SAN JOSE, CA — The global EMS market is projected to reach $231.4 billion by the year 2015, driven by the rapid increase in ownership of electronic goods in high-population and developing countries of China, Brazil, Russia and India, according to Global Industry Analysts, Inc.
The electronic contract manufacturing services market, involving the participation of companies engaged in providing manufacturing services to various Original Equipment Manufacturers (OEMs), is one of the most rapidly growing industries in the electronic assembling arena. Over the years, EMS companies have been able to broaden the spectrum of services offered by them – from simple manufacturing of components, to more complex manufacturing services, thus leading to increased number of OEM’s outsourcing much of their manufacturing.
The global economic downturn and the subsequent decline in the electronics industry revenues, however, put brakes to the robust growth in the EMS market. The recession’s impact has been particularly severe on contract manufacturers, with revenues witnessing a steep decline due to fall in orders from automotive, mobile phone equipment, and capital equipment (semiconductor) markets. Slower growth is also attributed to the focus of EMS companies on the more traditional segments such as telecom and networking. The shortage of component supplies also hampered the operations of contract manufacturers. Original Design Manufacturers (ODMs), on the other hand, exhibited resilience to the adverse conditions, partly attributed to their focus on low-mix, high volume products such as motherboards, notebooks and PCs. The strong growth potential of ODMs is also attributed to their strengthening presence in the fast-growth markets such as LCD TVs and mobile PCs.
Asia-Pacific and Europe dominates the global EMS market, as stated by the new market research report on Electronic Contract Manufacturing Services. The continuous shift of production facilities to low-cost offshore locations is proving beneficial for Asia, East Europe, and Latin America markets. India and China represents countries with vast potential due to lower labor costs.
While the electronics supply base in India is in early growth phase, China is a well-established manufacturing location. Infrastructure and labor are other competitive advantages for China. Consumer Electronics and Computers & Peripherals comprise bulk of the market. The demand scenario in the consumer electronics market is susceptible to economic conditions, due to the impact on consumer disposable incomes. In the telecommunications segment, potential opportunities for EMS providers are expected from wireless communications as well as from increased spending in basic infrastructure equipment. Asia-Pacific market for electronic contract manufacturing services in telecommunications segment is projected to exceed US$20 billion by 2013.
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