New Venture Research Publishes Annual Electronics Manufacturing Services Report
Nevada City, California – New Venture Research (NVR) announces the publication of its annual electronics manufacturing services report, The Worldwide Electronics Manufacturing Services Market – 2021 Edition.
The worldwide contract manufacturing (CM) market experienced an excellent increase in revenue—an estimated 7.1 percent based on our field research and worldwide survey—which is far in excess of the annual worldwide GDP rate of –3.2% as established by the International Monetary Fund in 2020. The industry reached an all-time high of $595 billion in 2020, mainly led by top-tier EMS companies performing at a higher level of growth since 2019. EMS companies averaged the highest growth over the last five years, exhibiting a 7.5 percent CAGR, whereas ODMs experienced somewhat lower growth of 3.7 percent. Both types of suppliers were lifted by the rising tide of sales of PCs and feature phones.
Figure 1 The Worldwide CM Market ($M), 2015–2020
Source: New Venture Research
The CM market was sustained by the strong demand for notebooks, servers, and smartphones, and capital spending on wireless infrastructure and enterprise LANs was driven by the building of 5G wireless networks. Computer notebook sales were still increasing and the computer industry as a whole (which includes servers and workstations) will see above-average growth as computer replacements and upgrades continue. Additional areas with high growth rates for electronics assembly products were the medical and industrial markets. Unfortunately, the COVID pandemic negatively affected the transportation sector (automotive and aerospace), due to the fear of travel and a decline in disposable income, as well as certain consumer electronics products such as smart home devices.
The impact of COVID-19 on the contract manufacturing services market caused orders to decline, mainly in the first and second quarters. The transportation industry was negatively impacted as air travel and vehicle commuting came nearly to a halt; it will take at least another year to fully recover, presuming the vaccines prove successful. In 2021, the retail sector is expected to rebound as demand for consumer electronics (TVs, wearables, smart home devices) spending increases over the next five years.
For the eleventh year in a row, the industry was profitable, at $11.4 billion (for 35 EMS public companies and 15 ODM public companies). Foxconn accounted for a little over one-third of all the money made by the EMS industry in 2020, down from approximately half of earnings over the last several years. Luxshare Precision ranked second in total earnings ($1.3 billion), followed by Delta Electronics ($1.1 billion), Pegatron ($761 million), Quanta Computer ($614 million), and Wistron ($491 million). Figure 2 presents the total available market (TAM) for electronics assembly in 2020 by segment.