NEVADA CITY, CA – Worldwide contract manufacturing revenue increased 7.1% in 2020, according to New Venture Research, while the annual worldwide GDP rate was down 3.2% for the year.

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, the firm says.

EMS companies averaged the highest growth over the last five years, exhibiting a 7.5% CAGR, whereas ODMs experienced somewhat lower growth of 3.7%. Both types of suppliers were lifted by the rising tide of sales of PCs and feature phones.

The CM market was sustained by 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 increased, and the computer industry as a whole, including 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. 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, says New Venture Research.

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 success of the vaccines. In 2021, the retail sector is expected to rebound as demand for consumer electronics (TVs, wearables and 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).

The Covid pandemic depressed the EMS industry starting in the first quarter with work slowdowns and the implementation of new organizational protocols for virus safety.

Early in the second quarter, orders were canceled or postponed as industries like automotive were having trouble obtaining parts. But in the fourth quarter, there was a recovery, and the total CM market recorded a positive gain.

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