European EMS downturn continues as modest recovery eyed for 2026

According to the latest primary research compiled by in4ma and the Global Electronics Association, European EMS revenues declined by approximately 7% in 2024, with zero or negative growth projected for 2025. The downturn follows several years of unusually strong expansion driven by pandemic-era supply shortages, inventory build-ups, and the so-called bullwhip effect.

The data covers around 87% of the European EMS market and includes more than 2,200 identified companies across Western, Central and Eastern Europe. While long-term growth between 2013 and 2019 averaged close to 5% annually, the sharp surge in 2022 and 2023 was followed by an equally steep contraction.

Western Europe hit harder than CEE?

The downturn has affected Western and Central and Eastern Europe differently. In 2024, Western European EMS revenues fell by nearly 10%, compared with a decline of around 4% in Central and Eastern Europe. However, when major outliers such as Foxconn — whose regional revenues are driven by data servers and AI infrastructure — are excluded, the decline in Central and Eastern Europe appears even steeper than in the West.

Germany remains Europe’s largest EMS market by revenue and number of companies, followed by France, the UK, Italy, and Poland. Poland is now the fifth-largest EMS market in Europe by number of legal entities, with strong clustering around Warsaw, Gdańsk, Wrocław, and Kraków.

Employment cuts concentrated in Eastern Europe

The revenue contraction has translated into significant job losses. Across Europe, more than 7,300 EMS jobs were eliminated, with the heaviest reductions occurring in Central and Eastern Europe. Poland alone lost over 1,800 EMS jobs, followed by Romania and the Czech Republic. In relative terms, Bulgaria saw the highest percentage decline in EMS employment.

Haass noted that workforce reductions have been easier to implement in Eastern Europe, particularly for Western European companies operating subsidiaries in the region.

Market concentration and foreign dominance

The European EMS market remains highly concentrated. In Central and Eastern Europe, the top ten EMS companies account for nearly two-thirds of total revenues, with Foxconn and Flex alone representing more than 50%. Domestic EMS providers tend to be smaller and account for a disproportionately low share of revenue, despite their numerical presence, particularly in countries such as Poland and Slovenia.

In Poland specifically, the top ten EMS companies control more than 80% of the market. While smaller domestic players showed more resilience in 2024, the largest EMS providers recorded the steepest revenue declines

2025 survey shows weak demand, easing inventories

A mid-year 2025 survey covering 225 legal entities and approximately EUR 11 billion in revenue confirms continued weakness. For the first half of 2025, large EMS companies reported an average year-on-year decline of 6.6%, while smaller firms saw an even sharper drop of around 12%, Solka noted.

However, inventory levels are falling across most regions, reversing the excessive stockpiling seen during the chip shortage. Total inventories declined by more than 6%, indicating gradual normalisation of supply chains, although order backlogs remain under pressure, particularly in Central and Eastern Europe.

Automotive weakness offsets defence growth

Sector exposure continues to shape national market performance. Countries with a high dependence on automotive electronics, such as Germany and France, have been disproportionately affected by declining vehicle production and restructuring within the automotive industry. By contrast, markets with lower automotive exposure, such as Sweden, have shown more stable performance.

At the same time, aerospace and defence electronics are emerging as a key growth driver. Increased defence spending across Europe – including in Poland – is benefiting EMS providers with the required certifications and capabilities, partially offsetting weakness in automotive and industrial segments

M&A activity continues despite slowdown

Despite the market contraction, merger and acquisition activity remains high, driven primarily by publicly listed Nordic EMS companies. Since 2019, France, Germany, and Sweden have seen the highest number of EMS acquisitions. Looking at the Nordic region as a whole, with companies such as Hanza, Inission, NOTE, Scanfil, and Kitron – these companies accounted for around 70% of all deals.

A notable recent transaction highlighted during the presentation was Hanza's acquisition of Germany’s BMK Group, further underlining consolidation pressures among large EMS providers seeking growth through acquisitions rather than organic expansion.

Cautious optimism for 2026

While 2025 is expected to end slightly below 2024 levels for the overall European EMS market, both in4ma and the Global Electronics Association foresee a return to modest growth in 2026. Survey participants anticipate growth rates of around 10% in Central and Eastern Europe, although the presenters cautioned that these figures reflect expectations rather than confirmed order intake.

The keynote concluded that EMS companies must prioritise margin management, reassess exposure to automotive electronics, and consider strategic partnerships or acquisitions to navigate a market that is stabilising but structurally changed from its pre-pandemic trajectory.

In 2026, in4ma is set to return as a keynote speaker at several Evertiq Expos. The analysts will present updated insights into the European EMS market at Evertiq Expo in Zurich on 23 April 2026, followed by Berlin on 18 June 2026, and Gothenburg on 17 September 2026, where further data and market developments are expected to be shared with the industry.