ELECTRONIC CONTRACT MANUFACTURING AND DESIGN SERVICES MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2024-2031)
Global electronic contract manufacturing and design services market is estimated to be valued at USD 712.03 Bn in 2024 and is expected to reach USD 1,462.75 Bn by 2031, exhibiting a compound annual growth rate (CAGR) of 10.8% from 2024 to 2031.
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Contract manufacturers help technology companies to focus on developing products while these can manufacture large volumes of devices and components. This division of labor allows both parties to maximize their core competencies.
Increasing demand for electronic devices in various industries
With technology penetrating deeper into every aspect of lives and industries, there has been huge demand for electronic devices globally. Be it consumer electronics like smartphones, tablets, wearables or industrial and medical devices, electronics have become an indispensable part of modern life. On the consumer front, upgrading to the latest smartphone or smart home devices has almost become a psychological necessity for people. As disposable incomes rise and millions enter the aspiring middle class globally, there has been huge demand for such devices.
The proliferation of internet of things (IoT) can offer untapped opportunities across industries. Manufacturing processes are evolving to become more automated, optimized and data-driven with millions of sensors powering the next wave of industry 4.0. Critical infrastructure and transportation are leveraging electronics for improved operations as well as safety. Even sectors like oil & gas, mining and construction are embracing smart solutions. The healthcare industry has undergone a revolution of sorts with focus shifting to preventive and remote care enabled by devices ranging from wearables to medical imaging systems. With aging populations worldwide, there has been huge demand for assisted living technologies and telehealth.
While industries continue broadening the scope of applications of electronics year after year to drive operational efficiencies, costs are also under pressure to be controlled. Outsourcing manufacturing as well as product design services is emerging as the most viable strategy. This propel the global electronic contract manufacturing and design services market by providing customers an asset-light approach to developing and manufacturing cutting-edge electronic solutions on demand. With specialization being the focal point, electronic manufacturing services (EMS) providers are well-placed to address this burgeoning demand across industry verticals through economies of scale.
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Rising trend of outsourcing manufacturing and design services
The business landscape prioritizes flexibility and nimbleness over maintaining expanded in-house capabilities. Growing complexities in electronics combined with shorter product life cycles have made it increasingly difficult for many organizations to develop comprehensive expertise across the value chain on their own. At the same time, cost optimization remains a top priority. This leads to rise to outsourcing as a favored strategy for both manufacturing and design requirements.
Design services outsourcing allows enterprises to leverage the technical skills of specialized design houses during the concept and development stages. Such providers help streamline the process with value engineering while also proposing innovative ideas. These take complete responsibility for design verification and compliance with quality and regulatory standards. This enables OEMs to stay laser-focused on their core competencies. On similar lines, electronic manufacturing services providers are emerging as single-point partners to produce finished goods as well as perform various processes like assembly, testing, and fulfillment.
The expertise, infrastructure and process maturity of EMS companies have convinced many small businesses and big brands alike about the commercial as well as operational advantages of outsourcing. These guarantee on-time delivery while absorbing demand fluctuations with relative ease. The increased risk-taking ability, costs savings through economies of scale and speed to market aided by global supply chains are hard to achieve in-house. Outsourcing drives workflow optimization through continuous improvement initiatives by service providers. These factors drives the rising trend of outsourcing manufacturing and design engagements worldwide. Established EMS providers are expanding their technical skills and delivery footprint to capture a larger share of this outsourcing wave.
Key Takeaways from Analyst:
Global electronic contract manufacturing and design services market growth is driven by increasing demand for electronics and technological devices across industries. As OEMs focus more on their core competencies and look to outsource non-core activities, there has been huge demand for contract manufacturing.
Rising labor costs and trade tensions pose a threat and could prompt some manufacturers to shift production bases. Geopolitical risks and fluctuations in commodity prices can also hamper the market growth. Market players are expected to gain from outsourcing product design and engineering along with manufacturing. This will allow OEMs to access advanced technological capabilities and expertise of EMS providers to bring new products to market faster. EMS players are also well positioned to tap opportunities arising from growth in applications like automotive electronics, medical devices, industrial automation and 5G infrastructure roll out.
Focus on high-mix low-volume production, complex electronics manufacturing and vertical integration of services will be crucial for long term success.
Market Challenges: High competition and price pressure from other manufacturers
Global electronic contract manufacturing and design services market faces immense price pressure from other established as well as new contract manufacturers. With numerous players operating in this market, there has been intense competition. Established manufacturers are trying to retain their existing customers by offering competitive prices, while new entrants are trying to gain market share by offering even lower prices. This high competition and price pressure has impacted the margins of many companies and forced them to look for ways to reduce costs. Firms now need to focus on ramping up efficiencies, developing unique service offerings, and building strong customer relationships to withstand this high competition and price wars. Unless companies streamline their operations and improve turnaround times, it will become difficult to survive and grow in this challenging environment.
Market Opportunities: Emerging markets and increasing demand in region like Asia Pacific
Global electronic contract manufacturing and design services market witnesses significant growth opportunities in emerging markets, especially in the Asia Pacific region. With rising disposable incomes and growing electronics consumption, there has been huge demand for electronic products in many developing countries of Asia and other regions. Since the production costs care also comparatively lower in these markets, many electronic product original equipment manufacturers are shifting their manufacturing base to emerging nations. This leads to increased outsourcing of production and creation of new opportunities for local and international electronic contract manufacturers. Regions like China, India, Indonesia, and Vietnam are expected to be the future hubs of electronics manufacturing. Contract manufacturers can gain significantly by catering to rising demands of local and global customers from these high growth emerging markets.
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Insights, By Services - Reliance on outsourcing boosts demand for electronic manufacturing services
In terms of services, electronic manufacturing services (EMS) segment is estimated to contribute the highest market share of 62.3% in 2024, owing to increased outsourcing of production by OEMs. EMS providers handle electronics manufacturing processes from prototype design to mass production. These help OEMs focus on core competencies like R&D and branding while taking care of manufacturing efficiently. The complexity of electronics and rising costs of in-house manufacturing have led more OEMs to outsource to EMS providers.
Production demands vary vastly across consumer electronics cycles and OEMs want flexibility without large capital costs. EMS providers offer scalable manufacturing capacities on demand through their global facilities. Their expertise in supply chain management and quality control also helps OEMs launch new products quickly. Growing demand for gadgets and the Internet of Things is increasing outsourcing to EMS providers for dependable, high-quality production.
Insights, By Enterprise Size - Focus on core business drives large enterprises to outsource design
In terms of enterprise size, large enterprises segment is estimated to contribute the highest market share of 57.6% in 2024, due to their focus on outsourcing design services. Large organizations have extensive internal resources but also complex product portfolios requiring dedicated R&D. Outsourcing design to specialized electronic design services providers allows them to leverage external expertise for innovations while prioritizing core offerings.
Electronic design services handle development of schematics, printed circuit board layouts, embedded firmware and digital/analog circuit design outsourced by large companies. These helps accelerate product development cycles through parallel project execution. With global delivery centers, design services ensure round-the-clock support. Their broad engineering skills across technologies meet sophisticated design needs of large enterprises. Cost savings from outsourcing non-core functions as well as access state-of-the-art EDA tools drive large companies to rely on design services outsourcing.
Insights, By Vertical - Growing consumer demand and product lifecycles drive consumer electronics segment
In terms of vertical, consumer electronics segment is estimated to contribute the highest market share of 32.4% in 2024, owing to growing global demand. Rapid technology changes and short lifecycles in CE require constant new product development as well as scalable manufacturing capacities. Contract manufacturers help CE brands optimize product development and manufacturing operations.
Contract manufacturing supports flexible manufacturing and global distribution networks essential for CE companies. It ensures uninterrupted supplies while managing inventories efficiently over volatile demand cycles. Expertise in complex CE manufacturing processes and quality systems help companies deliver innovative products affordably.
Furthermore, contract manufacturers provide total product lifecycle support from prototype to after-sales services. This comprehensive capabilities from a single source address the needs of CE companies across the value chain. The continuous innovation and rising income levels worldwide can sustain outsourcing growth in the consumer electronics sector.
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Asia Pacific region, led by China, currently dominates the global electronic contract manufacturing and design services market with an estimated market share of 40.9% in 2024. The region is home to a huge pool of low-cost skilled labor which contract manufacturers have leveraged to build massive manufacturing capabilities over the years. Besides affordable wages, countries like China also offer a very business-friendly environment with incentives and tax benefits for electronics companies. This has helped Asia Pacific attract significant foreign direct investment over the past few decades. The region has well-established supply chain networks for sourcing various components and materials required for electronics manufacturing. Proximity to suppliers enables contract manufacturers in Asia Pacific to maintain low production costs.
North America has emerged as the fastest growing regional market for electronic contract manufacturing and design services. The workforce in these countries is highly educated and possesses technical skills required for electronics manufacturing. North American governments have invested heavily in special economic zones and industrial parks with world-class infrastructure and facilities to attract manufacturing investments away from traditional hubs. Strong manufacturing expertise coupled with rising global demand for electronics can drive the Eastern electronic contract manufacturing and design services market.
Electronic Contract Manufacturing and Design Services Market Report Coverage
| Report Coverage | Details | ||
|---|---|---|---|
| Base Year: | 2023 | Market Size in 2024: | US$ 712.03 Bn |
| Historical Data for: | 2019 to 2023 | Forecast Period: | 2024 to 2031 |
| Forecast Period 2024 to 2031 CAGR: | 10.8% | 2031 Value Projection: | US$ 1,462.75 Bn |
| Geographies covered: |
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| Companies covered: |
Asteelflash, Benchmark Electronics, Inc., Celestica Inc., Compal Electronics, Inc., Delta Group, Fabrinet, Flex Ltd., Foxconn Technology Group, Inventec Corporation, Jabil Inc., Kimball Electronics, Inc., LACROIX - Electronics, New Kinpo Group, Plexus Corp., and Sanmina Corporation |
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| Restraints & Challenges: |
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*Definition: Global electronic contract manufacturing and design services market consists of companies that provide outsourced electronics manufacturing and product design services to OEMs and other companies. These specialize in manufacturing printed circuit board assemblies, electrical and electronic assemblies, precision plastic parts, complete box builds, and turnkey product development services like concept design, mechanical design, prototyping, testing, and certification.
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About Author
As an accomplished Senior Consultant with 7+ years of experience, Pooja Tayade has a proven track record in devising and implementing data and strategy consulting across various industries. She specializes in market research, competitive analysis, primary insights, and market estimation. She excels in strategic advisory, delivering data-driven insights to help clients navigate market complexities, optimize entry strategies, and achieve sustainable growth.
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