The Worldwide Electronic Manufacturing Services Market – 2011 Edition

The Most Comprehensive Study Available on the Worldwide EMS Market

New Venture Research is scheduled to release its definitive report on the EMS industry in July, 2011.  The following is a summary of the research findings.

The overall market for electronic components (semiconductors, passives, connectors, etc.) recovered strongly in 2010 and remains more stable throughout the forecast period as a result of resumed demand for manufactured electronics products. NVR expects overall market growth to remain reasonably healthy over the next five years, barring another unexpected downturn.  Figure 1 presents the worldwide electronics assembly forecast for 2010–2015.

Figure 1 – Worldwide Electronics Assembly Market ($B), 2010-2015

Consumer, communications, and computer products will continue to be the leading segments driving the largest growth of the electronics industry. In 2015, the total industry is expected to exceed $1.4 trillion in annual assembly value (COGS), as consumption and replacement of electronic products continues and new products fuel demand. Outsourcing has become a critical element in keeping the electronics assembly industry expanding and driving costs to the margin each year—a leading attribute in stimulating continuous consumer demand. The trend to move price-sensitive manufacturing to low-cost regions will impact the manufacturing footprint in the future market for all suppliers.

Figure 2 compares the worldwide EMS market by region for 2010 and 2015. The shift in production to low-cost regions is starting to wane. Today, we are seeing OEM customers requiring their EMS partners to manufacture products near the regions where they are to be sold. For certain high-volume products like mobile phones and PCs, OEMs need to leverage the lowest cost in manufacturing. However, for other products the labor cost differentials are becoming less significant when weighed against the total cost of production (including transportation and logistical challenges). Offshore product migration will still take place, according to NVR’s forecasts, but it will be at a more moderate pace.

Figure 2 – EMS Market by Region, 2010 & 2015

Figure 3 compares the worldwide EMS market by market segment for 2010 and 2015. Both CMs and ODMs will experience the strongest growth from production in the consumer, communications, and medical equipment markets. Specifically, CMs will find very strong growth in personal navigation, digital television, and cellular infrastructure, while ODMs are projected to experience very strong growth in enterprise storage systems, personal navigation systems, and set-top boxes. In general, CMs will tend to excel in technology-intensive product areas and complex board assemblies. ODMs excel in manufacturing commodity/high-volume products such as motherboards, monitors, handhelds, and consumer electronics.

Figure 3 – EMS Market by Segment, 2010 & 2015

Table 1 ranks the top ten overall EMS companies by revenue for 2010. Foxconn continued its extraordinary dominance as the leading CM in the industry, outdistancing its closest contender by almost 4 times. Flextronics remained steadfastly in the number-two position, followed by two ODMs (Quanta Computer and Wistron).  Jabil Circuit dropped to fifth position followed by five leading ODMs.

Table 1 – Ten Leading EMS Firms by Revenue ($M), 2010

Although a simple ranking of EMS companies by revenue is informative, there are many other meaningful financial measures of EMS performance. To summarize these measures, this report uses a total performance rating based on a weighting of these other measures. The EMS companies having the highest total scores were deemed the best performing companies in the EMS industry; conversely, those companies having the lowest total scores were viewed as the worst performing EMS companies for 2010. Table 2 lists the five highest rated companies in the EMS industry in 2010.

In 2010, HTC emerged as the EMS company with the highest total score, followed fairly closely by Wistron according to NVR’s financial performance metrics. Note that all of these high-performing EMS companies were ODM Asian manufacturers.

Table 2 – Five Highest Rated EMS Companies, 2010

The Worldwide Electronics Manufacturing Services Market, 2011 Edition is the product of thousands of hours of research. The report sells for $2995, with extra single-user licenses at $250 (contact us concerning corporate licensing). This report is only available in PDF format and is delivered by email.  With the purchase of the report, an Excel spreadsheet of all tables and a PowerPoint presentation highlighting key findings may also be obtained for an additional $500 each.  For more information see www.newventureresearch.com/