EMS companies offer value-added services such as engineering, manufacturing, and other services to the Original Equipment Manufacturers (OEMs). These companies provide various services to clients from different industries. Includes design, manufacture and assembly of electronic components, quality control, supply chain management, logistics and after-sales support. By partnering with EMS companies, manufacturers can focus more on their core business areas. Many manufacturers seek to partner with EMS companies to gain a competitive advantage in the market. This has led to an increase in the demand for electronics manufacturing services. FS Technology, one of China’s leading electronic manufacturers, has witnessed the growth and evolution of the EMS industry. This article aims to provide a comprehensive industry overview, covering aspects such as the history of the industry, its current trends, and best practices for choosing the right outsourcing electronic manufacturing services provider. Let’s dive in…
2023 Electronic Manufacturing Service Industry Market
Based on statistics, the global market for electronic manufacturing services (EMS) is predicted to reach a total output value of $504.22 billion in 2023 and increase to $797.94 billion by 2030. This is expected to result in a compound annual growth rate of 6.8% during the forecast period. The Asia-Pacific region holds the largest share and plays a significant role in the global EMS market. The automotive, communications, computers, consumer electronics (such as smartphones, personal computers, laptops, etc.), industrial (including automation and the Internet of Things), and medical industries widely use EMS. Among these industries, the communications and computer hardware sectors account for around 59% of total demand. For further information, please refer to our other blog post titled “Market Analysis and Trends of Electronic Manufacturing Services (EMS).”
Overall, the EMS market has huge potential for development. Especially with the growing demand for automotive and consumer electronics. As demand continues to increase, competition within the industry will become more intense. We had to set higher standards and regulations.
History of Electronics Manufacturing Services (EMS)
The first EMS company was the Foxconn Corporation, founded in 1977, which provided outsourcing services to original equipment manufacturers. Its founders recognized the huge need for printed circuit board assembly in the electronics industry. Therefore, a company integrating design, manufacture and after-sales service was established. Then in the 1980s, the industry experienced its greatest growth. Many well-known EMS companies were formed, including Sanmina Corporation in 1980. The advent of Surface Mount Technology (SMT) has made possible the rapid assembly of electronics. This is the driving force behind the development of the EMS industry. By the mid-1990s, many OEMs began outsourcing PCB assembly services to EMS companies to reduce costs, highlighting the advantages of EMS. In the late 1990s and early 2000s, most original equipment manufacturers sold their assembly lines to EMS suppliers, leading to a wave of consolidation in the EMS industry. Large EMS companies began acquiring factories and smaller EMS companies, with Foxconn Corporation being acquired by the Wistron Corporation in 2007.
What can Electronic Manufacturing Services Company do for you?
EMS services play a vital role in the production of electronic equipment. These companies provide a range of services. Examples include printed circuit board assembly (PCBA), new product introduction (NPI), supply chain management, and product testing. PCBA is the most important, it involves soldering electronic components to a circuit board using SMT or THT. While SMT has become more popular due to its efficiency, setting up a precision assembly line can be costly, which many manufacturers cannot afford, particularly startups. Therefore, outsourcing PCBA services to EMS providers can be a cost-effective solution, allowing manufacturers to assemble complex circuit boards with quick turnaround times and competitive prices.
EMS companies focus on product management, manufacturing processes, and quality control through their technical personnel and engineers. They offer more integrated electronics assembly services. Examples include electronics design, PCB layout design, enclosure design, BOM and revision management, prototype production, and DFM and DFX services. Additionally, they work with product certification bodies such as ETL, TUV, and UL. This helps to assist manufacturers in obtaining the necessary certifications for their products to be sold in international markets.
The NPI process is critical in electronic manufacturing, covering all steps from initial concept to final product, including prototyping. EMS providers evaluate new products comprehensively, identifying potential risks through P-FMEA evaluations, scheme formulation, trial production, and material validation. In some cases, they may also handle the design, construction, and preparation of any necessary specific tools or fixtures for the product. Partnering with experienced EMS providers in NPI can help launch products successfully in a shorter timeframe.
EMS providers help customers procure all necessary materials and components based on the Bill of Materials (BOM) and product specifications. They optimize the supply chain, finance on behalf of the OEM, assist in purchasing high-quality materials within the budget, and optimize service costs for the customer. EMS companies can also provide inventory management services as needed.
Product testing is a critical step to ensure that products delivered to customers meet quality requirements. EMS providers perform various tests, including flying probe testing, aging testing, automated optical inspection, and functional testing. This step is crucial to avoid significant losses due to product quality issues, including economic losses and damage to product and company reputation. EMS providers can directly use customer-provided equipment to perform these tests. By partnering with excellent EMS companies, OEM manufacturers can bring greater profits to their business.
What can partnering with the right EMS manufacturer get you?
Collaborating with a reliable Electronic Manufacturing Services (EMS) provider can offer several advantages, with the top four being as follows:
- For OEM manufacturers who lack their own production lines, facilities or skilled production and engineering personnel, partnering with an EMS provider can be the only option to bring new products to market. EMS providers typically invest heavily in infrastructure, technology, and personnel and can spread these costs among multiple customers, sharing their fixed costs. This collaboration helps original equipment manufacturers save time and money and turns typically high fixed costs into variable costs.. The fewer quantities you order, the less you pay.
- With the changing technology and customer demands, the need for highly specialized labor is becoming crucial. This not only requires good employee selection and training but also requires strong engineering expertise. This translates into a significant amount of fixed costs that assembly operations must maintain. By partnering with a qualified electronic manufacturing supplier, OEM manufacturers can focus on new product development or marketing, rather than spending more time on production and indirect manufacturing capabilities. This not only reduces fixed costs, staff numbers, and personal and recruitment expenses but also minimizes the hassle of managing the production environment.
- A trustworthy EMS provider has extensive experience in managing procurement processes and working with pre-approved suppliers worldwide. They possess a robust planning ability and advanced ERP system and MES platform to ensure the smooth execution of production assembly. These two components are crucial to managing a cost-effective production process, and require expertise gained through years of best practice. With these tools and capabilities, capable electronics manufacturers can respond to customer needs in a flexible and trustworthy manner, not only on paper but also in a real production environment. Their knowledge in selecting approved suppliers, sourcing components and executing the procurement process efficiently results in a well-managed supply chain. Working with an EMS provider frees OEMs from investing in complex IT systems. Additionally, establishments require well-trained employees. What matters is long-term expertise in supply chain management expertise. A professional EMS provider can help manage the supply chain. They can develop effective planning solutions and work with material suppliers according to client specifications and agreements. For projects it is possible to minimize excess material and ensure a stable production process.
- Late deliveries can harm a company’s reputation and business. Working with a well-organized EMS provider can reduce the risk of late delivery of your order. This may delay delivery of the final product. This requires effective collaboration and consideration of lead times for materials. Furthermore, the advantage of working with an EMS company is to leverage their buying power and market position. This allows for the negotiation of better material prices and efficient use of production equipment.Economies of scale lead to lower unit costs for OEM products, resulting in additional economic benefits and efficiently run projects.
Outsource electronics manufacturing services to EMS service providers
- Quality Control: It is essential to work with an EMS provider who has strict quality control measures in place to protect your reputation and business. To ensure their commitment to quality and compliance with industry standards, you can verify their certification. Such as ISO9001, ISO13485, UL, IPC, etc. Also, you can evaluate their quality control process. Including their inspection and testing methods. And do they do 100% inspection before delivery to make sure every product is as expected and avoid any possible defects.
- Expertise and Project Experience: When selecting an electronic manufacturing company for your project, it’s important to consider their experience and expertise. Working with an experienced manufacturer can provide peace of mind and minimize risks associated with novices handling the project. It’s important to look for a company that has experience in similar projects and understands the specific needs of your industry. By partnering with an experienced electronic manufacturing company, you can ensure that your product meets industry standards and minimize the possibility of quality issues. They also have the ability to make accurate market predictions and adapt to changes based on previous project experience.
- Engineering Services: An excellent electronic manufacturer should not only provide manufacturing services but also offer engineering services. That way, when the company receives your project specifications, they can assess whether the design will work. If it’s not practical, they can suggest modifications or redesigns. Electronics manufacturing companies often hire specialists for the job. Such as experienced engineers in production engineering, mechanical engineering, microelectronics, etc. to ensure the best performance of the final product.
- Advanced Technology and Facilities: Understanding the type of technology and facilities used by your electronic manufacturer is crucial. Using advanced technology and facilities can increase manufacturing efficiency compared to outdated technology and facilities. By obtaining the latest technology, the manufacturer can produce high-quality products that are more reliable and faster, thereby improving market competitiveness. Before making a decision, you can ask the manufacturer to provide their equipment list or arrange a visit to their manufacturing site to evaluate the equipment and confirm that their facilities and processes comply with the latest industry standards.
- Turnaround Time: The time required to complete the project is crucial, especially for projects that require large-scale production. To ensure timely launch of your product, you need to verify if the electronic manufacturer’s turnaround time aligns with your project timeline. To ensure timely delivery, you need to verify their production capacity. Reliable electronic manufacturers have the ability to efficiently complete projects because they have access to advanced machines and a well-established global supply chain that can provide materials and components in a timely manner.
- Supply Chain Management: Finally, understanding the electronic manufacturer’s supply chain management is essential when choosing an electronic manufacturing company. You should determine whether they have a reliable and adaptable supply chain system. Electronic manufacturers usually work with various suppliers from around the world to meet different needs and avoid procurement restrictions that may cause project delays. Additionally, working with multiple suppliers enables them to obtain the latest information on the global market, such as supply shortages and price fluctuations, allowing them to make wise decisions, reduce risks, and address any potential problems.
FS Technology’s forecast for the future electronics manufacturing industry
The electronics manufacturing industry is one of the fastest growing and constantly evolving industries in the world. With technological advancements and increasing demand for electronic devices, the industry is poised for growth, providing opportunities for companies and investors alike. Below are the latest five trends and opportunities in the electronics manufacturing industry:
Increased demand for smart devices
In recent years, there has been a surge in demand for smart devices such as smartphones, smartwatches, and smart home devices, and this trend is expected to continue in the coming years. With the rise of the Internet of Things (IoT), the smart device market is expected to grow rapidly, creating huge opportunities for electronics manufacturers. Companies that can produce high-quality and innovative devices that meet the ever-changing demands of consumers will thrive in this industry.
Development of wearable technology
Electronics manufacturers are expected to benefit from the growing market of wearable technology, which includes devices such as fitness trackers, smartwatches, and virtual reality headphones. The market is expected to continue growing due to the popularity of wearable devices and the constant technological improvements, which lead to decreasing prices. This trend provides significant opportunities for electronics manufacturers.
Emergence of 5G technology
The telecommunications industry recently rolled out 5G technology. This is expected to revolutionize the design, manufacture and use of electronic devices. The technology promises faster data transfer speeds, lower latency and greater reliability. It is beneficial to develop more powerful and more efficient next-generation equipment. Companies that develop and manufacture devices compatible with 5G technology will have a significant advantage in the market.
Expansion of e-commerce
More and more people are turning to online shopping for convenience. Growth in e-commerce is expected to continue driving demand for electronic devices such as smartphones and laptops. This trend will create huge opportunities for electronics manufacturers. Innovative devices that meet the changing needs of consumers can be developed and produced.
Growth of renewable energy
There is growing consumer demand for electronic devices that are compatible with renewable energy sources such as solar and wind power. As more and more people choose to use clean energy to power their homes and businesses. This is all driven by the growing popularity of renewable energy. Companies that can develop and manufacture innovative devices that meet this need will have a significant advantage in the market.