Before setting out our predictions of what the future of electronics manufacturing might bring it’s probably worth briefly exploring the current state of the global electronic manufacturing services (EMS) market as a whole. The size of the market and the level of demand for electronics components and devices are what will ultimately drive any of the developments and shifts which actually do emerge in the next few years.
Current State of the Global Electronics Manufacturing Services (EMS) Market
According to in-depth research carried out by the Fortune Business Insights website the global EMS market size in 2023 was $538.24 billion. It is projected to grow in size from a figure of $573.75 billion in 2024 to $1017.85 billion by 2032, which represents a CAGR of 7.4% over the period.
Key Drivers of Demand in the Electronics Manufacturing Sector
The research also looked at the industry segments driving demand for EMS, breaking them down into the following:
- Consumer Electronics
- Automotive
- Heavy Industrial Manufacturing
- Aerospace and Defense
- Healthcare
- IT and Telecom
- Others (Energy Utility, etc.)
Of this list, it is the consumer electronics industry which holds the highest market share for EMS, something which is driven by the on-going demand for electronic devices which more or less continually innovate in terms of the functions carried out and the features provided.
According to figures published by Statista, the global consumer electronics market generated $950.00 billion in revenue during 2024, and is projected to grow at a rate of 2.9% annually between 2024 and 2029. Within the consumer electronics market the largest segment was telephony, which boasted a market volume of $486.7 billion in 2024.
Impact of COVID-19 on the Electronics Manufacturing Sector
What makes these figures useful is the picture they paint of a sector which is experiencing strong global growth driven in large part by factors – such as the demand for consumer electronics – which are likely to remain in place for the foreseeable future. Experience teaches us that even a massively disruptive event such as the COVID-19 pandemic will do little to dent the demand for EMS – on the contrary, the widespread use of lockdowns and the switch to working from home where possible both contributed to a steep spike in the demand for EMS. During the course of the pandemic the number of people working from home was estimated by the International Labour Organization to have increased by 300 million, something which doubtless helps to account for the fact that – according to the World Economic Forum – global sales of desktop and laptop computers and related items increased by 11.2% year on year between April and June 2020. The boom in demand for EMS wasn’t driven solely by concerns over working arrangements – demand for leisure based electronic goods also spiked, as people sought ways to stay entertained within their homes. Perhaps the most dramatic example of this phenomenon is the fact that the sales of gaming consoles spiked by 155% as lockdowns were imposed. What makes these figures all the more impressive is that they happened during a period when the economy as a whole was contracting at historically unprecedented rates. In the UK, for example, the Office For National Statistics (ONS) reports that the GDP of the UK – a figure representing the monetary value of all goods and services bought and sold over a set period of time – dropped by 19.8% between April and June 2020 (by way of comparison, the ‘credit crunch’ of 20008 saw a 5.9% drop in GDP). None of which is to claim that EMS represents an entirely recession-proof business, because there’s probably no such thing. What these figures do illustrate, however, is that the resilience of the sector is something which can be factored into any predictions we make about the future. Alongside this resilience sits an ability to be flexible and respond quickly to changing circumstances. As well as the aforementioned spikes in demand the COVID-19 pandemic saw massive disruption to supply chains, something which the electronics manufacturing industry as a whole needed to respond to in order to meet the demands being placed on it. The flexibility within the sector is another aspect which we can simultaneously factor into our predictions and expect to see amplified in the years to come. Our own experience of offering flexible delivery schedules has taught us that companies which operate within the EMS market place a high premium on partnering with those who don’t only operate within rigid constraints. We take the same approach when waiving traditional NRE charges (link to page on NRE charges yet to be written), and it’s the kind of agile mind-set which we’ve looked for when peering into our crystal ball. Many of the predictions we’ve flagged up build on practices or technology already embedded within the electronics manufacturing sector, taking them to the next level in order to achieve the kind of agile delivery that enables the sector as a whole to keep pace with demand no matter what wider pressure is placed upon it.
The Role of Industry 4.0 in Shaping the Future of Manufacturing
Many of the developments we forecast for the future of electronics manufacturing can be pulled together under the umbrella heading of ‘Industry 4.0’. A variant on the concept of the Fourth Industrial Revolution, Industry 4.0 could be summarised as the integration of intelligent digital technologies into the processes used across a range of industries and manufacturing sectors. Given the number and variety of industries which now make use of technologies encompassed by Industry 4.0 – technologies such as automation, robotics, AI, Big Data analytics and industrial IoT networks – the genuinely revolutionary impact will be felt across electronics manufacturing in two ways. Firstly, the sector itself will adopt the technologies which make up Industry 4.0 in order to enjoy the advantages offered in terms of flexibility, productivity and efficiency and, secondly, EMS will be in the vanguard of equipping other industries wishing to do the same. The ultimate intention of businesses adopting Industry 4.0 is the creation of fully integrated ‘smart factories’, and while this process is already underway in virtually every sector of manufacturing, it will only accelerate in the future, as the various technologies required become more readily available and afordable. Amongst the technologies in question are the following:
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Big Data Analytics
– post Industry 4.0, data is collected from an increasingly wide range of sources. Within a smart factory these would include equipment, IoT enabled devices and smart sensors. Beyond the production line itself data could come in through everything from weather and traffic apps (used to enhance logistics and deliveries) to customer insights and market trends applied to product design and research and development. The sheer weight of data which can now be gathered by any business means that AI technology needs to be applied to analyse that data in real time and leverage the insights gained to inform and improve decision making across every aspect of the supply chain.
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Augmented Reality (AR)
– the increased use of AR within electronics manufacturing will enable employees equipped with mobile devices or smart glasses to overlay digital content onto a real world environment. This content could be as simple as IoT data gathered from items such as machinery, equipment, devices and products equipped with sensors or RFID tags, or could take the form of fully digitalized parts as well as assembly or repair instructions. Technology of this kind could come to play an important role in safety and quality inspections and employee training.
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Digital Twins
– the fully digitalized parts mentioned in the summary of augmented reality could take the form of digital twins. These are a virtual simulation of a product, part, machine or process. Digital twins of this kind will become more advanced as the analytic computing power applied to the data being gathered grows, amplified by successive iterations of machine learning. Using digital twins will make it easier to analyse and improve the operation of specific components or processes within electronics manufacturing without undue disruption, particularly in cases where IoT data is used to create a digital twin of real time operations.
Although the technologies which help to make up Industry 4.0 will become more entrenched across electronics manufacturing in the years to come, the concept itself and the current versions of those technologies are already, generally speaking, in place. What the future of Industry 4.0 is likely to bring is a refinement and enhancement of those technologies, as automation and AI become more embedded and advanced and the demand for flexibility and agile working methods grows. Industry 4.0 will create a virtuous circle, as the efficiencies and flexibility gained come to be seen as the norm and business look to leverage the technology in ever-more innovative ways in order to maintain a competitive advantage.
Advancements in Materials for Electronics Manufacturing
Silicon has been the go-to material for electronics manufacturing some time now, but the demand for circuits which are increasingly faster and more efficient has fuelled a growing demand for more advanced materials. The alternatives are already beginning to emerge, in the form of graphene and nanocarbon composites, as well as gallium nitride (GaN). Much of the demand for new materials is being driven by the growth of technologies such as 5G communications and electric mobility. What these new technologies demand are higher power densities, greater thermal resilience and faster switching frequencies than is easily achieved – or in some cases even possible – using the current technology of silicon-based semiconductors. Boasting high electron mobility, wide bandgap and striking breakdown field strength, GaN is currently seen as being at the forefront of the next generation of materials.
Innovations in Circuit Packaging
In simple terms, circuit packaging is the process via which chips get smaller and smaller while managing to integrate an increasing number of functions. One of the reasons why this is a trend which will continue into the future is because it is integral to the delivery of systems which are flexible and customisable. In this case, the term ‘flexible’ is being applied literally, in reference to screens and displays which can be bent, folded or rolled up. In addition, circuit packaging will play a huge role in the delivery of increasingly effective and affordable wearable tech, the market for which is tipped to grow from $70.30 billion in 2024 to 152.82 billion in 2029, a CAGR of 16.8%. The development of printed electronics is also likely to play a part in delivering growth in this particular segment of electronics manufacturing.
The Rise of Organic Electronics
Sustainability is becoming an increasingly important consideration for electronics manufacturers. This importance is driven by two things – regulatory compliance and consumer demand. The idea of regulatory compliance speaks for itself, but the demand for eco-friendly products from consumers is one which is only likely to grow in the future. For electronics manufacturers this will have a clear impact, as product manufacturers and retailers seek to ensure that every part of the supply chain for their finished products operates in as sustainable a manner as possible. Organic electronics sit at the furthest extreme of this particular trend, being an emerging technology which seeks to utilise carbon-based compounds to create electronic components which are lightweight, flexible and, in some cases, even biodegradable.
Printed Electronics
One of the most effective ways of reducing the cost of the electronics manufacturing process is to make use of printing. To be precise, printing electronic components onto a semiconductor substrate such as silicon. The traditional method sees the semiconductors using miniscule wires to form circuits, while printed circuits make use of flexible films and conductive links. One example of the work being done in this area is offered by the Canadian start-up Omniply, which offers delamination technology. Using this technology, flexible circuits can be separated from a rigid carrier, creating electronic devices on flexible substrates. The claim is that the method used tackles the kind of reliability and resolution issues previously associated with printed electronics.
Additive Manufacturing
Additive manufacturing is also known as 3D printing and marks the next evolution of the printed electronics technology mentioned previously. Within the electronics industry it eliminates the need for flat circuit boards and enables rapid prototyping, something which will cut the time and cost of developing new products. The use of additive manufacturing opens up the possibility of developing more complex and innovative geometric shapes within electronics manufacturing, and also of designing components which can be fabricated as a single continuous part, calling for little or no assembly. At their most advanced, 3D printers can fabricate structures from non-conductive materials, while at the same time embedding conductive materials within the structure being created.
E-Waste Recycling
We’ve already mentioned the growing importance of sustainability across the electronics manufacturing sector, related in particular to the materials and manufacturing methods in use. Over and above the manufacturing process itself, there is a growing awareness of the negative impact which electronic waste is having on the environment. The growing demand across the consumer electronics sector is only likely to add to this problem in the future. The UNs Global E-Waste Monitor report for 2024 included the following facts and figures:
- 62 million tonnes (Mt) of e-waste was produced in 2022 – an increase of 82% since 2010.
- It is predicted that by 2030 this figure will have risen by another 32% to 82 million tonnes
It always difficult to get a handle on figures of this size, of course, so the report helpfully explains that the 62 million tonnes of e-waste would fill 1.55 million 40-tonne trucks, enough to form a bumper to bumper line which would circle the equator. The scale of the problem has seen governments and international bodies imposing regulations intended to inculcate responsible practices up to and including the correct disposal and recycling of electronic products. The rise in demand for responsible practices presents an opportunity for those EMS providers who feel able to offer end-of-life management services.
Supply Chain Resilience
The mention of the COVID-19 pandemic and its impact on electronics manufacturing was a reminder of the importance of supply chain resilience in a world which is often uncertain and volatile. Many of the steps already mentioned in this article will enhance the resilience of supply chains almost by default, as Industry 4.0 and the associated technologies embed flexibility and visibility across the sector as a whole. The experience of the recent past – not just the pandemic, but also Brexit before that and then a war on mainland Europe – has taught everyone in the electronics manufacturing sector that the status quo can never be taken for granted. The result is that EMS providers are likely to make strategic moves to enhance the resilience of their supply chains. These moves will include near shoring or on shoring production facilities and suppliers, building networks of local industry partners and expanding the base of suppliers on which they depend. Allied with the use of AI and IoT to streamline operations and enhance visibility, measures of this kind will put businesses which adopt them in the strongest possible position to ride out unforeseen disruption.
Summary
All available evidence points in the direction of demand on EMS providers remaining buoyant in the foreseeable future. Any attempt to predict the future of the industry needs to be based on this assumption, and on extrapolating current practices and technologies in a way which would leave providers better placed to meet this demand. Much of this can be pulled together under the banner of Industry 4.0 – in simple terms, the creation of ‘smart factories’ with fully integrated digital systems powering AI solutions. In addition to the Industry 4.0 technology, much of which is already in place in many businesses, EMS providers efforts to meet the challenges of the future are likely to coalesce around the following measures:
- More advanced materials
- Circuit packaging
- Organic electronics
- Printed electronics
- Additive manufacturing
- E-waste recycling
- Supply chain resilience
