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Electronic Manufacturing Services Market Size,Growth and Trends (2023-2030)

The electronic manufacturing services (EMS) industry refers to companies that design, test, manufacture, distribute and provide return/repair services for electronic components and assemblies for original equipment manufacturers (OEMs).

The EMS market has seen substantial growth over the past decade, driven by factors like:

  • Increasing outsourcing by OEMs
  • Rapid technological advancements
  • Cost optimization by OEMs
  • Growing consumer electronics market

This article provides an in-depth analysis of the size, growth trends and future outlook of the global EMS market. Analysis includes historical market data from 2015-2022 and market forecast up to 2030.

Electronic Manufacturing Services Market Overview

The electronic manufacturing services market was valued at USD $499.4 billion in 2022 and is projected to reach USD $1,252.6 billion by 2030, growing at a CAGR of 9.7% from 2023 to 2030.

Key growth factors include:

  • Transition towards a fabless or asset-light model by major OEMs to reduce manufacturing overhead costs and focus on core competencies like R&D and product design
  • Increasing scope of EMS across various industries like automotive, aerospace, medical devices etc apart from traditional consumer electronics domain
  • Rising penetration in emerging Asian markets like India and Southeast Asia

North America accounted for the largest revenue share of over 35% in 2022 on account of prominence of major EMS companies in the region as well as proximity to some key OEM hubs. However, APAC is anticipated to exhibit the fastest CAGR over the forecast period owing to rapid industrialization and favorable government policies attracting substantial investments in electronics manufacturing in China, Taiwan, South Korea and Southeast Asian countries.

Key Market Trends

The EMS market is being shaped by certain emerging trends like:

Trend 1: Increasing Adoption of Smart Manufacturing Technologies

Implementation of smart factory solutions including AI, ML, IoT, cloud and big data analytics by EMS companies to enable data driven manufacturing, predictive maintenance and process automation forlean and efficient production. For instance, Foxconn uses thousands of Foxbots (robotic arms) to automate production.

Trend 2: Geographic and Supply Chain Diversification

EMS providers expanding global footprint beyond traditional hubs like China to locales like India, Vietnam, Mexico etc to serve customers in multiple locations and mitigate risks of supply chain disruptions.

Trend 3: Rising Demand for Aftermarket Services

Increasing EMS revenue contribution from higher margin aftermarket services like repairs, returns, refurbishing, parts management and connected services for once sold products providing an additional revenue stream.

Market Drivers

Key factors propelling growth of the EMS industry include:

  • Transition towards outsourcing of manufacturing operations by major OEMs over the past decade to optimize Capex, focus more on core competencies and accelerate go-to-market for new products
  • Rapid pace of technological evolution with electronics becoming integral to products across industries. This leads to increasing complexity and need for specialists like EMS players for manufacturing and testing using cutting edge capabilities
  • Economies of scale with large EMS providers such as Foxconn, Flextronics, Jabil having established manufacturing with latest tools and processes

Additionally, growth of pivotal end use sectors like consumer electronics, automotive, industrial, telecom and medical devices will fuel demand for EMS in coming years. Expanding electronics content in products across industries is presenting significant business opportunities for EMS companies.

Competitive Landscape Analysis

through-hole assembly process

The global EMS market is moderately concentrated with the top 5 players accounting for around 35% market share.

1. Foxconn

The largest EMS provider globally, Foxconn (Hon Hai) generates annual revenues of over USD $200 billion. It manufactures electronic products for major technology companies including Apple, HP, Dell etc.

Key strengths:

  • Largest electronics manufacturer offering complete production cycle from product design to logistics management
  • Possesses extensive production facilities globally with over 30 industrial parks in China itself along with presence in over 15 countries
  • High degree of automation with thousands of Foxbots along with skilled workforce exceeding 1.3 million employees enables efficient scale production

2. Flex

With 2022 revenues of $28.4 billion, Flex (Flextronics International Ltd) has over 100 design and manufacturing facilities across 30 countries in Americas, Europe and Asia.

Competitive advantages:

  • Leading intelligent manufacturing services for range of products from simple PCB assemblies to complete product solutions across industries
  • Global scale and distributed supply chain minimizes geographic risks enabling delivery to customer locations worldwide
  • Strategic acquisitions like Anord Mardix (power solutions) in 2021 to expand presence across industries

3. Jabil Circuit

Headquartered in Florida USA, Jabil reported FY2022 (ending August 2022) revenues of $32.3 billion. It has over 260K employees and 200+ facilities in 30 countries serving customers globally.

Distinctive strengths

  • One of the top players in electronics design, production and product management services provider to wide array of end markets
  • Possesses capabilities to take customers products from initial concept to volume production and lifecycle management through aftermarket services
  • Making investments of $42 million for expanding capacity in Michigan site to meet demand growth especially for EV ecosystem solutions

4. Sanmina Corporation

With 2022 annual revenues of $7.5 billion, Sanamina provides EMS solutions including product design, manufacturing, testing etc primarily serving OEMs in communication networks and cloud solutions segments.

Key advantages:

  • Balanced portfolio spanning components production to complete end product builds including for products with high mix / low & medium volume
  • Highly integrated IT system connects 50+ manufacturing sites across key geographies enabling seamless information flow and consistent production quality
  • Emphasis on technology innovation through investments in advanced manufacturing technologies and R&D partnerships with customers

Other key players in the EMS market include Benchmark Electronics, Celestica, Kimball Electronics Group, Plexus Corp. etc. Mid-sized companies are competing through services differentiation in niche areas along with geographic expansion in emerging markets.

Electronic Manufacturing Services Market Segments

Box Build ASSEMBLY

Based on service type, the market is analyzed across segments like:

Electronic Design & Engineering

  • Includes development services for hardware, software, prototyping, testing and supporting certification
  • Critical for OEMs to accelerate product development and release to market
  • Accounts for over 15% of the EMS market currently

Electronics Assembly

  • Testing and assembly of electronic components into PCBAs and other sub assemblies
  • Constitutes the largest segment with a share of nearly 40% presently
  • Involves high labor intensity making low cost regions like China attractive production bases

Electronic Manufacturing

  • Encompasses procurement, production, testing and distribution of complete electronic products on behalf of OEMs
  • Key strengths of EMS players like supply chain partnerships make them ideal for managing entire production cycle
  • Contributes to over 25% of total market size owing to rising outsourcing of full product manufacturing

Others

  • Includes post-production/aftermarket services like part repairs, returns management, connected services etc
  • Higher margins than contract manufacturing driving service extensions by EMS players
  • 20% revenue share but likely to witness strong growth in coming years

Based on industry verticals, key end use sectors include:

  1. Consumer Electronics
    • Largest segment accounting for over 40% share driven by demand for smartphones, wearables, home appliances etc
    • Focus on product miniaturization and technology integration makes OEMs reliant on EMS partners
  2. Automotive
    • Fast growing vertical with rising electronic content per vehicle
    • EMS support needed for connectivity solutions, EV components production etc
    • Segment contribution expected to cross 25% by 2030
  3. Industrial
    • Covers medical devices, instrumentation, semiconductor production equipment etc
    • High mix / low volume manufacturing and reliability requirements make EMS adoption critical
  4. Networking & Telecommunications
    • Includes production of routers, switches, base stations etc
    • EMS capabilities around high precision, quick turnaround times leveraged by telecom players

Other sectors witnessing increasing EMS penetration include aerospace & defense, lighting, solar etc.

Regional Landscape

North America is the leading regional market with over 35% revenue share presently:

  • Presence of key EMS companies like Jabil, Flex, Sanmina etc along with clusters of electronics and semiconductor manufacturing in countries like US and Mexico
  • Booming growth in segments like EVs, communications infrastructure, aerospace & defense etc to fuel regional EMS demand

However the APAC market consisting primarily of China, South Korea, Japan and India accounts for over 30% share currently and is slated to witness the fastest growth of 10.8% CAGR till 2030.

  • Rapid growth across end markets such as 5G infrastructure, biomedical devices etc. driving substantial volume growth
  • Favorable environment including government incentives, improving IP protections making APAC especially SE Asia manufacturing hub for electronics

Other regions like Europe, South America, MEA together account for the remaining market share presently. Expanding outsourcing by regional OEMs coupled with capacity expansions by large EMS companies to serve customers locally expected to drive growth across these markets as well.

Key Challenges: Contract Manufacturing Industry

pick and place machine for pcb assembly

Certain factors pose challenges for growth of the EMS/contract manufacturing market:

  • Maintaining consistency of product quality and managing risks across global supply chains
  • Investment requirements for keeping pace with evolving technologies from AI to digital manufacturing
  • Pricing pressures from OEMs demanding cost reductions despite inflationary pressures
  • Geopolitical issues including rising trade protectionism that could disrupt demand-supply balance

However leading EMS providers are addressing these aspects through measures like:

  • Investments to automate production leveraging best-in-class fabrication technologies
  • Developing supply networks close to target markets providing regionalized support
  • Vertical integration and long term supply agreements with strategic component partners
  • Developing capabilities in emerging high potential areas like medical, EV manufacturing

Thereby major outsourcing trends across electronics and adjacent industries remains positive driven by OEMs focusing increasingly on innovating core platform technologies and new products.

Growth Drivers and Forecast, 2023 Onwards

The global electronic manufacturing services market is projected to reach $1.25 trillion by 2030 expanding at a CAGR of around 9.7% between 2023 to 2030.

Key growth factors include:

  • Increasing electronic systems adoption across critical industries to drive substantial demand growth from automotive, healthcare, aerospace & defense sectors
  • Developing technologies from ADAS, IoT, AI, 5G communications etc requiring specialist manufacturing support and expected to gain wider penetration
  • Global demand for electronic goods including mobile devices, computers, internet related hardware driving steady rise of over 3% CAGR triggering production outsourcing
  • Export oriented markets with favorable manufacturing environments like China, Southeast Asia, India attracting investments from both domestic as well as foreign players

In terms of services split, the highest expansion is likely in:

  • Aftermarket services with rising demand for repair, return and refurbished electronics
  • Complete product manufacturing as OEMs increase focus on product design and platform development

From a regional standpoint the order of growth rates is expected as below:

RegionExpected Growth Rate
Asia Pacific10.5% CAGR
North America9.3% CAGR
Europe7.1% CAGR
South America8.4% CAGR
Middle East & Africa7.9% CAGR

Key Market Participants Growth Outlook

We expect established EMS leaders to outperform the broader market growing between 11-13% annually during 2023-2030 driven by:

1. Inorganic Growth: – Leveraging M&A to augment technological capabilities and expand into higher margin services – Targeted acquisitions to enhance presence in key geographical clusters or enter new regional markets

2. Investments in Advanced Manufacturing Technologies: – Transition towards smart data driven manufacturing to optimize production flows – Automation to offset labor cost inflation and ensure quality consistency

3. Strategic Partnerships with Key Customers: – Co-innovation and co-creation of manufacturing roadmaps to support strategic clients and markets – Catering to customer needs from design to after sales support through one shop solution

4. Focus on Sustainability: – Initiatives toward renewable energy, recyclable materials driving customer mindshare
– Helps attract business from sustainability focused clients especially in Europe / Americas

For instance, Sanmina is making considerable investments to develop design and manufacturing infrastructure for electric vehicles while Jabil has launched major expansion plans in certain clusters like Asia and Americas to serve strategic end markets better.

Analyst Perspective on Market Outlook

As per leading industry analysts, the positive outlook for the global EMS market is attributed to:

  • Increasing adoption of outsourcing strategies by technology OEMs to optimize operations and allocate resources more efficiently overheads towards product differentiation and lifecycle management
  • EMS providers expanding capabilities to deliver integrated solutions spanning design prototyping, volume manufacturing, after sales support etc better positioned to increase customer wallet share in coming decade
  • Double digit growth rates forecast particularly across medical equipment, clean energy, defense and automotive sectors with rising electronics content to drive outsourcing needs by product companies

Overall, the rising complexity of technological solutions across industries is compelling OEMs to leverage specialists for manufacturing and testing thereby expanding the addressable market for electronic manufacturing services vendors over the long run.

Frequently Asked Questions (FAQs)

SMT-assembly-board

Q1. Who are the key players operating in the global electronic manufacturing services industry?

Some of the major companies offering electronic manufacturing services globally are Foxconn, Flex, Jabil Circuit, Sanmina, Celestica, Benchmark Electronics, Plexus, Kimball Electronics etc.

Q2. What is the current size of the global electronic manufacturing services market?

The EMS market was sized at around $500 billion as of 2022 and is forecast to exceed $1.2 trillion by 2030 expanding at close to 10% CAGR during 2023-2030.

Q3. What are some of the latest trends emerging in the EMS industry? Some key trends shaping the competitive landscape include adoption of smart manufacturing technologies leveraging IoT, analytics and automation; geographic and supply chain diversification by service providers; along with growing demand for aftermarket services such as repairs and refurbishing.

Q4. Which region accounts for the largest share of the EMS market?

Currently North America represents the largest regional market contributing over 35% to the global EMS industry. However APAC is forecast to expand at the fastest pace of 10-11% CAGR until 2030.

Q5. What impact has the Covid 19 pandemic had on the EMS sector?

While temporary supply chain disruptions and component shortages posed some initial headwinds, increased electronics adoption across healthcare, remote work/learning and communication infrastructures has led to steady recovery and robust order pipeline for EMS companies since 2021.

 

 

 

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