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Electronic Manufacturing Services (EMS): Trends, Opportunities, and Challenges

The term "electronics manufacturing services" (EMS) refers to both the whole industry and a specific subcontractor or company. It is common to use the terms "EMS" and "contract manufacturing (CM)" interchangeably. Consumer demands for electronic goods are constantly evolving, which encourages the EMS industry's quick growth. Electronic producers must be adaptable and able to keep up with the pace of fast change if they are to better serve their clients and grow their market share.

The market for electronics manufacturing services (EMS) is booming as the demand for electronic components and outsourced manufacturing services is increasing. According to reports, the global electronic manufacturing services (EMS) market is expected to reach USD 504.22 billion in 2022 and increase to USD 797.94 billion by 2029, growing at a CAGR of 6.8% over the forecast period.

According to data, the majority of EMS end-users come from the communication and computer hardware industries, which together account for roughly 59% of the overall demand and are driving the market’s rapid growth. Modern technological advancements allow manufacturers to capitalize on current opportunities as consumer devices are in more demand. Due to rising customer expectations and the desire to save costs, manufacturers may need to collaborate with solution providers with expertise in the sector.

Electronic Manufacturing Services (EMS) Explained

The term “electronics manufacturing services” (EMS) refers to both the whole industry and a specific subcontractor or company. It is common to use the terms “EMS” and “contract manufacturing (CM)” interchangeably. Simply said, the wide range of value-added engineering and manufacturing outsourcing services that EMS organizations provide may help original equipment manufacturers (OEMs) boost operational efficiency and focus on core responsibilities like research and development (R&D).

According to Market Research, the following are the key factors driving the Electronics Manufacturing Services (EMS) market:

  1. Increasing interest in automobile electronics- The increase is attributable to the need for safety solutions.
  2. Increasing interest in consumer electronics- According to a recent Frost & Sullivan report, the tendency towards outsourcing will intensify as consumer electronics demand rises.
  3. Concentration on basic capabilities and advanced skills- Companies are looking for solution providers with knowledge of their particular industry or market segment.
  4. Proliferation of mobile technology- The markets for iPhones, Android phones, and wearable technologies are expanding.

Trends and Opportunities in the Electronics Manufacturing Sector (EMS)

One of the global businesses with the quickest growth and most continual change is electronics manufacturing. Due to technological developments and rising consumer demand for electronic gadgets, this industry is primed for expansion and is full of potential for both businesses and investors.

  • Growing Demand for Smart DevicesSmartphones, smartwatches, and smart home gadget demand has risen in recent years, and it is anticipated that this trend will continue in the years to come. The market for smart devices is anticipated to expand quickly as a result of the Internet of Things (IoT), providing enormous opportunities for electrical makers. Companies will succeed in this market if they can provide high-quality, cutting-edge products that satisfy consumers’ shifting requirements and desires.
  • An Increase in Wearable Technology- Another development that will revolutionize the electronics manufacturing sector is wearable technology. The prevalence of wearable technology is rising, and its expected that this trend will continue. Smartwatches, virtual reality headsets, and activity trackers are a few examples. The market for wearable technology is anticipated to expand as technology advances and costs drop-down, offering enormous opportunities for electronic makers.
  • 5G Technology’s Development- The newest advancement in telecoms, 5G technology, is anticipated to fundamentally alter how electronic products are created, assembled, and used. This technology is expected to result in a new generation of gadgets that are more potent and effective because of their capacity to speed up data transmission, reduce latency, and increase dependability. Businesses that can design and produce products that work with 5G technology will have a significant competitive edge.
  • Growth of E-Commerce- Another trend that is anticipated to continue growing is e-commerce, and its rise is anticipated to fuel the need for electronic gadgets. The demand for gadgets that make buying simpler, such as smartphones and laptops, is anticipated to rise as more consumers switch to online shopping. Electronic producers will have a great chance to design and produce novel gadgets that cater to changing customer requirements as a result of this trend.
  • Increasing Use of Renewable Energy- The use of renewable energy sources like solar and wind power is rising, and it is anticipated that this trend will continue in the years to come. As more individuals select renewable energy sources to power their homes and businesses, it is predicted that demand for gadgets like solar panels and wind turbines will rise. Businesses that can develop cutting-edge goods that are suitable for renewable energy sources will have a huge competitive advantage.

The electronics manufacturing sector is a vibrant, rapidly changing industry that is set for expansion and offers several prospects for businesses and investors. Companies that can stay on top of the newest developments and provide high-quality, cutting-edge products will succeed in this market. The electronics manufacturing sector is anticipated to expand dramatically over the next several years as a result of the growth of smart gadgets, wearable technology, 5G technology, e-commerce, and renewable energy sources, offering enormous opportunities for businesses to prosper.

Challenges In Electronic Manufacturing Services Market

The EMS market has excellent future possibilities, but it also has several problems and difficulties.

  • Decreased Operating Margins- The cost of electronic goods has decreased due to rising global competition and the deployment of cutting-edge technologies. The ongoing pressure from OEMs to cut costs, on the other hand, has hurt the profit margins of some EMS suppliers in particular industry sectors. As a result, manufacturers must take steps to increase production efficiency if they want to continue to be successful. These steps can include using cutting-edge technology, updating equipment, optimizing manufacturing processes, etc.
  • Globally Complex Supply Chain- EMS firms must balance their internal and external resources while adhering to international standards. The operational load is further increased by traceability and compliance difficulties, as components and subassemblies are likely to move across many countries before being delivered to end users.
  • Management of Supplier Quality- Taking advantage of global supply chain management is a current trend among electronics businesses, therefore finding the correct supplier is essential for success. To confirm that suppliers are dependable and professional, manufacturers must have a solid grasp of them. It would be preferable to create a system for quality control and traceability that would enable them to acquire top-notch post-production support.
  • Products with Quicker Lifecycles- Short product life cycles are a result of consumers’ tastes for electronic items changing quickly. Electronics producers must be adaptable and quick to market trends to increase sales and capture market share. Create efficient NPI procedures, maintain information exchange, and foster communication across multiple departments to produce goods that satisfy customers’ expectations as soon as feasible.
  • Market Ambiguity- Manufacturers have significant difficulties as a result of the market’s overall unpredictability, which is exacerbated by the cyclical nature of consumer demand and the economy’s volatility. Manufacturers must increase output in this circumstance to maintain inventories in line with demand, which is also true in the electronics manufacturing sector.
  • Adoption of New Laws and Standards- New laws and requirements must be complied with, and manufacturers must modify their products accordingly. For instance, the new legislation mandates that producers of electronic items exercise greater social responsibility and create more environmentally friendly products. Therefore, while designing and developing electrical devices, producers must consider the product’s life cycle.

Final Thoughts

Consumer demands for electronic goods are constantly evolving, which encourages the EMS industry’s quick growth. Electronic producers must be adaptable and able to keep up with the pace of fast change if they are to better serve their clients and grow their market share.

eInfochips provides a wide range of services, including hardware design, manufacture, and production, and it also has a strong ecosystem of manufacturing partners. eInfochips works closely with contract manufacturers to make sure that designs are optimized for testing (DFT) and manufacturing (DFM), which helps to prevent design modifications during production transfer. To know about our key offerings, contact our team of experts here.

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