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Global EMS market continues to grow in 2017 2018


Global EMS market continues to grow in 2017 2018
The rising demand and requirements for electronic devices and components across multiple industries has created a dynamic business environment for most OEMs and EMS providers.
Primarily, OEMs within the Automotive and Lighting sectors are experiencing the biggest growth driven by connectivity and “smart” electronics, which is expected to grow until 2020 by a CAGR of 23.6 percent. Consequently, EMS companies need to support the increased demand and adapt to further production complexities while remaining cost-efficient, eco-friendly and lean.
The current market developments requires OEMs to advance their in-house development and design competencies further or alternatively collaborate with EMS providers through joint design manufacturing (JDM) models. In some instances OEMs may completely outsource this to Original Design Manufacturers (ODM), which enables service providers to be highly integrated into the OEMs value chain. The demand for strong strategic partners puts an even higher consolidation pressure on small and mid-market EMS providers to create a “one stop shop” offering design, engineering and manufacturing competencies to OEMs.
An additional trend that is gaining momentum are cross-industry manufacturing services. Complimentary to the vertical integration though JDM and ODM partnerships, OEMs are looking increasingly for cross-industry horizontally integrated service providers. This trend is mostly noticeable across the electronics, plastics and metal industries. Driven mainly by the end application market and developing exceptional cross-selling and engineering synergies, this business model will become a major strategic goal for every leading service provider in pursuit of higher margins and more negotiation power towards OEMs. Well-known players such as Jabil (acquired Nypro), Flex (acquired Riwisa) and Kimball (acquired Aircom Manufacturing) demonstrate the demand for cross-industry manufacturing services through acquisitions.
These trends will be the key influencers shaping the EMS and electronics industry in 2017 and beyond. Simultaneously it opens new opportunities for EMS providers to reach a deeper integration and offer improved sophisticated service and product portfolios, that will bring about higher margins.

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