The growth outlook for the EMS industry continues to be geographically unbalanced. According to Electronic Trend Publications, from 2007 to 2012, Asia is expected to grow at a CAGR of 17.2% and account for over 71% of the EMS market by 2012 - compared to a 4.9% annual growth for North America and a 7.5% annual growth for Europe. The rest of the world is expected to grow at a 11.6% CAGR over the same period, states Lincoln International in their latest report.

The key region within the Asian market remains China, accounting for approximately 60% of all Asian EMS production. Together with Taiwan, these two countries represent 46% of the entire global EMS production. By 2012, this is predicted to change. China is expected to account for 76% of all EMS output in Asia and 54% worldwide. The Chinese government is likely to continue to provide significant incentives, such as tax credits, land grants, low import duties, among other advantages. In addition, full private equity ownership of EMS operations is now possible and is beginning to become more popular.

As shown in Chart E, overall EMS revenue during the last 12 months (LTM) has flattened, with only large EMS companies showing significant growth. Large EMS providers grew 18.8% on an LTM2008 basis versus 14.7% in CY2007. Revenue began to decline in the Mid Tier with LTM2008 revenue dropping 0.4%. Small Tier EMS company LTM2008 revenues grew 6.8% versus 4.6% in CY2007. The Micro Tier provider’s growth has slowed significantly to only 1.3% in LTM2008, short of their CY2007 performance of 15.6%, states Lincoln International.

Longer term growth in the EMS industry will continue to be driven by end markets. In regards to long term growth, communications continues to be the end market that offers the most significant upside potential with an expected growth of CAGR 15.9% from 2007 to 2012. The consumer sector is also expected to show strong growth with forecasts showing a CAGR of 13.5% over the next five years. Also showing double digit growth are the computer and medical industries with expected CAGRs of 13.4% and 12.0% through 2012. From 2007 to 2012, the annual growth rates for the automotive, defense and industrial end markets are expected to be around 8% annually. Overall, the global EMS market is expected to grow 13.5% annually from a $261 billion market in 2007 to a $492 billion market in 2012, concludes Lincoln International.



Source: Lincoln International Newsletter
Image Source: Assel