In 2021, the global electronic manufacturing services (EMS) market size was valued at $500.26 billion, which is expected to grow at $849.72 billion in 2028 with a CAGR of 7.9%. The whole market grows rapidly which is driven by industries like telecommunication and medical, and according to the statistics, most end-users of EMS are from communication and computer hardware industries account for about 59% of the total demand.
The demand for electronic manufacturing services is constantly increasing, more and more companies start to outsource such services to reduce the cost caused by large inventory, warehouse construction, and maintenance, so they can shift the investment into other aspects such as sales, marketing, research, and development. With the rising demand, competition among electronic manufacturing service providers has also intensified, but this has also raised global norms in the EMS industry. The EMS companies are devoted to upgrading their facilities and applying new technologies such as virtual reality, the Internet of Things (IoT), and 3D printing to improve their production efficiency and quality. And they build collaboration with many Original Design Manufacturers and Original Equipment Manufacturers to enhance their EMS performance.
Electronic Manufacturing Services Market Analysis
1. EMS Market Share in Different Regions
Based on geographic location, the entire EMS market can be divided into five regions, which are North America, Europe, Asia Pacific, the Middle East & Africa, and South America.
1.1 Asia Pacific Region
Asia Pacific is the largest electronic manufacturing services market that was valued at more than USD300 billion, which would keep expanding in the future. And countries like China, Vietnam, Japan, Korea, and Singapore play important role in this area’s EMS market, especially China. It is one of the most important EMS markets players in the world that fabricates and assembles about 60-70% of the world’s electronics, which also plays an important role in consumer electronics, semiconductors, and other telecommunication products. As Semiconductor Industry Association (SlA) mentioned: “In 2020, the Chinese semiconductor industry registered an unprecedented annual growth rate of 30.6% to reach $39.8 billion in total annual sales.”
In addition, the Chinese EMS market is expected to grow further thanks to its world-leading 5G technologies. More than 50 cities are covering 5G services in China, which can definitely raise the demand for telecommunication and navigation devices to drive the growth of electronic manufacturing services.
1.2 Europe EMS Market
The European electronics manufacturing services market is undergoing huge changes, the product design, development, and manufacturing processes begin to separate. And the emerging economies in Europe like Romania, Bulgaria, Slovakia, Estonia, Belarus, and Turkey attract more and more manufacturers’ attention.
This market is expected to reach USD 110 billion by 2026 with a CAGR of over 5%, and the Eastern European EMS market accounts for about 50% of the total European EMS markets. Thanks to the European Union which supports fabricating electric vehicles, electronic lighting, and safety electronics, the EMS market in the region is growing strongly. In addition, there are many automotive manufacturers in Europe such as BMW and Ford that work with EMS providers for PCB manufacturing and assembly, designing, engineering, prototyping, and so on.
1.3 North and Latin American EMS Market
The North American market grows strongly in 2021, and the total electronic manufacturing services market in the United States and Canada exceeds 90 billion US dollars, which is driven by rapid urbanization and steady population growth. Along with the emergence of new technologies, the demand for electronics manufacturing services grows significantly, especially in young generations who are interested in using kinds of consumer electronics. In addition, North America is investing heavily in R&D activities, including the development of high-end automobiles and spacecraft, increasing the demand for EMS across the region.
The Latin American electronics manufacturing services market reaches approximately US$60 billion in 2021, with the economies of Brazil, Mexico, and Argentina accounting for more than 80% of the total EMS market in the region that will continue to lead the growth of electronics manufacturing in Latin America in the future.
2. EMS Market Size by Industries
Classified by industry, the EMS market can be segregated into automotive, communications, computer, consumer electronics, industrial, healthcare, and so on.
As shown in the figure below, the top three industries that used the most electronic manufacturing services are the communications, computer, and consumer electronics industries respectively. And the communications industry ranks NO.1 accounting for 30.1%. The main reason is the wide application of networking and wearable technologies that drives the growth of the communications electronic market. On the other hand, the digitization of the market requires the use of complex electronic devices and functions, as well as a high level of networking, which makes electronic manufacturing services more widely used in the communications industry.
Among these industries, the healthcare segment has the greatest growth potential with the highest CAGR, the digital health market is projected to grow in value at over $90 billion by 2025. The medical devices tend to be designed and fabricated in a smaller size but with more functions, thus, the electronics should also comply with these trends. In fact, many advancements in the healthcare industry have benefited from sophisticated electronics, for example, medical devices such as X-ray equipment and pacemakers equipped with high-quality electronics are capable of offering patients better ways to diagnose and treat.
The Impact of COVID-19 on the EMS Market
The COVID-19 impacts every country in the world and has a considerable impact on the electronic manufacturing services market. As Organization for Economic Co-operation and Development(OECD) reported: 43% of global electronics manufacturers and suppliers are negatively affected due to the COVID-19.
Many factories are forced to close or reduce staffing levels, and manufacturers have to streamline their product lines, which causes severe effects on the global electronics supply chains. In addition, it has created problems with insufficient supply of raw materials as well as rising prices, there are fewer flight available because of the local policies on epidemic control, which makes the supply time of raw materials longer and makes the shipping charge even more expensive. As we all know that in 2021, the chip shortage brought a heavy impact on the automobile industry, many automakers have to halt production which causes huge economic losses.
Thus, more and more companies started to rethink their business strategy and shift electronics manufacturing and assembly services to areas where COVID-19 is under control. In 2021, compared to other countries in Asia, China had excellent performance in epidemic control, it would be a good choice to outsource your EMS in this country.
It is not yet clear how the situation of the epidemic will develop in the future, but we need to plan ahead. As a leading electronics manufacturer in China, MOKO has extensive experience and has already taken measures to deal with the epidemic by increasing warehouse capacity, maintaining regular meetings with suppliers to reduce any risks. With specialized knowledge, MOKO understands the market well and provides customers with the best EMS service within their budget.
Electronic Manufacturing Services Market Development Trends and Challenges
1. New Trends in EMS Market
There are several trends that will bring new shifts to the EMS industry, and these shifts will impact the way the business operates and how electronics manufacturing operates, and take the whole EMS market to a new level. Below are listed the main trends in the electronic manufacturing services industry, helping you understand how these trends will dominate in shaping and guiding the development of the electronics industry.
1.1 Wearable Technologies
The global wearable technology market size was valued at USD47.89 billion in 2021 and is projected to reach USD118.16 billion in 2028 at a compound annual growth rate of 13.8%.
A report from GlobalWebIndex claims that 64% of Internet users have already used or are interested in using wearable devices, and about 71% of those aged 16 to 24 are interested in this technology. Thus, we can see that there is huge potential for market development in this area, which would definitely affect the EMS market layout.
Wearable technology brings much convenience to our life, which allows us to monitor our fitness levels, track location and free our hands. It also plays an important role in the medical and healthcare industries. The wearable devices are equipped with sensors, flexible electronics, and wireless technologies that can monitor the health status of patients, building a real-time communication bridge between at-home care and medical professionals.
2. Challenges in EMS Market
Even though the EMS market has great prospects in the future, it also faces some issues and challenges.
2.1 Shrinking Operating Margins
With increasing global competition and the use of advanced technology, the price of electronic products has been driven down. On the other hand, OEMs are demanding constant cost reductions, which has negatively impacted EMS providers’ profit margins in certain lines of business. Therefore, if manufacturers want to stay profitable, they must take some measures to improve production efficiency, such as introducing cutting-edge technology, upgrading equipment, and streamlining production processes, etc.
2.2 Complex Global Supply-Chain
While complying with the international standards, EMS companies must balance internal and external resources. Additionally, traceability and compliance issues add to the operational burden, with components and sub-assemblies likely to travel across several continents before reaching end consumers.
2.3 Supplier Quality Management
Leveraging the global supply chain management is a trend among electronics manufacturers now, thus, working with the right supplier is the key to success. Manufacturers must have a good understanding of suppliers to make sure that they are professional and reliable. It would be better to build a quality and traceability system that allows them to control the quality and get good post-production service.
2.4 Short Product Lifecycles
The rapidly changing consumer preferences for electronic products result in short product life cycles. To gain more customers and take market share, electronics manufacturers must be flexible and responsive. Formulate effective NPI processes, and maintain information sharing and communication among various departments, so as to manufacture products that meet customer needs as quickly as possible.
Conclusion
The continuous improvement of consumers’ requirements for electronic products promotes the rapid development of the EMS industry. If they want to better serve customers and increase their market share, then electronic manufacturers must respond flexibly and be able to keep up with the rhythm of rapid changes.
MOKO closely follows the pace of the times, innovation is the force that drives MOKO to make improvement constantly. We use world-leading equipment and advanced technology, and continuously streamline our production process, aiming to provide customers with the best electronic products. We would work with you closely through your entire product development life cycle from the concept design, engineering to manufacturing to improve your market competitiveness.
