This growth is estimated because, in 2017 there was a sharp increase in demand. This is because the electronics manufacturing industry expanded in that year because of a sharp increase in end-use segments, medical market, telecom sector, and industrial sector. The market intelligence report by Beroe states that by 2022, the EMS market is expected to grow at up to a CAGR of 8%. This means the market size will be over $575 billion by the end of 2022 as demand and supply will increase in the coming years, which will boost the market and propel it forward.
There are many end-use applications. Most of the market share is of computers, which has a 42% market share. Then comes the communication industry, which has a market share of 23%. The medical, automotive, and industrial industries have a market share of about 20%. Consumers have a market share of 15%. You can see that the main end-use industries in EMS are the computer hardware segments and communication. Put together; these account for nearly 60% of the global demand.
The US And Canada
The EMS market in these regions was valued at over $66 billion in 2017. The CAGR was 0.5% at that time, and this is expected to increase in the future to about 2%. China’s labor rates were cheap many years ago but this is quickly changing, which has caused some changes to occur. Before, many of the companies from these regions had their industries in China. However, now this is changing as they are shifting their electronics manufacturing industry regionally so that domestic demands can be met. Take for example Lenovo which has started to shift the needs to the US.
The EMS market in Western Europe is expected to improve in the future, according to Beroe. There are many markets in Europe that have a strong focus on EMS. These industries include medical, industrial telecom, automotive, control and instrumentation, aerospace, and defense. In 2017, Western Europe had revenue of €11 billion while in 2019, the revenue was estimated to be over €13 billion. Although at a point there was a decline in Western Europe’s market revenue, it was stabilized with the help of the growth of other regions such as Central and Eastern Europe.
When it comes to Mexico’s electronics manufacturing industry, it is the largest exporter of domestic electronic appliances in LATAM according to Beroe’s analysis. Mexico is the 6th largest exporter globally. Mexico does this by making note of many factors. One of them is having an efficient supply chain process. Another is using strategies to save on costs. Mexico’s transport infrastructure is commendable and it focuses on technical talents which have led it to be among the top exporters in the world.
Asia has one of the highest demands for the industry and is one of the biggest contributors to the growth of the EMS industry. This is because the use of consumer electronic products has increased manifolds in Asia. The decrease in prices and better incomes are driving the growth even further in this region. The low-cost regions in Asia such as India are preferred because of the low manufacturing cost compared to other regions. There is expected to be a growth of up to 4% in this region in the future. In 2019, the APAC market size was over $290 billion which is expected to increase further.
The EMS market growth is going to increase because of a spike in demand from various downstream industries. Another growth factor is technological development and advancement. When new manufacturing techniques will be used, they will be useful in the coming end-use segments such as IoT. This will help drive the growth of the market even further. R&D is being given importance as the top EMS manufacturer companies are thinking about how their product will stand out from the rest to drive the demand. Other innovations will improve the demand even more.
There are some constraints in the EMS market that must be thought through. For example, there is going to be an increase in competition, which means the profit margins will decrease. This can have a big impact on small manufacturers in APAC regions. This can lead to a decrease in the quality of the products. Another major constraint is compliance. There are many strict regulations that must be complied with. Then there are trade tariffs. All of these are affecting the EMS market and industry-leading to building in-house manufacturing units.