The global electronics manufacturing services market is estimated at US$165.354 billion for the year 2019 growing at a CAGR of 14.17% to reach the market size of US$366.208 billion by 2025. The major factor driving the growth of the market is the wide adoption of contractual services by OEMs on account of an increase in the number of service offerings by the providers. The adoption of these services further enhances the capabilities of the OEM manufacturers to expand their focus in the core capabilities and further invest in enhancing their efficiency and stay determined to achieve operational excellence also. Furthermore, the adoption of these services further reduces the lead time to the market and also reduce the production costs along with the reduction in the capital investments also contribute to the growth of the market significantly. Furthermore, the rising focus of the major end-users towards the reduction of costs is one of the prime factors significantly driving the growth of the market. The growth of the numerous end-user industries coupled with the growing complexity of operations is further boosting the adoption of the contract manufacturing services and leading to increased investments by major companies in the form of facility expansions, investments in R&D, all these factors are collectively contributing towards the growth of the market significantly throughout the forecast period. The rising penetration of smart and handheld devices such as smartphones and tablets is also bolstering the growth of the market. The growing penetration of the latest and advanced medical devices is projected to significantly boost the growth of the market due to a strict regulatory environment for the manufacturing of the devices coupled with the requirements for highly advanced manufacturing technology. This is further leading to the wide adoption of contractual services by OEMs to stay focused more on their core competencies and invest more in the R&D with an aim to reduce the costs and gain a competitive edge over other players.
Booming investments by key market players for facility expansions, R&D, and partnerships also show the potential for the growth of the market for the coming years. For instance, recently in 2020, Benchmark Electronics was chosen by a leading German company dealing in the field of electronic, cybersecurity, radio monitoring and radiolocation, test equipment, broadcast & media, and radio communication, Rohde & Schwarz as their global manufacturing partner for the expansion of their manufacturing output and avail the manufacturing expertise of Benchmarking Electronics due to the rapidly rising demand for the components or electronics manufacture red by it to meet the growing demand. Similarly, in January 2020, Flex Corp. launched a new development kit along with a system-in-package with an aim to enable shorter to market and also support the design for high volume IoT devices. Furthermore, the company also opened a new 159,000 square feet manufacturing facility in India in July 2019 to expand its operations in the country due to the growing potential of electronics manufacturing in the country.
Growing focus of industry players towards cost reduction
The rising focus of major industry players across the different industry verticals towards the reduction of costs and maximization of profits is one of the key factors to boost the adoption of contractual services and thereby amplify the growth of the market throughout the forecast period. Furthermore, the rising competition in the industries is further leading to the dilution of the profits which is leading to the high adoption of these services for the cost reductions and the expansion of profits.
Increasing investments in electric and hybrid vehicles
The growing demand for electric vehicles is one of the prime opportunities for electronic manufacturing service providers. A surge in the demand is anticipated to propel the production of electric and hybrid cars, thereby complement the growth of electric components. In addition, favorable government policies regarding the promotion of electric vehicles is further projected to augment the demand for these services by major EV manufacturers throughout the forecast period and beyond. Moreover, the deployment of electric vehicles has also been growing at a remarkable pace during the past years.
According to the data from the International Energy Agency, the electric car deployment increased from 0.23 million units in 2013 to 3.29 million units by 2018. Moreover, the value of the NEV cars is also projected to grow at a noteworthy CAGR of 28.04% (Source: Knowledge Sourcing Intelligence), which is also anticipated to positively impact the growth of the market. Also, the increasing focus towards environmental protection is further leading to increasing investments by the government of major developing economies to boost the production of these vehicles. For instance, under the Made in China 2025 program, in which the NEVs are considered as an important part of the program and the goal of the Chinese government is to facilitate manufacturing 1 million electric and plug-in hybrid cars in China by 2020.
Aerospace and Defence industry is projected to witness decent growth over the forecast period
On the basis of industry vertical, the global electronics manufacturing services market has been classified into healthcare, aerospace and defense, automotive, telecom and IT, consumer electronics and others. The aerospace and defense sector is anticipated to show good growth over the forecast period owing to a steady increase in the investments by major countries in the defense sector to mitigate the numerous levels of security threats and strengthening the defense capabilities in major developing economies such as China, India, and Indonesia among others.
Europe holds good growth opportunities during the forecast period
By geography, the global electronics manufacturing services market is segmented into North America, South America, Europe, Middle East, and Africa and Asia Pacific. The European region is anticipated to show decent growth over the forecast period on account of rising investments by market players for the expansion of facilities in this region due to the rising demand from numerous end-user industries. North America is anticipated to hold a decent market share on account of the early adoption of technology and the availability of a well-established infrastructure. The Asia Pacific is anticipated to grow substantially during the next five years due to the significant growth of industries in the major emerging countries such as India, China, Indonesia, and Vietnam.