand
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The consumer electronics application is projected to expand at a CAGR of 5% from 2020 to 2026. driven by the proliferation of connected devices and integration of Artificial Intelligence (AI) and Internet of Things (IoT) into wearable devices, home appliances, among others. Prominent players in the industry offer specific services to consumer electronics companies including engineering, prototyping, service designing, and mass production services. The device manufacturers are more inclined to avail these services to gain a competitive advantage and maintain an effective supply chain management. With the help of logistics, return & repair services, service providers can cater to OEM demands accordingly.
Rising trends toward digitalization, such as online shopping and mobile banking, have accelerated the demand for smartphones, which is likely to bring new opportunities for electronic manufacturing service providers over the coming years. Several smartphone manufacturers are focusing on availing EMS services to cater to the high service demand. For instance, Foxconn manufactures, assembles, tests, and develops majority of iPhones for Apple Inc. at its production facilities in China, India, the U.S., Mexico, and other countries. Smartphone manufacturers including BBK Electronics, Huawei, Xiaomi, Sony, and Samsung are also availing electronic manufacturing services form major vendors.
Browse key industry insights spread across 230 pages with 129 market data tables and 28 figures & charts from the report, “Electronic Manufacturing Services (EMS) Market Size, By Service (Electronics Manufacturing Services, Engineering Services, Test & Development Implementation, Logistics Services), By Application (Computer, Consumer Electronics, Aerospace & Defense, Medical & Healthcare, Automotive), Industry Analysis Report, Regional Outlook, Application Potential, Competitive Market Share & Forecast, 2020 - 2026” in detail along with the table of contents:
Favorable government policies for electronics manufacturing development in the Asia Pacific region will support the market size
The Asia Pacific electronic manufacturing services market is predicted to witness 8% growth till 2026. Increasing government initiatives and policies support electronics manufacturing development for the region.
China is one of the important markets for EMS in the world on account of its strong position in semiconductor, consumer electronics, and telecommunication equipment & device manufacturing capabilities. According to the Semiconductor Industry Association (SIA), in 2019, the semiconductor sales of the country witnessed USD 143.7 billion from USD 82.4 billion in 2015. The country has more than 60% of the world’s total electronics production and assembly capacity. According to GSMA Intelligence report 2019, the country is projected to witness more than 450 million 5G connections by 2025. This will increase the penetration of 5G-enabled consumer electronic devices.
Key players in the EMS market include Sanmina, Foxconn, Flex Ltd., Benchmark Electronics Inc., Advanced Semiconductor Engineering Inc., Jabil, Integrated Microelectronics, among others. Industry leaders are continuously focusing on R&D activities and viewing service development & innovation as a lucrative path for market expansion. In addition, these companies are forming long-term contracts. For instance, in December 2019, Jabil announced a partnership with Eaton for electronic manufacturing services to support the fast-growing electrified vehicle sector. Through this partnership, Jabil will produce electromechanical and PCB assemblies for Eaton’s eMobility business.