The market for #ElectronicsManufacturingServices (EMS) in 2022 experienced its lowest growth rate in five years — 1.7 percent — from a five-year CAGR of 7.7 percent, according to New Venture Research. Nevertheless, EMS revenue grew last year to reach an all-time high of $694.4 billion.

The contract manufacturing market, comprised of EMS providers and original device manufacturers (ODMs), was sustained by the strong demand in the automotive, aerospace/military and medical markets, according to NVR’s 2023 report. Orders for tablets, desktop and notebook computers, and servers, once strong, weakened in 2022 as demand for replacement sales had peaked in the previous year.

Foxconn continued its dominance as the leading EMS firm in the industry, outdistancing its closest contender by more than five times. The top 10 leaders accounted for 74.0% of total industry revenue.

The electronics industry as a whole is adjusting to declining demand for #PCs. For the EMS market, #desktop revenue is now expected to be in #decline for the next five years, while #notebook orders should remain #strong. The computer industry as a whole (which includes servers and workstations) will see good growth over the next five years.

Some of the highest growth rates for electronics assembly products last year were found in the medical and industrial markets. The #pandemic negatively affected the #transportation sector (automotive and aerospace), as well as certain #consumer electronics products, due to a decline in disposable income but transportation has since recovered. Nearly all the high-mix/high-complexity products (medical, industrial, transportation) experienced higher than average growth, except for defense/military projects, which were flat, according to NVR surveys, as contractors attempted to determine if any new investment upgrades would be forthcoming from the U.S. government.

The largest EMS market in size is the #communications segment, with its dominance by smartphones that have begun to overshadow the computer market.
The #computer market will always see growth driven by upgrades and new developments such as generative AI that will be demanding more compute power and storage, NVR said.

The #consumer market ranks third and is sustained by strong demand for digital TVs. The #industrial market ranks fourth in size, followed by the #automotive and #aviation/defense/other transportation segments, and lastly by the #medical equipment market. Together these market segments for electronics product assembly totaled approximately $1.4 trillion in assembly revenue.

Communications and automotive products will continue to be the segments driving the largest growth in the electronics industry, according to NVR.