By Eric Miscoll, EMSNOW Publisher
Here are six of the most impactful EMS industry trends we at EMSNOW will be watching as we head into 2026. Based on our interviews, site visits and associations within the industry, we believe we are deeply connected to the information sources that matter to this corner of the electronics industry.
We have distilled a year’s worth of content into what we hope to be pithy, succinct observations. Long story, short: we are buckled up and ready for another wild ride in 2026.
1. A New World Order – Rev.2
Regionalization has been a trend we’ve been covering for a decade now, but in 2025 geopolitical events have accelerated it as each geography – Europe, Asia and the Americas – races to build out electronics manufacturing infrastructure, especially the ‘chips’ that drive AI. Nations are scrambling to figure out how to enable independent, vertically integrated and self-sufficient electronics manufacturing eco-systems. Advanced semiconductor manufacturing is now seen as a critical national imperative, but reversing years of global interdependence is not done overnight and most politicians don’t fully understand what’s needed.
Tariffs, sanctions, legislation and massive funding initiatives are the carrots and sticks being applied, but these are blunt instruments and are having unintended consequences.
Global industry advocacy groups like the PCBAA in the U.S., and the Global Electronics Association are working to educate the politicians as best they can. In India and China, there are more engineers than lawyers in politics and the policy makers may be more attuned to industry requirements; however there are major challenges when building out complicated, labor and capital intensive industries like semiconductors. We hope rational policies will be enacted.
But the biggest globalization story is the rise of electronics manufacturing in India. After decades of being on the verge of breaking out, the country is well and truly realizing this potential. EMSNOW visited 13 EMS companies all across India this past fall and we refer you to our comprehensive report on EMS in India.
2. Market sectors for growth – Some surprises
In Europe, the big growth sector is seen to be aerospace/defense as the EU and the UK increase their target defense spending goals from 2% to 5%. The war in Ukraine is not as close to ending as anyone hoped; drone consumption is astronomical, and Ukrainian ingenuity will likely be studied carefully by future war historians.
It’s not just drones and it’s not just Europe. The hardware driving global surveillance and avionics will need refreshing as agentic AI is deployed throughout commercial and military systems. Deloitte points out that deploying AI in this market sector has specific challenges. “A&D manufacturing presents a more complex challenge due to the stringent safety requirements, reliance on legacy systems, and the high cost associated with potential failures. Nonetheless, investment prospects remain strong. According to an International Data Corporation forecast, US A&D spending on AI and generative AI is expected to reach US$5.8 billion by 2029, 3.5 times higher than 2025 levels.”
Other market sectors are not doing as well. The automotive sector is suffering in both the Americas and Europe; tariffs and supply chain disruptions have continued to plague, as well as competition from China’s EV dominance.
Data centers are a bright spot, but some fear that investment is a bubble. More on AI and EMS below.
But at the center of everything is the holy grail: energy. Finding sustainable sources of energy to power the electrification of everything will be the key enabler of all the sectors. Ultimately there is much work to be done in this sphere.
3.Consolidation and global realignment
EMS industry consolidation continues and accelerates. There have been many acquisitions announced globally with more expected.
Some acquisitions have been aimed at adding capabilities for vertical integration, e.g. design, access to regulated industries, PCB fabrication, and so forth.
Others are designed to add a regional presence to enhance a company’s global footprint in other geographies. For example, EMS in India acquire companies in Europe and/or the Americas; and European EMS acquire companies in the Americas. It will be interesting to see how M&A activity develops in India as more global EMS seek to establish a toe hold in this emerging region.
We expect this consolidation to continue as there is still overcapacity in the EMS industry.
4.Industry revenue forecasts
According to our reading of the tea leaves, 2025 is clocking in as a down year for EMS revenues, but there are positive indicators for growth in 2026. The post Covid boom seems to have given way to lower EMS revenue growth for many EMS due to lower demand from customers after post-Covid build up. The last few years have seen negative revenue growth. This is not true for all EMS in all regions; a more nuanced look at each sector and each geography is required for the full picture.
The overall industry is still dominated by the activities of the largest EMS, and the “Foxconn effect” remains real when deciphering EMS market growth. It is worth the reminder that M&A consolidation does not grow the size of the industry, it just changes the size of the existing players.
More OEMs must make the decision to outsource their electronics manufacturing in order to grow the revenue pie.
5. Supply chain
Supply chain optimization seems to be the primary focus for improving overall efficiency in the industry. Visibility into the component channel is considered key. The search for the elusive ‘glass pipeline’ through data sharing among the supply chain participants is a key sticking point. In theory, it should be the answer, but companies are loathe to share pricing information directly due to legitimate business confidentiality concerns.
Aggregation platforms like TrustedParts.com, which the authorized component channel endorses, and its partners including Luminovo and Sluicebox, are working on the solutions to create a digital glass pipeline to share lead time and availability data, as well as carbon emissions. Other initiatives are likely to come online.
Vertical integration of more of the electronics manufacturing processes is driving some of the EMS strategy decisions. Many of the companies we talk to are gaining expertise and engineering prowess in product design; some are building board fabrication, wire and harness, injection molding, advanced packaging, and other downstream and upstream capabilities.
6. AI for EMS
Beyond the adoption of AI to improve its own internal efficiencies, EMS are building the AI infrastructure for the world. Companies like Celestica, Jabil, and Flex have all made major announcements around hyperscale server initiatives, offering a ‘one-stop shop’ for data centers. Celestica, for example, claims they operate as an ODM for data centers, offering a complete array of services to hyperscalers like Amazon and Google, to ensure energy efficiency and sustainability in the final product.
This initial EMS growth spurt from the AI infrastucture hardware boom is expected to last about 4 years and then slow down as upgrades and maintenance growth takes over.
As mentioned, aside from this massive market for EMS services, AI is super charging Industry 4.0, promising increased efficiencies, better yields, improved quality and more automation.
How this all impacts the labor market is a topic for another article, but we will say that there clearly will be a critical need for more training and upskilling of the workforce. The drive for more automation must be done in tandem to ensuring the current workforce has the right skills to manage the factory of the future.
Conclusion
All in all, we are very bullish on the EMS industry, as we have been for decades. EMSNOW is the voice of the industry, and we pledge to continue to contribute our finest journalistic efforts to bring our audience the data and insights they require to be successful. We enter 2026 with great hope, and a bit of anxiety.
