More OEMs will outsource electronics manufacturing
By Jim Carbone -- Purchasing, 7/26/2007 1:12:00 PM
Automotive, communications, medical and aerospace and defense industries will become more important drivers of the global electronics manufacturing services industry over the next few years, according to a new Frost & Sullivan report.
Those industries will help drive the EMS market from about $190 billion in 2006 to $387 billion in 2013 and the original design manufacturing market from $100 billion in 2006 to $219 billion in 2013.
“Increased outsourcing from automotive and communication industries along with new outsourcing opportunities from the aerospace and defense (A&D), medical and industrial applications industries will likely drive the future growth of the
EMS market,” says Frost & Sullivan Research Analyst Lavanya Ram Mohan.
He says design expertise represents a primary growth factor for ODMs, especially in markets such as consumer electronics, computing, PC and servers. OEMs often seek ODMs as strategic design partners as product design is a key differentiator in these markets. ODMs’ ability to offer design solutions with high quality and low-cost options will maintain the market’s high growth rate during the forecast period.
A key challenge for EMS providers will be price pressure. Average selling prices in the traditional markets served by EMS providers have declined and EMS providers often find themselves squeezed to provide OEMs the lowest cost.
EMS providers need to offer differentiated services to OEMs, while simultaneously retaining the current level of services. In particular, EMS providers offering design services can increase revenues and profits, says Mohan.
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