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© Assel Electronics Production | April 07, 2010

EMS: cautious Comeback

The EMS industry is still on a slow-paced recovery track after the 13.4% downward spiral it experienced in 2009 largely due to the global financial turmoil.

With a lot of optimism fuelling hope of growth in the second half of 2010, the industry still seems to have dark clouds looming above. However, recent developments in the industry have indicated that EMS market is doing well and that the industry is starting to win investors' trust, states analyst firm Rothman Research. “One of the biggest highlight in this space has been the manufacturing contracts awarded to Flextronics International at the end of March 2010 by Q-Cells SE. This agreement denotes one of the largest solar manufacturing contracts in the industry and it propelled Flextronics to a leadership role in the Clean Tech market. Another sign of the moment is the regained confidence in earnings results within the industry which bullishly forecast that revenue might surpass that of 2009 as EMS providers gear to meet an anticipated surge in demand from OEM clients. "We have seen a weak first quarter in 2010 within the industry which is characteristic to this time period... but the enhanced earnings, prominent ROIC performance and improved operations by most players in this space in the last quarter coupled with optimistic guidance for the first quarter by some of the key players, like Jabil Circuit are keeping spirits high," stated Jack Benassi of Rothman Research. "We might, however, experience more solidified growth in the Original Design Manufacturers segment as compared to the EMS segment due to growing demands for LCD televisions and mobile PCs." In recent years, EMS companies have expanded the range of services they provide. These vary from straightforward manufacturing of components, to more multifaceted manufacturing services which have brought an increasing number of OEMs to subcontract a sheer amount of their manufacturing. Furthermore, EMS is slowly but surely been courted by non-traditional end-use markets like medical or aerospace which are now feeling a pressing need to adopt outsourcing approach.
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