Report: European EMS Revenues to Grow 4.6% through 2020
OXON, UK -- Uncertainties surrounding the impact of Brexit and US political situation are expected to subdue growth among European EMS companies in the first half of 2017, a new report asserts.
Assuming that the impact on the global economy is limited and short-term, the market should regain momentum in the second half of the year and then accelerate through 2020, Reed Electronics Research says.
EMS sales by European EMS companies reached 27.4 billion euros ($30.7 billion) in 2016, the second consecutive year of growth. The research firm forecasts the region's revenues will reach 32.1 billion euros ($35.9 billion) in 2020, up 4.6%.
EMS revenues in Western Europe are forecast to reach 11.7 billion euros ($13.1 billion) in 2020, up from 10.8 billion euros ($12.1 billion) in 2015. The market is increasingly focused on the aerospace, defense, automotive, medical, control & instrumentation, industrial and telecom segments of the market. Pricing pressures and the transfer of production to manufacturing facilities in Central/Eastern Europe and Middle East and North Africa to reduce costs and increasing demand by OEMs for EMS to offer local manufacturing in key global markets will dampen growth in Western Europe during the period to 2020, the firm said.
The reverse applies to CEE/MENA, where growth will be boosted by the transfer of production from Western Europe and in particular, lower-volume, high-mix products. However, despite the migration of production from Western Europe, CEE/MENA region revenues will continue to be focused on higher-volume products in the consumer, computing and communications, or 3C, segments. Assuming that the leading global EMS providers remain committed to retaining a major manufacturing presence in the region, revenues are forecast to reach 18.3 billion euros ($20.4 billion) by 2020, up from 16.6 billion euros ($18.5 billion) in 2015.
Although made up of over 1,000 companies, the industry is dominated by a small number of global players with the Top 3 – Foxconn, Flextronics and Jabil – accounting for around 44% of revenues in 2015, with the vast majority from plants in CEE focused on the 3C segment. The leading 50 companies made up 77% of total sales (21 billion euros).
