The worldwide electronics manufacturing services (EMS) industry is expected to decrease $4.5 billion in 2002, according to a new report by IDC.
The industry will start to show signs of steady growth in 2003 and reach $122.5 billion by 2006. While the trend towards outsourcing will certainly accelerate, IDC does not expect the EMS industry to reach the growth levels seen before the economic downturn.
While most sectors within the EMS market are expected to decrease in 2002, the one bright spot will be the consumer segment, which is projected to increase $2.0 billion from 2001. The telecommunications and the networking segments are predicted to decline $3.0 billion and $1.5 billion, respectively.
‘2001/2002 has been a year of restructuring for the EMS market. The economic slowdown forced EMS vendors to consolidate plants, cut jobs, and move from high-cost to low-cost regions in the Americas, Europe, and Asia,’ said Kevin Kane, research manager at IDC.
Solectron remained in first place for revenue share for 2001 with 16.9% share despite a slight loss in revenue share from the previous year. Flextronics moved up from 11.5% in 2000 to 14.3% in 2001. Rounding out the top five were Sanmina-SCI, Celestica and Jabil Circuit. These top five companies represent nearly 60% of the total industry revenue.
‘Competition for leadership of the EMS industry is fierce, with Solectron and Flextronics having been trading the number one market share position,’ Kane said.
While Solectron led the industry for calendar 2001, IDC expects that Flextronics will take over the lead for calendar year 2002. Effective fiscal and operational management will be the key for the EMS vendors.