Electronics Manufacturing Services Market Size

Electronic Manufacturing Services (EMS) Market Analysis

The Electronics Manufacturing Services Market size is estimated at USD 580.52 billion in 2024, and is expected to reach USD 773.22 billion by 2029, growing at a CAGR of 5.90% during the forecast period (2024-2029).

• With increasing miniaturization and adoption of emerging technologies in the Industrial Internet of Things (IIoT) and enhanced communication posed by 5G, electronic component design and assembly have been revolutionized. For instance, the communication base stations for 5G developed a superior antenna technology, such as MIMO, leading to a rise in the number and performance of radiating elements.
• Additionally, the demand for electronic devices, such as smartphones, smartwatches, and other devices, has boosted the market's growth. According to IBEF, the Indian appliances and consumer electronics industry stood at USD 9.84 billion recently, and it is anticipated to more than double to achieve INR 1.48 lakh crore (USD 21.18 billion) by 2025.
• Further, many companies seek to lower their inventory, facilities, and equipment in their manufacturing activities, shifting the focus of their capital investments toward sales and marketing and R&D. This has increased the demand for outsourcing to third-party manufacturing service providers.
• For instance, an avionics company decided to transfer its PCBA production to an EMS partner to broaden its product and service offerings and not make an additional investment in manufacturing. The primary requirements were compliance with AS9100 standards and multiple BGAs on the PCBAs, with up to 16 layers on some PCBs.
• The rising government initiatives in several geographies are driving the market's growth. For instance, according to IBEF, the government approved 14 companies under the IT hardware production-linked incentive (PLI) scheme. Over the next four years, these companies are expected to fuel total production of USD 21.64 billion. The project will bring additional investment in electronics manufacturing in India.
• Furthermore, The Government of India authorized 100% FDI in the electronics systems design and manufacturing sector under the automatic route. FDI into single-brand retail has increased from 51% to 100%; the government plans to hike the FDI limit in multi-brand retail to 51%. Such developments would likely drive the market's growth.
• Around the world, SMEs and MSMEs are adopting more and more third-party manufacturing services, so they can avoid huge capital investments in the production lines and take advantage of the service providers' design expertise and manufacturing capabilities. As per the International Finance Corporation (IFC) estimates, 65 million firms (approx.), or about 40% of formal micro, small, and medium enterprises in developing countries, have unfulfilled financial needs. The majority of businesses across the globe are small and medium enterprises, specifically in developing countries. This dependency on manufacturing service providers will solidify the future growth of the EMS market.
• Moreover, the COVID-19 outbreak severely impacted many end-user industries, including electronics manufacturing. According to the IPCs survey, consumer electronics were expected to be the most impacted because of their more substantial reliance on the manufacturing capacity of China and supply chains that rely more heavily on China.
• But many electronics manufacturing and related services were classified as essential service providers, as they carried out many critical tasks from product assembly to circuit board designs that power necessary medical equipment; electronics manufacturing was an integral part of the economy and the healthcare space during this COVID-19 outbreak.