NEVADA CITY, CA – The worldwide electronics assembly market is approximately $1.4 trillion in terms of cost of goods sold as of 2016, says New Venture Research.
The market is expanding rapidly but changing in composition both in terms of outsourcing partnerships and in‐house manufacturing, the firm says. Also, moves are being made annually with regard to the manufacturing country of origin based on total cost.
The worldwide electronics manufacturing services market now accounts for almost 40% of all assembly. While the rate of growth for outsourcing has slowed, it still represents the most desired manufacturing model for the assembly of advanced electronics products available to OEM companies.
The EMS market has thrived by the continued demand for smartphones, which resulted in an increase in assembly revenue of $6 billion in 2016. Orders for tablets once were strong but not in 2016, as the market declined 7.5% and is expected to further decline 4.5% in 2021.
Notebook assembly was weak, albeit still growing, and the expansion of desktops was negative for the last couple of years. Growth will be 3.3% for notebooks and will be down 3.9% for desktops by 2021. Overall, the computer industry grew nearly $5 billion in assembly revenue in 2016, including all products.
For the seventh year in a row, the EMS industry was profitable at $9.3 billion in 2016, falling short of last year’s earnings by $1 billion among public contract manufacturing companies. Foxconn accounted for more than half of all the money made by the industry in 2016, with profits of $4.6 billion, followed by Pegatron, ranking second in total earnings ($600 million), Quanta Computer ($562 million), Flex ($444 million), Delta Electronics ($399 million) and Compal Electronics ($239 million).
In 2016 Foxconn continued its extraordinary dominance as the leading EMS firm in the industry (31.8% share), outdistancing its closest contender by more than four times. Flextronics (5.6% share) was displaced from the No. 2 position by Pegatron (7.7% share), dropping into third place. The remaining leaders are comprised of four ODMs and three EMS firms.
In 2021 the EMS industry will experience the strongest growth from production in the communications and computer market segments, assuming the latter recovers, which it is expected to do, says the research firm. Specifically, EMS companies will find good growth in notebooks, e‐readers, cellular handsets, monitors, console video games, and set‐top boxes, while ODMs are projected to experience good growth in tablets, e‐readers, cellular handsets, monitors, and class‐carrier equipment.
In general, EMS firms will tend to excel in technology‐intensive product areas and in complex, low‐volume board assemblies, whereas ODM companies excel in manufacturing commodity/high‐volume products such as motherboards, monitors, handhelds, and consumer electronics.