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Kitron Electronics Production | February 04, 2010

iSuppli: EMS back to growth

Although the global electronics contract manufacturing industry is set to return to growth in 2010 after a painful 2009, the market still faces major uncertainties this year, reports the market researcher iSuppli.
Both – EMS and ODM – were back to generating rising revenue – estimated to reach $280.8 billion in 2010 ( an increase of 7.8% from the $260.5 billion reported for 2009. However, this has to be viewed in respect to the decline of 13.4% incurred in 2009. As with most industries, global recession and the following resulting electronics downturn were the main reasons for this decline.

The attached figure presents iSuppli’s forecast of global electronics contract manufacturing revenue.



“Things are definitely looking up for the EMS/ODM market in 2010,” said Adam Pick, principal analyst for EMS and ODM at iSuppli. “However, we’re holding our breath until the second half of 2010 given certain industrial and macroeconomic issues that could inhibit the outsourcing cycle.”

However, most of the leading EMS und ODM companies report an increasing order intake, which is viewed positively by the market researcher. Signs are that the “typical seasonal downturn in the first quarter will be mitigated by stronger-than-normal demand signals”, the report continues.

Despite these gains, Mr Pick doesn’t foresee the kind of sharp rebound for the entire contract manufacturing business that some experts are predicting for 2010. “Some analysts believe the global contract manufacturing business is due for a V-shaped recovery, similar to that of the 2003 to 2005 time frame, when the industry enjoyed a surge in outsourcing.

He believes however, that conditions differ greatly and the CM market is set to “experience a dichotomy of growth”. Global ODM revenue is set to rise by 10.8% in 2010, while the EMS market will expand slightly more moderate with only 5.2%. The market researcher even states that some manufacturers could experience shortages with certain components. The recent shortages have inhibited full-throttle assembly activity among contract manufacturers for the past six months, the report continues.

Source: iSuppli

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