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Global EMS Market Grew 15% in 2018 to Nearly $542 Billion

24.7.2019
Reading Time: 2 mins read
A A

Source: EPS news

The global electronics manufacturing services (EMS) industry increased its revenue by 15 percent in 2018, according to New Venture Research’s (NVR) annual EMS report, to reach nearly $542 billion.

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Combined EMS and original design manufacturer (ODM) revenue grew by $70.7 billion in 2018. Revenue growth from 2013 to 2016 had been flat, according to The Worldwide Electronics Manufacturing Services Market – 2019, but expanded dramatically in 2017 and 2018.

The EMS market has been sustained by the strong demand for smart phones, and the even more powerful demand for infrastructure networking equipment to build out the 5G wireless architecture with products like enterprise storage systems, enterprise LANs, and servers, according to NVR. The need for cloud computing, social media, and real‐time data and video streaming is driving the need for advanced switching, routing, and wireless communication hardware.

The industry was profitable at $8.4 billion (for 42 EMS public companies and 17 ODM public companies) for the ninth year in a row, the same amount achieved in 2017. Foxconn accounted for nearly half of all the money made by the EMS industry in 2018, and EMS companies accounted for approximately 80 percent of the total. Only five EMS companies and one ODM company lost money in 2018.

Pegatron ranked second in net income for EMS firms ($369 million). Meanwhile, Delta Electronics ($639 million), Quanta Computer ($473 million), and Lite‐On ($264 million) ranked highest in earnings for the ODMs.

Plant closures and openings were rare in 2018, said NVR, as most companies appear to have right‐sized their operations or closed facilities due to consolidation. New openings are clearly related to new business opportunities, while the closures are being driven by economic decisions such as right‐sizing the company.

global EMS market

Communications and computer products will continue to be the segments driving the largest growth in the electronics industry. Fueled by the demand for EMS services, the contract manufacturing industry will grow from $542 billion in 2018 to $777 billion in 2023, at a CAGR of about 7.5 percent.

Outsourcing has become a critical element in keeping the electronics assembly industry expanding and driving costs down each year, and is a leading factor in stimulating continuous consumer demand and technology deployment. The trend to move price‐sensitive manufacturing to low‐cost regions has ceased, but will continue to impact the industry for all suppliers in the foreseeable future— at least regionally.

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