Electronic Contract Manufacturing And Design Services Market Analysis Report By Service, By End Use, By Region And Segment Forecasts From 2020 To 2027

Industry Insights

The global electronic contract manufacturing and design services market was accounted for USD 417.0 billion, in 2019 and expected to grow with a CAGR of 8.5% during the forecast period, from 2020 to 2027. The rising functionalities include component assembly, circuit board designs, functional testing, and sub-assemble manufacturing offered by electronic contract manufacturing is projected to drive the market growth during the forecast period. Electronic-based contract manufacturing is a system of manufacturing and engineering services that provide several manufacturing capabilities. In addition, the outsourcing of supporting activities is expected to help OEMs to concentrate on the major competencies that help them to maintain their operational efficiency, help to reduce production cost along with the reduction of fixed capital investment.

The contract manufacturing model was derived by the ability of contract manufacturers to focus on economies of scale, pooling sources, and procurement of raw material along with additional services like repairs and warranty. This model also helps OEM to avoid complex or extensive operations. OEMs outsource circuit assembly to reduce production time and volume time by using technology solutions, manufacturing services, engineering, and design services. These factors are projected to boost the market growth over the forecast period.

Increasing penetration of mobile devices like tablets and smartphones is a key driver to augment the electronic contract manufacturing model market. The healthcare industry is expected to have significant growth due to the rising demand for medical devices. Thus, outsourcing of these activities enables OEMs to focus on R&D activity and reduce the prices of medical devices to sustain in a competitive market, thereby expected to drive the market growth over the forecast period, from 2020 to 2027.

The aerospace and automotive sectors are anticipated to have healthy growth over technical segments like IT & telecom and consumer electronics. Though electronic manufacturing providers offer several advantages to OEMs, it cannot be the best option every time for OEMs. Sometimes, the OEM’s executives are not able to understand the assembly process resulted in time-consuming and complex services than in-house services. The cost of quality maintenance and volume of production is anticipated to hinder the growth of the designing and manufacturing process.

Services Insights

By services, the electronic contract manufacturing & design services market is fragmented into electronic design & engineering, electronics assembly, electronic manufacturing, and others. In 2019, electronic manufacturing led the market and accounted for more than 44.0% of the global revenue. Besides, the engineering and electronic designs segment is anticipated to grow with the highest CAGR over the forecast period. This growth is attributed to the increasing shift of OEMs towards the outsourcing of manufacturing and designing requirements. The market is expected to witness high demand for electronic circuit boards owing to rising importance in various electronic devices such as tablets and smartphones.

OEMs help to test and design prototypes for product development. In addition, services offered by contractors ensure low capital investment. Further, they offer advanced manufacturing practices for new product innovation and development to OEMs. In addition, OEMs are outsourcing their electronic assembly to electronic contract manufacturing and designing services providers to improve profit margin. Due to the above-mentioned factors, the market is projected to grow during the forecast period.

 To improve flexibility and cost reduction, OEMs are adopting the outsourcing of electronic contract manufacturing. They are concentrating on investing in the R&D department and implementing several strategies to improve the production process to sustain themselves in a highly competitive market. However, the high cost of implementation of advanced technology such as Artificial Intelligence (AI) and 3D printing for automation led to high initial investment which is expected to restraint market growth.

End-Use Insights

The demand for the services is projected to grow extensively due to increasing applications across various applications such as industrial, aerospace, healthcare, and others. Telecom and IT sector held the largest market share of more than 47.0%, in 2019. Apart from this, increasing demand for these services in defense, healthcare, automotive, and other verticals is anticipated to drive the growth of the market from 2020 to 2027.

Growing demand for electronic vehicles has increased the need for outsourcing the manufacturing of electronic components thereby expected to spur market growth in the automotive sector.

 The healthcare sector is projected to have significant growth due to the increasing demand for medical devices. These devices include blood analyzers, blood glucose monitoring meters, ultrasound imaging systems, and tomography assemblies. Improvement in product development, reduction in capital investment, and optimization of resources are the key factors fueling the demand for electronic contract manufacturing and design services across various industries like consumer electronics, IT & telecom, automotive, aerospace, and others.

Regional Insights

The Asia Pacific is projected to have the highest growth rate followed by other regions like North America. In 2019, Asia Pacific accounted for the largest market share and is projected to remain the highest growing region from 2020 to 2027.  Moreover, China held a market share of over 33.0%, in 2019 and held the leading position in the Asia Pacific market. The low cost of labor and the easy availability of raw materials are the major factors influencing the regional market growth.

North America's electronic designs and manufacturing services market growth is expected to surge due to increasing demand from the automotive and medical industries. The medical industry is a major segment to contribute high-profit margin in this region. Various medical institutes and R&D centers are present in North America that majorly works on portable and advanced diagnostic products that they plan to outsource through contract manufacturers. All these aforementioned factors are anticipated to boost the regional market growth over the forecast period.

The companies like Jabil Circuit, Inc.; Sanmina Corp; and FLEX are striving to expand their presence in Europe to increase production capacity. In addition, the shift towards advanced manufacturing skills in Europe and America is projected to drive the market growth in these regions over the forecast period.

COVID-19 Impact Analysis

The electronic contract manufacturing market has been negatively impacted due to the outbreak of the COVID-19 virus. Government across the globe imposed movement restrictions, leading to supply chain disruption. Logistics slowdown and unavailability of workers worldwide have resulted in a halt in production. Thus, the distribution of raw materials has also affected the electronics industry.

However, the market is expected to gain traction in the healthcare industry during the pandemic. For instance, The U.S. Center for Disease Control and Prevention and Microsoft have developed a Coronavirus self-checker that allows people to determine whether they should seek treatment. Such initiatives are expected to drive the market growth post-pandemic.

Electronic Contract Manufacturing and Design Services Market Share Insights

The market is highly competitive in nature owing to the existence of strong market players. Flextronics International, Ltd.; Sanmina Corporation; Hon Hai Precision Industry Co., Ltd.; Benchmark Electronics, Inc.; and Jabil Circuit, Inc.; are the key players operating in the contract manufacturing market.

Companies in developing countries are providing low-cost outsourcing services to designing and production sectors. To offer the best outsourcing services, market players are investing in R&D. In addition, key players are concentrating on increasing operational efficiency as well as the supply chain to gain a maximum customer base.

Report Scope

Segments Covered in the Report

This report forecasts revenue growth at global, regional, and country levels, and provides an analysis of the latest industry trends in each of the sub-segments from 2016 to 2027. For this study, Million Insights has segmented the global electronic contract manufacturing & design services market report based on Services, device, End-Use, and region:

• Service Outlook (Revenue, USD Billion, 2016 - 2027)
    • Electronic design & engineering
    • Electronics assembly
    • Electronic manufacturing
    • Others

• End-Use Outlook (Revenue, USD Billion, 2016 - 2027)
    • Healthcare
    • Automotive
    • Industrial
    • Aerospace & Defense
    • IT & Telecom
    • Power & Energy
    • Consumer Electronics
    • Others

• Regional Outlook (Revenue, USD Billion, 2016 - 2027)
    • North America
        • U.S.
        • Canada
        • Mexico
    • Europe
        • U.K.
        • Germany
    • The Asia Pacific
        • China
        • India
        • Japan
    • South America
        • Brazil
    • Middle East & Africa