NEVADA CITY, CA – In 2018, worldwide contract manufacturing services market revenue increased 15%, resulting in combined EMS and ODM revenue of nearly $542 billion, says New Venture Research.

Revenue growth from 2013 to 2016 was flat, expanding dramatically in 2017 and 2018, the firm says.

Strong demand for smartphones and infrastructure networking equipment to build the 5G wireless architecture, with products like enterprise storage systems, enterprise LANs, and servers, has sustained the market. The need for cloud computing, social media, real‐time data and video streaming is driving the need for advanced switching, routing, and wireless communication hardware, according to NVR.

For the ninth year in a row, the industry was profitable at $8.4 billion (for 42 EMS public companies and 17 ODM public companies), flat with 2017.

Foxconn accounted for nearly half of all the money made by the EMS industry in 2018, and EMS companies accounted for approximately 80% of the total. Only five EMS companies and one ODM company lost money in 2018. Pegatron ranked second in net income for EMS firms ($369 million). Meanwhile, Delta Electronics ($639 million), Quanta Computer ($473 million), and Lite‐On ($264 million) ranked highest in earnings for the ODMs.

Plant closures and openings were rare in 2018, as most companies appear to have right‐sized their operations or closed facilities due to consolidation, says NVR. New openings are related to new business opportunities, while closures are being driven by economic decisions such as right‐sizing.

Communications and computer products will continue to drive the largest growth in the electronics industry. Fueled by demand for EMS services, the contract manufacturing industry will grow from $542 billion in 2018 to $777 billion in 2023, a CAGR of about 7.5%.

Outsourcing has become a critical element in keeping the electronics assembly industry expanding and driving costs down each year and is a leading factor in stimulating continuous consumer demand and technology deployment. The trend to move price‐sensitive manufacturing to low‐cost regions has ceased but will continue to impact the industry for all suppliers in the foreseeable future—at least regionally.

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