The electronic manufacturing services (EMS) business is expected to reach USD 847.10 billion by 2025. Demand for smart devices, energy-efficient electronics, and new partnerships between OEMs and manufacturers are affecting the industry. Additionally, new electronic devices and smart materials — such as for medical devices, aerospace, and telecommunications — are driving the EMS market forward.
Well-established corporations such as Flex, Foxconn, Wistron, and Benchmark Electronics are developing production plants and investing in new regions to meet supply and demand. For example, in March 2018, Wistron invested USD 106.4 million in property near Bengaluru, India. The government supported the firm’s investment to manufacture smartphones, biotech devices, and Internet of Things (IoT) products — including Apple iPhones.
That same month, Foxconn Interconnect Technology announced the acquisition of Belkin and its Wemo and Linksys subsidiary trademarks for USD 866.0 million. Belkin manufactures cell phone cases and accessories.
A recent report, “Global Electronic Manufacturing Services Sector…Forecast 2018 to 2025,” provides a complete view of historical and current market predictions. Here’s a breakdown of the different categories.
The EMS business is classified into testing services, design services, manufacturing & production services, and others. The testing services market produced about 20 percent of the market share in 2018. However, each testing service offers a different function, from small to large. This sub-segment analysis identifies the precise placement of the components, including whether joints are connected and soldered accurately or if testing is completed before manufacturing.
Testing services are expected to positively impact the market in the future.
The EMS market is divided into Telecom & IT, Consumer Electronics, Automotive, Industrial, Aerospace, and Defense. Asia-Pacific led the market by supplying 65.5 percent of the total business share in 2018 and it is anticipated to maintain its lead. China and Taiwan are the top countries, which accounted for 82.0 percent of Asia-Pacific EMS market. Vietnam, India, Indonesia, and Thailand are also developing an EMS market. These countries have inexpensive and experienced labor, which will undoubtedly impact the market.
As of 2018, EMS is divided and growing among global and domestic professionals. For example, in February 2018, Nortech Systems Inc. declared it would expand its Mexico operations to increase production.
Major players in the EMS market include Foxconn, Flextronics International, Benchmark Electronics, Celestica, Creation Technologies, Jabil Circuit, Inc., Kimball International Plexus Corp., Integrated Microelectronics, Inc., ESCATEC, Sanmina Corporation, Sparton, Key Tronic EMS, and Venture Corporation.
The ‘Make in India’ initiative, which aims to create jobs and enhance skills for 25 sectors of the economy, is expected to facilitate the expansion of the domestic EMS industry in the country. The program will make it easier for OEMs to set up local operations.
Additionally, India hit a new milestone. For the first time, the country’s domestic electronics production surpassed imports in 2016-17. As per the government sources, the local production of electronic goods for 2016–17 reached USD 49.5 billion – which is greater than the USD 43 billion paid on imports. This symbolizes that the ‘Make in India’ initiative is having a positive impact on domestic manufacturing.
Such supportive business policies for the domestic electronics sector have certainly helped OEMs set up manufacturing facilities for smartphones, TVs, set-top boxes, and other devices.
Thanks to the Make in India initiative, global and domestic electronics manufacturers are showing renewed interest in India as a manufacturing destination.
The EMS market is forecast to be highly productive in the coming year. In fact, India is expected to be a hotspot for electronics manufacturing for the South Asian countries, owing to improved policies and low operating costs. The top three growth-driving application sectors that will require EMS providers are telecom and mobile devices, consumer electronics, and LED lighting.
Demand is strong for these products and OEMs will need to keep costs low to maintain an advantage in the industry, particularly given the rapid advances in technology.
The power electronics and strategic electronics sectors (including aerospace and railways) are also offering opportunities for growth. With the need for the electrical-to-electronics transition in the energy sector, power electronics is one of the most promising industries today. Aerospace and defense (A&D) OEMs frequently depend on EMS providers to address logistics, risk management, and after-market service needs. This means EMS organizations with global supply chains and advanced technological capacities are in an ideal place to support and succeed in the power sector.