Everyone is talking about EMS service, what exactly is it

As a result, many manufacturers seek to partner with EMS companies to gain a competitive edge in the market, leading to an increase in demand for electronic manufacturing services. This article aims to provide a comprehensive industry overview, covering aspects such as the history of the industry, its current trends, and best practices for choosing the right outsourcing electronic manufacturing services provider. Let's dive in...

2023 Electronic Manufacturing Service Industry Market

Based on statistics, the global market for EMS is predicted to reach a total output value of $504.22 billion in 2023 and increase to $797.94 billion by 2030. This is expected to result in a compound annual growth rate of 6.8% during the forecast period. The Asia-Pacific region holds the largest share and plays a significant role in the global EMS market. The automotive, communications, computers, consumer electronics (such as smartphones, personal computers, laptops, etc.), industrial (including automation and the Internet of Things), and medical industries widely use EMS. Among these industries, the communications and computer hardware sectors account for around 59% of total demand. For further information, please refer to our other blog post titled "Market Analysis and Trends of EMS."

In general, the EMS market holds immense potential for development, particularly in light of the growing demand for automotive and consumer electronics products. As demand continues to increase, competition within the industry will become fiercer, leading to higher standards and regulations across the board.

History of Electronics Manufacturing Services

The first EMS company was the Foxconn Corporation, founded in 1977, which provided outsourcing services to original equipment manufacturers. Its founders, Roy Kusumoto and Prabhat Jain, recognized a huge demand for printed circuit board assembly in the electronics industry, and thus established the company that integrated design, manufacturing, and after-sales services. Then in the 1980s, the industry experienced its largest growth, with many renowned EMS companies established, including the Sanmina Corporation in 1980. The emergence of surface mount technology (SMT) allowed for rapid assembly of electronic products and was a driving force in the development of the EMS industry. By the mid-1990s, many OEMs began outsourcing PCB assembly services to EMS companies to reduce costs, highlighting the advantages of EMS. In the late 1990s and early 2000s, most original equipment manufacturers sold their assembly lines to EMS suppliers, leading to a wave of consolidation in the EMS industry. Large EMS companies began acquiring factories and smaller EMS companies, with Foxconn Corporation being acquired by the Wistron Corporation in 2007.

What can Electronic Manufacturing Services Company do for you?

Electronic manufacturing service providers (EMS) play a crucial role in the production of electronic devices, providing a range of services such as Printed Circuit Board Assembly (PCBA), New Product Introduction (NPI), supply chain management, and product testing. One of the most significant services provided by EMS companies is PCBA, which involves soldering electronic components onto circuit boards using SMT or through-hole technology. While SMT has become more popular due to its efficiency, setting up a precision assembly line can be costly, which many manufacturers cannot afford, particularly startups. Therefore, outsourcing PCBA services to EMS providers can be a cost-effective solution, allowing manufacturers to assemble complex circuit boards with quick turnaround times and competitive prices.

EMS companies have technical personnel and engineers who focus on product management, manufacturing processes, and quality control. They provide integrated electronic assembly services, including electronic design, PCB layout design, casing design, BOM and revision management, prototype production, and DFM and DFX services. Moreover, they work with product certification agencies such as ETL, TUV, and UL to help manufacturers obtain the necessary certifications for their products to be sold in international markets.

NPI is a critical process in electronic manufacturing, encompassing all the steps from the initial concept to the final product, including prototyping. EMS providers conduct comprehensive evaluations of new products, including P-FMEA evaluations, scheme formulation, trial production, and material validation, to identify potential risks. In some cases, they may also consider the design, construction, and preparation of any necessary specific tools or fixtures for the product. Working with experienced EMS providers in NPI can help successfully launch products in a short amount of time.

EMS providers help customers procure all necessary materials and components based on the Bill of Materials (BOM) and product specifications. They optimize the supply chain, finance on behalf of the OEM, assist in purchasing high-quality materials within the budget, and optimize service costs for the customer. EMS companies can also provide inventory management services as needed.

Product testing is a critical step to ensure that products delivered to customers meet quality requirements. EMS providers perform various tests, including flying probe testing, aging testing, automated optical inspection, and functional testing. This step is crucial to avoid significant losses due to product quality issues, including economic losses and damage to product and company reputation. EMS providers can directly use customer-provided equipment to perform these tests. By partnering with excellent EMS companies, OEM manufacturers can bring greater profits to their business.

What can partnering with the right EMS manufacturer get you?

Collaborating with a reliable Electronic Manufacturing Services (EMS) provider can offer several advantages, with the top four being as follows:

For OEM manufacturers who lack their own production lines, facilities or skilled production and engineering personnel, partnering with an EMS provider may be the only way to bring new products to market. EMS providers typically invest heavily in infrastructure, technology, and personnel and can spread these costs among multiple customers, meaning that their fixed costs are shared. Collaborating with an EMS provider helps original equipment manufacturers save money and time and turns typically high fixed costs into variable costs. The fewer quantities you order, the less you pay.

With the changing technology and customer demands, the need for highly specialized labor is becoming crucial. This not only requires good employee selection and training but also requires strong engineering expertise. This translates into a significant amount of fixed costs that assembly operations must maintain. By partnering with a qualified electronic manufacturing supplier, OEM manufacturers can focus on new product development or marketing, rather than spending more time on production and indirect manufacturing capabilities. This not only reduces fixed costs, staff numbers, and personal and recruitment expenses but also minimizes the hassle of managing the production environment.

A trustworthy EMS provider has extensive experience in managing procurement processes and working with pre-approved suppliers worldwide. They possess a robust planning ability and advanced ERP system and MES platform to ensure the smooth execution of production assembly. These two components are crucial to managing a cost-effective production process, and require expertise gained through years of best practice. With these tools and capabilities, capable electronics manufacturers can respond to customer needs in a flexible and trustworthy manner, not only on paper but also in a real production environment. Their knowledge in selecting approved suppliers, sourcing components and executing the procurement process efficiently results in a well-managed supply chain. Collaborating with an EMS provider frees OEMs from investing in complex IT systems and building supply chain management expertise that requires highly trained staff and long-term expertise. Professional EMS suppliers can help manage the supply chain, formulate effective planning solutions and work with material suppliers according to customer specifications and agreements to minimize excess material and ensure a stable production process.

Late deliveries can harm a company's reputation and business. Working with a well-organized EMS provider reduces the risk of late delivery of orders, which could delay delivery of the final product. This requires efficient collaboration and consideration of lead times for materials. Additionally, working with an EMS company offers the advantage of using their buying power and market position to negotiate better prices for materials and efficient use of production equipment. Economies of scale lead to lower unit costs for OEM products, resulting in additional economic benefits and efficiently run projects.

Outsource electronics manufacturing services to EMS service providers

Quality Control: Quality is of utmost importance, and partnering with an EMS provider that has strict quality control measures is essential to protecting your reputation and business. You can verify their certifications, such as ISO9001, ISO13485, UL, IPC, etc., which demonstrate their commitment to quality and compliance with industry standards. Additionally, you can evaluate their quality control processes, including their inspection and testing methods, and whether they perform 100% checks before delivery to ensure each product meets expectations and avoid any potential defects.

Expertise and Project Experience: Why take the risk of having a novice handle your project when you can partner with an experienced electronic manufacturer? When choosing an electronic manufacturing company, their experience and expertise must be considered, especially if they have worked on similar projects before. Partnering with an experienced company that understands the needs of various industries ensures that the product meets industry standards and eliminates quality issues. They also have the ability to make accurate market predictions and adapt to changes based on previous project experience.

Engineering Services: An excellent electronic manufacturer should not only provide manufacturing services but also offer engineering services. This way, when the company receives your project specifications, they can evaluate whether the design is practical, and if not, they can suggest modifications or redesign. Electronic manufacturing companies usually hire experienced engineers who specialize in production engineering, mechanical engineering, microelectronics, etc., to ensure the best performance of the final product.

Advanced Technology and Facilities: Understanding the type of technology and facilities used by your electronic manufacturer is crucial. Using advanced technology and facilities can increase manufacturing efficiency compared to outdated technology and facilities. By obtaining the latest technology, the manufacturer can produce high-quality products that are more reliable and faster, thereby improving market competitiveness. Before making a decision, you can ask the manufacturer to provide their equipment list or arrange a visit to their manufacturing site to evaluate the equipment and confirm that their facilities and processes comply with the latest industry standards.

Turnaround Time: The time required to complete the project is crucial, especially for projects that require large-scale production. To ensure that your product is launched on time, it is necessary to verify whether the electronic manufacturer's turnaround time is consistent with your project timeline. To ensure timely delivery, you need to verify their production capacity. Reliable electronic manufacturers have the ability to efficiently complete projects because they have access to advanced machines and a well-established global supply chain that can provide materials and components in a timely manner.

Supply Chain Management: Finally, understanding the electronic manufacturer's supply chain management is essential when choosing an electronic manufacturing company. You should determine whether they have a reliable and adaptable supply chain system. Electronic manufacturers usually work with various suppliers from around the world to meet different needs and avoid procurement restrictions that may cause project delays. Additionally, working with multiple suppliers enables them to obtain the latest information on the global market, such as supply shortages and price fluctuations, allowing them to make wise decisions, reduce risks, and address any potential problems.

TechSparks forecast for the future electronics manufacturing industry

The electronics manufacturing industry is one of the fastest growing and constantly evolving industries in the world. With technological advancements and increasing demand for electronic devices, the industry is poised for growth, providing opportunities for companies and investors alike. Below are the latest five trends and opportunities in the electronics manufacturing industry:

Increased demand for smart devices: In recent years, there has been a surge in demand for smart devices such as smartphones, smartwatches, and smart home devices, and this trend is expected to continue in the coming years. With the rise of the Internet of Things (IoT), the smart device market is expected to grow rapidly, creating huge opportunities for electronics manufacturers. Companies that can produce high-quality and innovative devices that meet the ever-changing demands of consumers will thrive in this industry.

Development of wearable technology: Wearable technology is another trend that is set to revolutionize the electronics manufacturing industry. Wearable devices such as fitness trackers, smartwatches, and virtual reality headphones are becoming increasingly popular, and this trend is expected to continue. With continuous technological improvements and decreasing prices, the wearable device market is expected to grow, providing huge opportunities for electronics manufacturers.

Emergence of 5G technology: 5G technology is the latest innovation in the telecommunications industry and is expected to bring significant changes to the design, manufacturing, and usage of electronic devices. This technology is expected to bring faster data transmission speeds, lower latency, and higher reliability, which will lead to more powerful and efficient next-generation devices. Companies that can develop and manufacture devices that are compatible with 5G technology will have a significant advantage in the market.

Expansion of e-commerce: E-commerce is another trend that is set to continue growing, and this growth is expected to drive demand for electronic devices. As more people turn to online shopping, the demand for devices such as smartphones and laptops that can simplify the shopping process is expected to increase. This trend will create huge opportunities for electronics manufacturers to develop and produce innovative devices that meet the ever-changing demands of consumers.

Growth of renewable energy: Renewable energy sources such as solar and wind power are becoming increasingly popular, and this trend is expected to continue in the coming years. As more people turn to renewable energy to power their homes and businesses, the demand for electronic devices such as solar panels and wind turbines is expected to increase. Companies that can develop and manufacture innovative devices that are compatible with renewable energy sources will have a major advantage in the market.

The electronics manufacturing industry is a dynamic and constantly evolving industry that is poised for growth, providing opportunities for companies and investors alike. Companies that can keep up with the latest trends and produce high-quality and innovative devices will thrive in this industry. With the rise of smart devices, wearable technology, 5G technology, e-commerce, and renewable energy, the electronics manufacturing industry is set to experience significant growth in the coming years, providing huge opportunities for companies to succeed.