Electronics Manufacturing Services Market Outlook Through 2027

The electronics manufacturing services market is estimated to grow at a compound annual growth rate of 6.6% between 2022 and 2027, according to Technavio. The size of the market is forecast to increase by USD$167.02 billion. The growth of the market depends on several factors: increasing number of electronics manufacturing services providers in economies with low hourly wages, reduced time to market and improved access to emerging markets, and the growing focus on core competencies or on compensating for lack of in-house expertise, according to Technavio.

This report covers market segmentation by end user (computing and consumer appliances, telecommunication, industrial, automotive), service type (electronics design and engineering, electronics assembly, electronics manufacturing), and geography (APAC, North America, Europe, South America, and Middle East and Africa). It also includes an in-depth analysis of drivers, trends and challenges. The report includes historic market data from 2017 to 2021.

Parent Market Analysis

Technavio categorizes the global electronics manufacturing services market as a part of the global electronic equipment and instruments market within the overall electronics market. The parent global electronics market includes manufacturers of communications equipment, technology hardware storage and peripherals, electronic equipment and instruments, electronic components, consumer electronics, and industrial electronics products, as well as electronic manufacturing services. 

Key Drivers, Trends, Challenges

The increasing number of electronics manufacturing services providers in economies with low hourly wages are driving market growth, although factors such as the risk of intellectual property theft and misuse may impede market growth. Researchers analyzed the data with 2022 as the base year, along with the key drivers, trends and challenges. 

Electronics Manufacturing Services Market Driver 

The increasing number of electronics manufacturing services providers in economies with low hourly wages is the key factor driving global electronics manufacturing services market growth. One of the key factors driving the growth of the global electronics manufacturing services market is  cost savings derived from delegating work to electronics manufacturing services providers in low-cost economies.

The reduction in costs for electronics manufacturing services providers associated with maintaining technology infrastructure, manufacturing space, operations and staffing, has been a key factor supporting their expansion in low-cost countries. Electronics manufacturing services providers benefit from labor arbitrage through the maintenance of a lean workforce and reduced spending on employee hiring and retention.

The outsourcing of electronics manufacturing to such electronics manufacturing services providers not only allows businesses to scale operations on-demand in line with their operational requirements but also enables them to improve their profit margins by negotiating better deals with electronics manufacturing service providers. 

Electronics Manufacturing Services Market Trend

The collaborative co-innovation partnership with electronics manufacturing services providers is the primary trend in the global electronics manufacturing services market. Collaborative partnerships in outsourcing call for risk sharing and value sharing, deriving from the joint functioning between the customer organization and the outsourcing service provider. 

Although the risks and challenges associated with electronics manufacturing services adoption are deepening each year, many companies are continuing to operate their outsourcing relationships successfully through extensive collaborations and co-innovations. electronics manufacturing services providers are regarded as integrated strategic partners of their clients' supply chains under such instances. 

Electronics Manufacturing Services Market Challenge

The risk of intellectual property theft and misuse is a major challenge to the global electronics manufacturing services market growth. Many electronics businesses keep their manufacturing designs classified and have stringent policies in place, which restrict them from outsourcing manufacturing to electronics manufacturing service providers. 

EMS providers or vendors usually work on a contract basis for their customers, and these electronics manufacturing service providers cater to the needs of multiple businesses simultaneously. Despite detailed documentation, which takes place before the contract is awarded to an electronics manufacturing services provider, there still are concerns among customers regarding the potential loss of IP technology and designs, data theft, and the misuse of these technologies at the electronics manufacturing services providers' end. 

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Sources: Press materials received from the company and additional information gleaned from the company’s website.