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Growth Market Report: Telecom Electronic Manufacturing Services, the Catalytic Cog in Industrial Machinery

In June 2022, Flex, one of the leading technological manufacturers, made announcements regarding its plan to increase its operations in the automotive sector in Jalisco, Mexico. The company is developing a brand-new facility in an area of 145,000 sq ft. It is intended to serve the purpose of a strategic automotive manufacturing hub that produces highly advanced electronic components, helping the company usher into the era of autonomous and electric vehicles. The use of electronic manufacturing services is rapidly increasing in various industrial sectors and is likely to continue growing in the coming years.

What are Electronic Manufacturing Services (EMS)?

Businesses that offer services to OEMs for the production of electronic components and printed circuit board (PCB) assemblies are known as electronic manufacturing services (EMS). The telecom industry is a major consumer of these components and PCBs. Some EMS providers only require the design file from the client to start the product development process, and then source the parts from reliable vendors to assemble the product and test it thoroughly.

Factors Contributing to the Growth of the Market

The telecom EMS market is witnessing propulsion due to the increasing requirement for mobile phones and smart electronic devices. Moreover, this technology is responsible for OEMs collaborating with equipment manufacturers and original service providers, leading to a rise in the demand for effective EMS manufacturing equipment. The growing investments of OEMs in outsourcing their testing, manufacturing, and logistics operations are also creating opportunities for new players in the market.

The cutting-edge technological capabilities of EMS companies along with their widespread supply networks have placed them in a favorable position to support and thrive in the telecom industry. Hence, the telecom EMS market is expected to benefit from these opportunities. However, it might face challenges due to high labor costs, including higher wages and employee benefits. Although higher labor costs increase labor productivity, they can result in lower company profits and fewer jobs, hindering the market’s growth potential.

The development of 5G technology is propelling the demand for connecting devices and relevant applications. As more people adopt 5G technology and wireless communication continues to advance, the requirement for electronic network devices is set to soar. Huawei, a leading supplier of telecommunications network infrastructure, has played an essential role in the rollout of network equipment worldwide. These factors are expected to create lucrative growth opportunities for the telecom electronic manufacturing services market.

Potential Hotspots for the Market

There is a huge demand for EMS in the development of IT infrastructure and IT-based solutions. Transceivers combine a transmitter and a receiver on an integrated circuit board to provide two-way radio communication in half-duplex mode. They are widely used for data transmission and storage processing in communication and telecommunication networks. The electronic manufacturing services (EMS) industry is involved in the design, production, assembly, and testing of transceivers and transmitters.

In the sector of electronic design and engineering, the advent of sensor technologies and big data capabilities has allowed the Internet of Things (IoT) to revolutionize the technology landscape. The rising expectations and requirements of consumers have led to the integration of electronic advancements in the product engineering and designing process, thereby leading to market growth.

In electronic manufacturing, the OEMs are leveraging the trend of outsourcing product design and development to subcontractors to gain two significant advantages, a shift from fixed to variable cost and a reduction in the overall cost. Several telecommunication electronic contract manufacturers are expanding their capabilities by offering new services with higher profit margins.

Conclusion

The significant growth in the telecom electronic manufacturing services market has been a result of the explosive boost in the telecom sector, particularly wireless communication. With the acceptance and implementation of outsourcing as a competitive strategy by telecom OEMs, EMS firms are actively pursuing it. This presents several lucrative opportunities for telecom electronic manufacturing services in the coming years.

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