Electronic Contract Manufacturing and Design Services Market Analysis By Service (Designing, Assembly, Manufacturing), By End-use (Healthcare, Automotive, Aerospace, Telecom), By Region, And Segment Forecasts, 2018 - 2025

Industry Insights

The global electronic contract manufacturing and design services market size was valued at USD 348.2 billion in 2016. The growing functionalities, such as component assembly, engineering & design of printed circuit boards, sub-assembly manufacturing, and functional testing offered by contract manufacturers, are subsequently expected to drive the contract manufacturing services market growth over the forecast period.

The EMS model is driven by a contract manufacturer’s ability to specialize in economies of scale in production, industrial design expertise, raw materials procurement, and pooling resources along with offering value-added services such as warranty and repairs. These allow OEMs to avoid having tediuos or complex large-scale industrial operations. By working with EMS companies, customers can vary their cost structure, reduce working capital requirements, and lessen the time to market. On account of these factors, the electronic contract manufacturing services market is expected to gain traction over the forecast period.

China electronic contract manufacturing services market by service, 2015 - 2025 (USD Billion)

The proliferation of mobile devices, such as tablets and smartphones, has been the key propeller of electronic contract manufacturing and design services market over the last few years. However, non-technical segments such as healthcare, automotive, and aerospace & defense are projected to witness higher growth as compared to technical segments such as Information Technology & Telecom and consumer products.

Service Insights

Electronic manufacturing emerged as the leading service category in 2016 and accounted for over 40% of the overall revenue share. However, the design & engineering segment is projected to witness a high growth over the forecast period owing to the surging inclination of OEMs toward outsourcing their designing requirements.

The EMS market is witnessing an upsurge in the demand for electronic circuit boards due to its growing importance in several electronic devices, such as mobile phones and tablets, among others. Many OEMs are increasingly outsourcing their circuit assembly requirements to EMS service providers, which substantially increases their profit margins. All these factors are expected to propel the EMS services demand considerably over the next nine years.

OEMs are increasingly considering outsourcing their design and engineering to substantially reduce costs and improve flexibility. They are increasingly investing in R&D activities and other strategic initiatives to streamline their production processes. The establishment of in-house production is a key challenge faced by majority of the players, owing to which outsourcing is a preferable option for them in order to save cost. As such, the demand for this market is expected to rise in the near future.

End-use Insights

The global demand for electronic contract manufacturing services is anticipated to grow owing to rising applications across non-technical end-use segments such as healthcare, automotive, industrial, and aerospace & defense. The low penetration of EMS in these segments is creating higher opportunities for contract manufacturers to establish a strong foothold in the segments.

Global electronic contract manufacturing services market by end-use, 2016 (%)

The IT & telecom segment emerged as the largest end-use segment and accounted for over 45% of the total market revenue in 2016. However, growing outsourcing trends in the healthcare, automotive, defense, and other non-technical segments are projected to spur their market shares over the forecast period.

Furthermore, the upsurge in demand for electrical vehicles has elevated the need to outsource their electronic component manufacturing, thereby spurring the EMS market demand in the automotive sector. The growing demand in the healthcare industry for medical hardware is another key factor spurring growth in this segment. Thus, the escalating need to optimize resources emerges as a key factor contributing to the EMS demand across several end-use industries such as medical, automotive, aerospace & defense, consumer electronics, and IT & telecommunication.

Regional Insights

Asia Pacific is expected to exhibit the highest growth followed by North America, which is attributed to the rise in outsourcing activities in these regions. Asia Pacific held the largest market share in 2016 and is projected to remain the fastest growing segment over the forecast period. China has transformed into a dominant source of electronics production, accounting for more than 35% share in this region. The low-cost labor and mass availability of raw materials are the major drivers for EMS in this region.

Furthermore, the growth in North America is majorly driven by the medical and automotive industries. The medical industry is a high mix–low volume sector, which offers higher profit margins to EMS players involved in this region. Various R&D centers and medical institutes are located in North America that work on advanced and portable diagnostic products, which they plan to source through contract manufacturers. All these factors are cumulatively expected to spur the North American contract manufacturing market growth over the forecast period.

Key players such as FLEX, Sanmina Corp, and Jabil Circuit, Inc. are planning to expand their productions in Europe by increasing their production plants in this region. In addition, a shift of engineering facilities to the Americas and Europe is estimated to spur the EMS demand in these regions over the next seven years.

Competitive Insights

The market is competitive owing to the presence of several dominant players such as Foxconn, FLEX, Jabil Circuit, Inc., Sanmina-SCI, Venture Corporation, and Benchmark Electronics, Inc., among others. The presence of well-established players has intensified the industry rivalry, due to which the degree of competition is considerably higher.

Market players in the developing economies are offering low-cost, outsourced services to the production and designing sectors to increase their competitiveness. Furthermore, key players are striving to gain a competitive advantage by engaging in mergers & acquisitions.

Report Scope

Segments covered in the report

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the industry trends in each of the sub-segments from 2015 to 2025. For the purpose of this study, Grand View Research has segmented the global electronic contract manufacturing and design services market on the basis of service, end-use and region:

• Service Outlook (Revenue, USD Billion; 2015 - 2025)

  • Electronic design & engineering

  • Electronics assembly

  • Electronic manufacturing 

  • Others

• End-use Outlook (Revenue, USD Billion; 2015 - 2025)

  • Healthcare

  • Automotive

  • Industrial

  • Aerospace & Defense

  • IT & Telecom

  • Power & Energy

  • Consumer Electronics

  • Others

• Regional Outlook (Revenue, USD Billion; 2015 - 2025)

  • North America

    • U.S.

    • Canada

    • Mexico

  • Europe

    • Germany

    • UK

  • Asia Pacific

    • China

    • India

    • Japan

  • South America

    • Brazil

  • Middle East & Africa