Market Trends of Asia-Pacific Electronic Manufacturing Services Industry
The Consumer Electronics Application Segment is Expected to Witness Significant Growth
- The consumer electronics segment increasingly relies on electronics manufacturing services (EMS) to drive its expansion. As consumer electronics embrace advanced technology and features, the need for sophisticated manufacturing becomes paramount. Its focus on cost efficiency and adaptability underscores the industry's ability to meet consumer expectations effectively.
- EMS involves the engineering and design of printed circuit boards (PCBs), assembly, sub-assemblies, functional testing, and product and component design. These services cater to the demand for modern consumer devices. Also, EMS firms provide value-added engineering and manufacturing services to original equipment manufacturers (OEMs). This allows OEMs to boost operational efficiencies and focus on critical functions like R&D, aiding their adaptation to evolving market trends.
- In recent years, rapid urbanization and economic growth in countries such as China and India have driven the expansion of the middle class. This demographic surge has increased demand for consumer electronics, spanning smartphones, laptops, TVs, and home appliances. GSMA projected that smartphone adoption in the region would surpass 90% by 2030, underlining the region's tech appetite. Smartphones, in particular, are pivotal in driving revenue within the consumer electronics sector. As a result, EMS providers in the region are strategically positioned to cater to this growing consumer demand.
- Governments have implemented policies to bolster the electronics manufacturing sector in Asia-Pacific. These initiatives involve providing incentives and fostering the growth of electronics clusters and manufacturing hubs. For example, India's Production Linked Incentive (PLI) scheme offers a 4% to 6% incentive on the augmented sales of locally made goods, with a targeted focus on specific segments within the electronics industry. Such targeted strategies have significantly encouraged EMS providers to set up and scale their operations in the region.
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India is Expected To Witness Significant Growth
- During the forecast period, India is poised to emerge as a dominant force in electronics manufacturing, propelled by a rising domestic appetite and enhanced export competitiveness. At the core of India's burgeoning electronics manufacturing landscape lies electronics manufacturing services (EMS).
- Recognizing the industry's potential, the Indian government has introduced several schemes to bolster electronics manufacturing. The Indian government has prioritized electronics hardware manufacturing as an essential pillar of the Digital India initiative. In addition, the Production Linked Incentive (PLI) scheme directly addresses India's high capital costs. In November 2023, the Production Linked Incentive (PLI) scheme attracted investments exceeding INR 1.03 lakh crore (~USD 12.3 billion).
- Technology adoption, rising affordability, and a push for sustainability are set to fuel the growth of domestic electronics production in the country. The advent of Industry 4.0 is notably amplifying this surge, with businesses embracing digital tools like AI, automation, and data analytics. These technologies are streamlining operations and maintaining efficiency and productivity.
- Alongside surging domestic demand, numerous international electronics manufacturers are relocating their outsourced manufacturing from countries like India to safeguard their supply chains. According to the Reserve Bank of India and DGCI&S, in fiscal year 2023, India's exports of electronic products surged, surpassing INR 1,899 billion (~USD 22.7 billion). This marked a substantial increase from the preceding year. This shift is bolstered by the Indian government's initiatives to lure foreign investments, mainly benefiting the Indian EMS market.
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