The global telecom electronic manufacturing service market size was valued at USD 145.9 billion in 2021. It is expected to reach USD 257.6 billion by 2030, growing at a CAGR of 6.52% during the forecast period (2022–2030). Electronic manufacturing services (EMS) are provided by businesses that provide services for original equipment manufacturers (OEMs), including the design, fabrication, assembly, and testing of electronic components and printed circuit board (PCB) assemblies. The telecom industry makes extensive use of these electronic components and PCBs. Some companies only require the client to provide a design file before beginning product development. Then they purchase the parts from a reputable vendor, put the product together, and test it. The rising demand for EMS technology in the telecom sector, the increasing demand for electronic devices in developed and developing countries, and government initiatives are the main drivers of the telecom electronic manufacturing services market growth. High labor costs in the manufacturing industry are predicted to impede market expansion. On the other hand, increasing 5G adoption and the emergence of internet of things (IoT) technology are anticipated to present lucrative market opportunities.
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Rising Need for EMS Technology in the Telecom Industry
The telecom EMS market is expanding due to rising demand for mobile phones, products, and intelligent electronic devices. Additionally, quickly evolving technology is accountable for imitating original service providers and equipment manufacturer collaborations and partnerships (OEMs). This motivates EMS market participants to set up effective manufacturing equipment and service delivery facilities that spur the sector's growth. Additionally, OEMs' growing investments in outsourcing their manufacturing, testing, and logistics operations open doors for new players to enter this market. This indicates that EMS companies are well-positioned to support and flourish in the telecom industry, given their extensive global supply networks and cutting-edge technological capabilities. The telecom EMS market is anticipated to benefit from these growth opportunities.
Rising Demand in both Developed and Developing Countries
One of the key factors driving the growth of electronic manufacturing services globally is the growing demand for electronic devices in developed and developing countries. The primary factor propelling the expansion of the telecom EMS market is the rapidly expanding demand for electronic devices, including smartphones and other electronic devices, in developing countries. Additionally, the introduction of 5G-enabled smartphones and telecom equipment is expected to increase demand for 5G chipsets in developed economies, opening up lucrative opportunities for the telecom electronic manufacturing service market. Additionally, developing nations offer opportunities for long-term growth in the telecom EMS market, particularly in China and India, due to population growth.
High Labor Costs in the Manufacturing Sector
High labor costs may hamper the telecom electronic manufacturing service market. Higher labor costs, such as higher wages and employee benefits, make laborers more productive. Still, they can also result in fewer jobs and lower company profits, influencing its ability to expand. The minimum wage, hiring incentives, overtime pay, payroll taxes, and hiring subsidies are just a few of the laws that impact labor costs. These rules increase the cost of labor, which substantially impacts the economy and employment and hours worked in specific firms.
Rising Adoption of 5G Technology
The next wave of growth in electronics and communication products is expected to be driven by the development of 5G technology, an increase in demand for relevant applications, and connecting devices. Multiple wireless connectivity features, which can be broadly categorized as enhanced mobile broadband (eMBB), ultra-reliable and low latency communications (URLLC), and massive machine-type communications (mMTC), propel the development of 5G technology. High demand for electronic network devices is anticipated as 5G technology adoption increases and wireless communication advances. Huawei is a significant player among the leading suppliers of the infrastructure for telecommunications networks. Huawei's network equipment has played a significant role in rollouts in North America, Europe, Asia-Pacific, and other regional markets worldwide. The telecom electronic manufacturing services market is anticipated to benefit from these factors by offering profitable growth opportunities.
The global telecom electronic manufacturing service market is segmented by product type and service.
Based on Product Type, the market is bifurcated into computing devices and equipment, servers and routers, RF and microwave, fiber optic devices, and transceivers and transmitters.
The transceivers and transmitters segment accounts for the largest market share and is expected to grow at a CAGR of 4.9% over the forecast period. A transceiver is a device that enables wireless communication by combining the transmitter and receiver on an integrated circuit board. Transceivers, which combine a transmitter and a receiver and transmit and receive data in half-duplex mode, are used in telecommunications to provide two-way radio. Due to the rapid expansion of IT infrastructure and IT-based solutions, transceivers and transmitters are widely used in the telecommunications industry. Companies that provide electronic manufacturing services (EMS) may design, produce, assemble, and test transceivers and transmitters. Transceivers and transmitters are becoming more popular worldwide as the demand for data transmission capacity and storage processing for data communication and telecommunication networks grows.
Servers and routers are utilized rather frequently in the telecommunications business. Renowned electronic manufacturing service providers may put together the servers and routers. Telecommunications servers are open, standards-based computing platforms that serve as a carrier-grade common platform for various communications applications. They also allow equipment manufacturers to add value at many different levels of the system architecture. Routers are communication tools that link two distinct networks. Reputable electronics manufacturing service providers may put together the servers and routers. Server and router manufacturers may benefit from increased demand for IoT technology and 5G infrastructures, which could boost the growth of the telecom electronics manufacturing market.
Based on Service, the market is bifurcated into electronic design and engineering, electronic assembly, electronic manufacturing, and supply chain management.
The electronic manufacturing segment owns the highest market share and is expected to grow at a CAGR of 5.9% during the forecast period. Electronics manufacturing encompasses printed circuit boards, microelectronics, RF/wireless, and optoelectronics. EMS providers can work with various board types and occupy PCBs with members to create printed circuit assemblies (PCAs). PCBs are made as hard, rigid boards and are assumed to be tough. It is anticipated that rising consumer demand for communication devices, an ongoing trend, and the development of wireless communication technology will open up new business opportunities for companies that provide electronic manufacturing services to produce more electronic components.
Supply chain management, which includes all procedures that convert raw materials into finished goods, manages the flow of goods and services. Supply chain management involves actively streamlining a company's supply-side operations to increase customer value and gain a competitive edge in the market. Several businesses can reduce unnecessary costs and deliver goods to the consumer by managing the supply chain. This is accomplished by maintaining tighter control over internal production, distribution, sales, and vendor inventories. The need for speed and the supply chain model is being disrupted by rapid innovation, opening up new growth opportunities for the market for electronic manufacturing services.
The global telecom electronic manufacturing service market is divided into four regions, namely North America, Europe, Asia-Pacific, and LAMEA.
Asia-Pacific Dominates the Global Market
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Asia-Pacific is the largest global telecom electronic manufacturing service market shareholder and is expected to grow at a CAGR of 7.1% during the forecast period. China, Japan, India, South Korea, Taiwan, and the rest of Asia-Pacific are all included in the regional market. Most of the world's telecom electronic manufacturing services market comes from Asia-Pacific because developing nations like India, China, Taiwan, and Japan have seen an increase in technological development and the telecom industry. Moreover, Asia-Pacific has been a global leader in electronic manufacturing services for the past few years, which is the foundation for the region's continued dominance. Asia-Pacific's primary market expansion drivers are the region's rapid industrialization growth, low operating costs, and population growth.
North America is expected to grow at a CAGR of 4.80%, generating USD 53.73 billion during the forecast period. It is anticipated that the connected devices market will experience rapid growth, opening up lucrative opportunities for EMS technology. In North America, the telecom sector is expanding at an explosive rate. High growth in wireless communication sectors can be attributed to significant change. Large telecom OEMs have begun accepting and implementing outsourcing as a strategy for the competition, and EMS firms actively pursue these firms. The forecast period presents lucrative opportunities for the telecom electronic manufacturing service market due to rising end-user adoption of telecom electronics, a robust North American economy, and quick technological advancement.
One of the industries that are expanding the fastest in Europe is the electronic manufacturing services market. Most electronic manufacturing services (EMS) providers can offer an OEM all the manufacturing tools necessary to complete their orders, a reduction in working capital, and a shorter wait time for new technologies to become available or be acquired. Due to the increased capacity of wireless network infrastructures, which is driven by several factors, Europe is anticipated to experience a high growth rate for the market during the forecast period. Regional technological advancements fuel the demand for telecom electronic manufacturing services to expand. In addition, wireless network deployment and modernization with new technologies are made simpler by spectrum sharing and trading.
It is anticipated that technological advancements in South America and the Middle East will support market growth in LAMEA. Additionally, the LAMEA market is expanding due to the Middle East's swift technological and infrastructure advancements. LAMEA has a relatively minor market share in the global telecom electronic manufacturing services. The development of the LAMEA telecom EMS market is attributed to technological advancements in the telecom industry.
A list of key telecom electronic manufacturing service market companies