Europe Electronic Contract Manufacturing And Design Services Market (2023 - 2030)

Report Overview

The Europe electronic contract manufacturing and design services market size was evaluated at USD 84.9 billion in 2022 and is anticipated to grow at a compound annual growth rate (CAGR) of 9.3% from 2023 to 2030. The growth of the market can be attributed to the continued adoption of work-from-home and remote working practices, which has gained traction in the wake of the outbreak of the COVID-19 pandemic and has triggered the demand for high-end servers, storage devices, switches, routers, and other computing devices. The growth can also be attributed to the fact that remote working and work-from-home trends are expected to evolve as a new norm over the next few years.

The strong emphasis of Original Equipment Manufacturers (OEMs) on outsourcing electronics manufacturing to focus more on their core competencies is also expected to emerge as a long-term factor contributing to the market growth over the forecast period.The outbreak of the COVID-19 pandemic prompted several governments in Europe to impose lockdowns and restrictions on the movement of people and goods as part of the efforts to curb the spread of the coronavirus. This resulted in severe disruption in supply chains and temporary suspension of manufacturing activities at several production facilities, whichled to production delays. Nevertheless, order backlogs and sales to new customers in eastern European countries, notably Sweden, Finland, the Netherlands, and Denmark, gradually aided in a market recovery.

As a result, the slump in sales noted in H1/2020 was partially offset in H2/2020. The rising preference for localized supply chains and the need for a highly efficient manufacturing process bodes well for the growth of the market. Electronic Manufacturing Services (EMS) vendors can manufacture electronics products at a reduced total cost to OEMs. EMS companies can particularly manufacture customized products on a large scale while focusing on reducing manufacturing costs and leveraging higher capacity utilization. EMS vendors are also integrating the latest technologies, such as AI and 3D digital printing, into their production processes as part of the efforts to reduce their capital investment in inventory, facilities, and equipment used in manufacturing.

Such strategic initiatives being pursued by EMS vendors are expected to encourage OEMs to consider outsourcing electronics manufacturing to EMS vendors and focus on their core competencies.The continued adoption of cloud computing infrastructure and the rollout of smart city projects coupled with the rising popularity of smart homes are some of the other factors that are expected to contribute to the growth of the market. Vendors are aggressively adopting big data and implementing predictive maintenance technologies in all areas of EMS. The Internet of Things (IoT) can play a crucial role in predictive technology and big data by aiding in collecting, processing, and analyzing data in real-time, thereby helping in increasing productivity and efficiency. Predictive maintenance envisages linking factories through the internet to monitor and control processes remotely using mobile devices or personal computers.

Predictive maintenance helps EMS vendors in accelerating production, gain greater control over quality, and reduce costs. The proliferation of IoT networks is driving the demand for highly efficient smart applications and devices, thereby paving the way for the growth of the market. The strong emphasis on reducing the time to market is anticipated to drive the market over the forecast period. The time the product takes to reach the OEMs’ facilities from the EMS providers’ facilities is turning out to be a major concern for the OEMs. As a result, OEMs are particularly hesitant to deal with EMS providers located at longer distances. Hence, EMS providers are exploring the alternative of micro-logistics to meet the OEMs’ demands for accelerated delivery and are investing heavily in improving their logistics to ensure the timely delivery of products.

Service Insights

The electronic manufacturing service segment accounted for the largest revenue share of 44.02% in 2022. This type of service helps industries with a continuous supply of services, reduces operational costs, and mitigates risks. The growing technological advancements with the rising adoption of electronic devices across sectors, such as aerospace, healthcare, automotive, and telecommunication, in the region have increased the need for electronic manufacturing services.

The electronic design & engineering service segment is anticipated to grow at a CAGR of 11.1% during the forecast period owing to the growing demand for electronic systems among the industries, such as aerospace, healthcare, automation, and telecommunication. Furthermore, stringent regulatory compliance in Europe for product safety, privacy, and environmental stability has anticipated the need for suitable electronic design & engineering services, leading to market growth.

End-Use Insights

The IT & telecom segment accounted for the largestrevenue share of 47.44% in 2022. The IT & telecom industry is identified as the most evolving sector of the market. The sector is continuously adopting advanced technology solutions for fulfilling growing customer demands. The electronic contract manufacturing and design services offer enhanced scalability and flexibility to manufacture electronic devices as per consumer demands. The sector mainly outsources these services to offer customized and specialized services and efficiently handle large-scale productions and customer variation requirements. The healthcare segment is anticipated to grow at a CAGR of 11.2% during the forecast period.

The growth of the segment can be attributed to the rising demand for advanced medical devices, including Computed Tomography (CT) scanner assemblies, ultrasound imaging systems, and blood analyzers. The increasing geriatric population in European countries, such as Italy, Greece, and Portugal, is typically driving the demand for ambient-assisted devices. The high costs associated with the manufacturing of these devices are prompting healthcare OEMs to opt for contract manufacturing. The rising demand for patient care devices and sophisticated diagnostics devices, particularly in the wake of the COVID-19 pandemic, also bodes well for market growth.

Regional Insights

Germany held the largest revenue share of 27.49% in 2022. The continued innovation, primarily in the IT and telecom, and automotive industries, has been driving the market growth in Germany. The increasing popularity of intelligent transport systems, such as connected cars, which can provide real-time information about traffic and weather conditions is expected to drive the demand for electronics manufacturing services over the forecast period. Strategic collaborations aimed at inculcating sophisticated technologies and advancing existing technologies are also expected to drive the growth of the market in Germany over the forecast period. The UK is anticipated to show significant growth at a CAGR of 9.3% from 2023 to 2030. The growing reliance on outsourcing electronics manufacturing to EMS vendors is expected to emerge as a long-term trend in the UK.

Outsourcing electronics manufacturing to EMS vendors allows OEMs to focus on their core competencies and expand their customer base. The outbreak of the pandemic has particularly triggered the demand for wearable devices, such as fitness bands, among individuals to monitor and track various health parameters, such as body temperature, blood pressure, respiratory rate, and sleep patterns. Heavy investments in new manufacturing technologies are also anticipated to open new opportunities for EMS companies to attract new customers and augment their revenues. For instance, Chemigraphic Ltd., an EMS provider based in the UK, implements camera-based system verification, X-rays, or Automatic Optical Inspection (AOI) technology to validate the placement of materials while manufacturing healthcare devices.

Key Companies & Market Share Insights

To broaden their product offering, companies utilize a variety of inorganic growth tactics, such as partnerships, regular mergers, and acquisitions. In November 2021, Cicor Management AG announced its acquisition of Axis Electronics Ltd. (Axis). (UK) to strengthen its position in strategically targeted areas and expand its footprint across Europe. The former company focuses on integrating Axis’s strong areas into the global manufacturing and engineering network of the electronic solutions sector. Some of the prominent players in the Europe electronic contractmanufacturing and design services market include:

• Benchmark Electronics

• Cicor Management AG

• Enis

• Flex Ltd.

• Hon Hai Precision Industry Co., Ltd. (Foxconn Technology Group)

• Jabil Inc.

• Kitron ASA

• Neways

• NORBIT ASA

• NOTE AB

• Sanmina Corp.

• Scanfil

• USI

• VIDEOTON HOLDING ZRt

• Zollner Elektronik

Europe Electronic Contract Manufacturing And Design Services Market