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Global EMS Market to Reach $32.05 Billion by 2025
April 1, 2019 | Globe NewswireEstimated reading time: 3 minutes
The global electronics contract manufacturing services market was valued at around $18.63 billion in 2018 and is expected to reach approximately $32.05 billion by 2025, at a CAGR of slightly above 8% between 2019 and 2025.
Electronic contract manufacturing services is a model where an original equipment manufacturer (OEM) hires a company that looks for the core manufacturing facilities on behalf of the hiring firm. The EMS providers provide design and engineering, assembly and manufacturing, functional testing, and rework services along with supply chain management services to offer complete service to the OEM or hiring firm.
There are numerous factors anticipated to drive the electronics contract manufacturing services market. These include the increasing demand for various consumer electronic products including high-end gaming PCs, home appliances, and computer hardware. Contract manufacturing companies do not limit their contracts to manufacture goods for a single hirer or OEM only.
They offer their services to multiple OEMs, which helps them in procuring raw materials and other resources in large quantities at lower prices, thereby increasing the scope of profit for the EMS provider. Nowadays, several OEMs are increasingly outsourcing their circuit assembly requirements to regional and foreign EMS providers, which aid them in generating more profits.
The business expansion in untapped regions is among the primary advantages offered by the EMS providers that are anticipated to drive the electronic contract manufacturing services market. However, as the lack of control over production and quality concerns related to the manufactured products may hamper the global electronics contract manufacturing services market in the future. Contract manufacturing helps OEMs in unraveling new growth opportunities for market growth.
The global electronics contract manufacturing services market is segmented on the basis of process and application. The process segment is divided into electronics design and engineering, electronics assembly and manufacturing, test engineering, and others (supply chain management services and rework services). The electronics design and engineering segment is anticipated to hold a significant market share in the future. The application segment is segmented into consumer electronics, automotive, aerospace and defense, medical and healthcare, telecommunications, and others. The telecommunications industry is anticipated to hold a substantial market share over the forecast time period.
North America is anticipated to hold a significant share of the global electronics contract manufacturing services market in the future, owing to various global players engaging in partnerships with regional contract manufacturers to lower their overhead expenses and increase profit margins. The ongoing trend among OEM providers of expecting more in designing from the EMS companies is forcing the EMS providers to step away from traditional manufacturing and shift their focus to product designing and redesigning as along with partnering with ODMs. Recently, Celestica Inc., a Toronto-based electronics manufacturing services provider, acquired Impakt Holdings LLC, the U.S.-based provider of design, engineering, and manufacturing solutions, for expanding across display, semiconductor, and solar sectors. It will help the company to have its own design and manufacturing facilities for multiple verticals.
Asia Pacific is likely to register a notable growth in the global electronics contract manufacturing services market in the future, owing to the high adoption of electronics contract manufacturing services model by major countries, such as China, South Korea, India, Taiwan, and Japan. Taiwan is projected to hold a significant share of this regional market, due to its ability to have an upper hand in the more profitable segment of ODM (Original Design Manufacturer) and the presence of most of the EMS companies in the country. In 2017, Foxconn, a Taiwan-based leading EMS Company, accounted for nearly half of the revenue earned by the global EMS industry. The Asia Pacific region is anticipated to dominate the electronics contract manufacturing services market over the forecast time period.
Europe is expected to show noticeable growth over the forecast timeline, owing to the increasing automation in the manufacturing sector in Germany, UK, Spain, Italy, and France. The consistent demand for defense equipment across the world is projected to drive this regional market. The regional manufacturers’ focus on providing customized products or devices as per the OEMs demand is also anticipated to further drive this market.
Latin American and the Middle Eastern and African regions are projected to show substantial growth in the global electronics contract manufacturing services market. The UAE, Brazil, South Africa, and Israel are leading these regional markets owing to the growing adoption and use of cutting-edge technologies. The ease of doing business in Latin American countries is improving. For instance, The Brazilian Information Technology Law (2001) allows partial tax benefits on computer products that contribute to the country’s contract manufacturing growth.
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