Electronic manufacturing and design services companies test, manufacture, distribute as well as provide return or repair services for the electronic components and assemblies for original equipment manufacturers (OEM). Electronic contract manufacturers use wide range of productive functions pertaining to component design, assembly of circuit board and hardware, product engineering, process engineering, procurement, product fulfillment, distribution as well as after-sales services. Outsourcing in electronics industry has evolved in a considerable manner during the past few years. The outsourcing providers manufacture specific products on contract basis. Through the economies of scale across contracts, the contract manufacturers can use operational expertise, cheap labor and more buying power which in turn leads to low cost of production.
This shift to outsource manufacturing for maintaining low costs has been the major evolution in electronics industry. OEMs also use contract manufacturing in order to cost effectively enter into a new market. Most of the electronic manufacturing and design service providers maintain good relations with the customers which in turn is beneficial in design and pre-production process that leads to shorter new product introduction time. The electronic contract manufacturing services concentrate mainly on technologies and sub technologies such as computers, networking, consumer devices, servers and storage, telecommunications and peripherals.
Based on end-use industry, electronic contract manufacturing and design services market is segmented into industrial, healthcare, automotive, enterprise and infrastructure. In automotive industry, electric vehicles are gaining significant demand, which has significantly increased the need for contract manufacturing services in the sector. Further, in healthcare industry, the demand for electronic contract manufacturers is growing for providing medical hardware as rapidly developing countries are significantly buying medical equipment and looking for enhancing healthcare infrastructure and facilities.
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The major factor driving the growth of electronic contract manufacturing and design services market is the need for resource optimization. Other factors include improvement in consumer purchasing power, growing need for consumer electronics, various technological advancements, and growing internet penetration. Furthermore, fluctuation in buyer preferences and increasing need for wireless technology are expected to influence the electronic contract manufacturing and design services market.
The proliferation of mobile devices such as tablets and smartphones has been the key propeller of electronic contract manufacturing and design services market during the last few years. In-house manufacturing and obsolescence of technology are major challenges to the growth of electronic contract manufacturing and design services market. Software focused services are expected to be a key opportunity for the manufacturers operating in the market.
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The market for electronic contract manufacturing and design services is highly competitive, especially, the players from Asia Pacific countries such as China and Taiwan are increasingly offering low cost outsourced services for manufacturing and design. The key focus of electronic manufacturing and design services vendors today is to promote green technologies and manufacturing practices. Increase in merger, acquisition and partnership activity is another key trend in in electronic contract manufacturing and design services market. Key players in electronic contract manufacturing and design services market are Hon Hai Precision Industry Co. Ltd., Flextronics International Ltd., Jabil Circuit Inc. and Celestica Inc.