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Nolan’s Notes: Welcome to a Strong 2026!

We are now into the second quarter of the 21st century, and we may not quite yet have flying cars as we saw in “The Jetsons,” but we’re close. In fact, you’ll want to check out the video about the electric VTOL “flying car” flown by my high school classmate, Tim Lum.¹ Electronics manufacturing, rather than Spacely Sprockets or Cogsley Cogs as the Jetsons predicted, occupies a noble and critical place in this century. No one disputes that electronics are increasingly at the center of virtually all modern life.

Industry watch groups, such as Lincoln International, project this to be the early years of an EMS supercycle,² which certainly seems like a call to action with respect to investment and strategic positioning. But does the reality of the market reflect that same sentiment?

According to a report by Fortune Business Insights, the global EMS market in 2025 expanded under a few clear, intersecting forces. Projections indicate strong growth as demand rebounds from cyclical semiconductor weakness. The forecasts place the 2025 global revenue baseline in hundreds of billions of dollars with less than 10% CAGR expectations throughout the decade.³

That certainly validates the Lincoln International perspective, but what’s driving that growth?

Demand drivers concentrated in AI/data center infrastructure, automotive electrification, and telecom build-outs pushed higher-complexity assemblies and advanced packaging work into EMS supply chains.⁴ Manufacturers prioritized regionalization and resiliency, for example, “China-plus-one,” nearshoring to Mexico and Southeast Asia, and reshoring incentives, so OEM sourcing strategies tightened around speed, risk reduction, and onshore capacity.⁵ If these shifts in supply chain toward Mexico affect your business, be sure to read our November issue of SMT007 Magazine, which details this scenario in depth. 

How are EMS companies evolving in 2025? On the factory floor, AI- and analytics-driven process control, the broader adoption of Industry 4.0 automation, and investments in back-end test and assembly equipment have raised productivity while shifting labor profiles toward data and process engineers.

Our customers are building out the AI infrastructure, while we increasingly bring AI capabilities into our business operations. Regarding investment, EMS providers moved up the value chain—offering design-for-manufacturability, system assembly, and co-development services—to capture margin and counter commoditization. The defining feature of 2025 was making strategic M&A and CapEx focused on higher-mix, higher-value offers. 

In 2026, you can expect a shift from recovery-driven growth to structurally driven expansion, with competitive advantage increasingly defined by capability depth rather than footprint alone.

We’ll see more concentration in AI infrastructure, automotive electronics, industrial automation, and medical devices, all of which require higher reliability, tighter traceability, and more complex assemblies, with a product mix trending toward lower volumes and higher complexity.

Expect trade dynamics to keep regionalization central to OEM sourcing strategies. This is a good time to assess your procurement and inventory management processes. Operationally, 2026 will mark a transition from “pilot” to scaled deployment of AI in manufacturing. Capital investment will favor advanced SMT, inspection, and test platforms tightly integrated with MES and ERP systems.

SLMs in more tightly focused application-specific roles, like AOI results analysis, will be on the rise. SLMs will help us make sense of the raw disconnected data we’re gathering, and we’ll see whether this data can be further monetized. 

In this month’s issue, we look back at 2025 as a global inflection point. We report on the impact of manufacturing, Europe’s changing market, where AI is leading with respect to SLMs, and what’s ahead for the industry as well. We also take a look at our top reads of 2025, report on the winners of the Hand Soldering World Championship, Zuken’s wire harness efforts, and feature the continuing series from Stan Rak on EV technology.

To keep up with the changes ahead, you’ll see some changes to our magazine content as well. SMT007 Magazine will feature more content about advanced electronics packaging, while PCB007 and Design007 Magazines will blur the line between design for manufacturability with the launch of I-Connect007 Magazine.

It looks to be a positive and exciting year ahead.

References

1. “I have an eVTOL in my carport,” by Tim Lum, youtube.com.
2. “Driving Growth and Transforming the EMS Industry,” with Jack Calderon and Chaim Lubin, SMT007 Magazine, February 2025.
3. Electronics Manufacturing Services (EMS) Market Size and Future Outlook, Fortune Business Insights, Dec. 1, 2025.
4. “300mm Fab Outlook Report: Long-Term Outlook: Detailed Analysis to 2028, High-Level Forecast to 2030,” SEMI.
5. “Global Semiconductor Equipment Sales Projected to Reach a Record of $156 Billion in 2027, SEMI,” SEMI, Dec. 16, 2025.

This column originally appeared in the January 2026 issue of SMT007 Magazine.