Electronic Contract Manufacturing and Design Services Market – Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Service (Electronic design & engineering, Electronics assembly, Electronic manufacturing), By End-Use (Healthcare, Automotive, Industrial, Aerospace & Defense, IT & telecom, Power & energy, Consumer electronics), By Region, By Competition, 2018-2028

Market Overview

Global Electronic Contract Manufacturing and Design Services Market has valued at USD 514 Billion in 2022 and is anticipated to project robust growth in the forecast period with a CAGR of 10.8% through 2028. The Global Electronic Contract Manufacturing and Design Services Market is a dynamic and crucial sector within the electronics industry. It encompasses a wide range of services provided by contract manufacturers and design firms to companies looking to outsource the production and design of electronic components, devices, and systems. These services include printed circuit board (PCB) assembly, product testing, prototyping, design engineering, and supply chain management. The market's growth is driven by several factors, including the increasing complexity and miniaturization of electronic products, the need for cost-effective manufacturing solutions, and the rapid pace of technological advancements. Additionally, the globalization of supply chains and the demand for customized electronic products further contribute to the market's expansion. Companies across various industries, such as automotive, healthcare, aerospace, and consumer electronics, rely on electronic contract manufacturing and design services to stay competitive, reduce time-to-market, and focus on their core competencies. As technology continues to evolve, this market is expected to play a pivotal role in shaping the future of electronic innovations and manufacturing efficiency, making it a strategic and indispensable segment in the global electronics ecosystem.

Key Market Drivers

Increased Demand for Outsourcing

The global electronic contract manufacturing and design services market is experiencing significant growth due to the increased demand for outsourcing. Many companies are opting to outsource their electronic manufacturing and design processes to specialized service providers. This trend is driven by several factors, including cost reduction, access to specialized expertise, and the need for faster time-to-market. Outsourcing allows companies to leverage the capabilities and resources of contract manufacturers and design service providers, enabling them to focus on their core competencies and strategic initiatives. By partnering with experienced service providers, companies can benefit from their extensive knowledge and experience in electronic manufacturing and design, resulting in improved product quality and reduced time and cost of production.

Rapid Technological Advancements

The electronic contract manufacturing and design services market is also driven by rapid technological advancements. The electronics industry is constantly evolving, with new technologies and innovations emerging at a rapid pace. This creates a need for specialized expertise and resources to keep up with the latest trends and developments. Contract manufacturers and design service providers play a crucial role in helping companies navigate these technological advancements. They have the necessary infrastructure, equipment, and skilled workforce to handle complex electronic manufacturing and design processes. By partnering with these service providers, companies can access the latest technologies and leverage their expertise to develop innovative and competitive products.

Cost Reduction and Operational Efficiency

Cost reduction and operational efficiency are key drivers of the electronic contract manufacturing and design services market. Outsourcing electronic manufacturing and design processes to specialized service providers can result in significant cost savings for companies. Contract manufacturers and design service providers often have economies of scale, allowing them to procure materials and components at lower costs. They also have optimized manufacturing processes and efficient supply chain management systems in place, which can further reduce costs. By leveraging these cost advantages, companies can improve their profitability and competitiveness in the market. Additionally, outsourcing allows companies to focus on their core competencies and strategic initiatives, resulting in improved operational efficiency and productivity.

Global Expansion and Market Penetration

The electronic contract manufacturing and design services market is driven by global expansion and market penetration strategies adopted by companies. As companies expand their operations into new geographic regions, they often face challenges related to local regulations, cultural differences, and market dynamics. Contract manufacturers and design service providers can help companies overcome these challenges by providing localized manufacturing and design capabilities. They have a deep understanding of local markets and can tailor their services to meet the specific needs and requirements of customers in different regions. By partnering with these service providers, companies can accelerate their market penetration efforts and establish a strong presence in new markets.

Focus on Research and Development

The electronic contract manufacturing and design services market is also driven by a focus on research and development (R&D). Companies are increasingly investing in R&D activities to develop innovative and technologically advanced products. However, R&D can be a resource-intensive process that requires specialized expertise and infrastructure. Contract manufacturers and design service providers can support companies in their R&D efforts by providing access to state-of-the-art facilities, skilled engineers, and specialized knowledge. By partnering with these service providers, companies can accelerate their product development cycles, reduce time-to-market, and gain a competitive edge in the market.

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Key Market Challenges

Lack of Awareness and Understanding

The global electronic contract manufacturing and design services market faces a significant challenge in terms of limited awareness and understanding among organizations regarding the benefits and advantages of adopting these services. Many businesses, particularly smaller enterprises, may not fully comprehend the potential risks and complexities associated with in-house manufacturing and design processes. This lack of awareness can lead to hesitation in outsourcing manufacturing and design services, resulting in missed opportunities for cost savings, improved efficiency, and access to specialized expertise. Addressing this challenge requires comprehensive educational initiatives to highlight the critical role that electronic contract manufacturing and design services play in accelerating time-to-market, reducing production costs, and enhancing product quality. Organizations need to recognize that outsourcing these services can provide them with a competitive edge and enable them to focus on their core competencies.

Complexity and Integration Issues

The implementation and management of electronic contract manufacturing and design services can pose complex challenges for organizations, particularly those with limited experience or resources in this area. Integrating external manufacturing and design partners seamlessly into existing supply chains and processes can be technically demanding. Compatibility issues may arise during integration, leading to delays and suboptimal performance. To address these challenges, it is essential to simplify the deployment and management of electronic contract manufacturing and design services. Streamlined communication channels, standardized processes, and clear performance metrics should be established to ensure effective collaboration between organizations and their manufacturing and design partners. Additionally, organizations should have access to comprehensive support and guidance, including documentation, training, and technical experts who can assist with integration and troubleshoot any issues. Simplifying these aspects of implementation can lead to more efficient processes and improved product development outcomes.

Quality Control and Intellectual Property Protection

Maintaining quality control and protecting intellectual property (IP) are critical challenges in the global electronic contract manufacturing and design services market. Organizations often have concerns about the quality and reliability of products manufactured by external partners. Ensuring consistent quality across different manufacturing facilities and adhering to industry standards can be a complex task. Additionally, protecting sensitive design information and IP from unauthorized access or misuse is of utmost importance. To overcome these challenges, robust quality control processes should be established, including regular audits, inspections, and performance evaluations of manufacturing partners. Non-disclosure agreements (NDAs) and other legal safeguards should be implemented to protect IP. Collaboration with trusted and reputable manufacturing and design partners can help mitigate these risks and ensure high-quality products while safeguarding valuable IP.

Supply Chain Disruptions and Geopolitical Risks

The global electronic contract manufacturing and design services market is susceptible to supply chain disruptions and geopolitical risks. Factors such as natural disasters, political instability, trade disputes, and changes in regulations can impact the availability of raw materials, components, and skilled labor. These disruptions can lead to delays in production, increased costs, and potential reputational damage. To address these challenges, organizations should diversify their supplier base and establish contingency plans to mitigate the impact of supply chain disruptions. Close monitoring of geopolitical risks and proactive engagement with manufacturing partners in different regions can help identify potential risks and enable timely mitigation strategies. Building resilient and flexible supply chains is crucial to ensure uninterrupted manufacturing and design services.

Environmental Sustainability and Ethical Practices

The global electronic contract manufacturing and design services market faces increasing pressure to adopt environmentally sustainable practices and uphold ethical standards. Organizations and consumers are increasingly concerned about the environmental impact of manufacturing processes, including the use of hazardous materials and the generation of electronic waste. Additionally, ethical considerations such as fair labor practices and responsible sourcing of raw materials are gaining prominence. To address these challenges, organizations should prioritize environmental sustainability by adopting green manufacturing practices, recycling initiatives, and reducing waste generation. They should also ensure compliance with ethical standards and engage in responsible sourcing of materials. Transparent reporting and certification of sustainable and ethical practices can help build trust and enhance the reputation of manufacturing and design service providers.

Key Market Trends

Rise in Outsourcing of Electronic Manufacturing Services

The global market for Electronic Contract Manufacturing and Design Services (ECMDS) is witnessing a rise in the outsourcing of electronic manufacturing services by companies across various industries. As businesses focus on their core competencies, they are increasingly relying on ECMDS providers to handle the design, manufacturing, and assembly of electronic components and products. This outsourcing trend allows companies to leverage the expertise and capabilities of ECMDS providers, resulting in cost savings, improved time-to-market, and enhanced product quality.

ECMDS providers offer a wide range of services, including PCB design, prototyping, component sourcing, assembly, testing, and logistics management. By partnering with ECMDS providers, companies can access state-of-the-art manufacturing facilities, advanced equipment, and skilled engineering teams without having to invest in their own infrastructure. This enables companies to streamline their operations, reduce overhead costs, and focus on their core business activities.

Growing Demand for Customized Electronic Solutions

The global ECMDS market is experiencing a growing demand for customized electronic solutions tailored to specific industry requirements. As industries such as automotive, healthcare, aerospace, and consumer electronics continue to evolve, there is a need for electronic products that meet unique specifications and performance criteria.

ECMDS providers are addressing this demand by offering customized design and manufacturing services. They collaborate closely with their clients to understand their specific needs and develop electronic solutions that align with their requirements. This customization includes designing specialized PCB layouts, integrating advanced functionalities, and optimizing product performance. By offering tailored electronic solutions, ECMDS providers enable companies to differentiate their products in the market, enhance customer satisfaction, and gain a competitive edge.

Integration of Advanced Technologies

The integration of advanced technologies, such as Internet of Things (IoT), artificial intelligence (AI), and augmented reality (AR), into electronic products is a significant trend in the ECMDS market. As the demand for smart and connected devices continues to grow, companies are seeking ECMDS providers that can incorporate these technologies into their products.

ECMDS providers are investing in the expertise and infrastructure required to design and manufacture IoT-enabled devices, AI-powered electronics, and AR-integrated solutions. They are leveraging their engineering capabilities to develop innovative products that offer enhanced functionality, improved user experience, and seamless connectivity. By integrating advanced technologies, ECMDS providers enable companies to capitalize on emerging market trends, meet evolving customer demands, and stay ahead of the competition.

Focus on Sustainability and Environmental Responsibility

The global ECMDS market is witnessing an increased focus on sustainability and environmental responsibility. As companies strive to reduce their carbon footprint and comply with environmental regulations, they are seeking ECMDS providers that prioritize sustainable manufacturing practices.

ECMDS providers are adopting eco-friendly manufacturing processes, utilizing energy-efficient equipment, and implementing waste reduction strategies. They are also sourcing components from suppliers that adhere to sustainable practices and comply with environmental standards. By partnering with environmentally responsible ECMDS providers, companies can ensure that their electronic products are manufactured in an environmentally friendly manner, contributing to their corporate social responsibility initiatives, and meeting the expectations of eco-conscious consumers.

Segmental Insights

Service Insights

Electronic manufacturing emerged as a key service category in 2022 and accounted for 44% of the total revenue share. However, the electronic design & engineering segment is projected to witness higher growth during the forecast period, owing to the surging inclination of OEMs toward outsourcing their designing requirements. The market is witnessing an upsurge in demand for electronic circuit boards due to their growing importance in several key electronic devices, such as mobile phones and tablets.

Furthermore, OEMs can design and test prototypes for new product development. Additionally, the services provided by contractors enable relatively low capital investment and advanced manufacturing techniques for OEMs for new product development. OEMs are increasingly outsourcing their circuit assembly requirements to electronic contract manufacturing and design services service providers, substantially increasing their profit margins. These factors are likely to drive significant growth during the forecast period. Furthermore, OEMs are aiming to outsource their design and engineering to cut down costs and increase flexibility. They are increasingly investing in R&D activities and other strategic initiatives to streamline their production processes to sustain themselves in the highly competitive environment.

However, the implementation of advanced technologies such as 3D printing and Artificial Intelligence (AI) for automation by electronic contract manufacturers and design service providers results in high initial investment for OEMs. Also, the foundation of in-house production is a key hurdle faced by a majority of manufacturers. Thus, outsourcing is a preferable option for OEMs to keep pace with the growing competitive environment.

End-use Insights

The demand for electronic contract manufacturing services is anticipated to grow owing to rising applications across non-technical end-user segments, such as healthcare, automotive, industrial, and aerospace & defense. The low penetration of electronic contract manufacturing and design services in these segments is creating higher opportunities for contract manufacturers to establish a strong foothold in the segments. The IT & telecom segment emerged as the largest end-use segment and accounted for over 47% of the total market revenue in 2022. However, growing outsourcing trends in the healthcare, automotive, and other non-technical segments are projected to spur their market shares during the forecast period. The healthcare segment held the highest CAGR of the overall market in 2022. Healthcare facilities have different types of information systems, including practice management support systems, e-prescription systems, EHR systems, radiology information systems, and clinical decision support systems, which hold many sensitive patient and hospital datasets. Further, many IoT-enabled systems include smart HVAC systems, remote patient monitoring devices, infusion pumps, smart elevators, and more, which are critical in maintaining daily patient-related activities. Hence, healthcare facilities are expected to adopt cybersecurity solutions to safeguard electronic assets and information from unauthorized use, access, and disclosure, thereby driving market growth.

The upsurge in demand for electrical vehicles has elevated the need to outsource their electronic component manufacturing, thereby spurring the electronic contract manufacturing and design services demand in the automotive sector. The healthcare industry is anticipated to witness significant growth, owing to the rise in demand for medical equipment. This includes blood analyzers, ultrasound imaging systems, computed tomography scanner assemblies, and blood glucose meters, among others. The low fixed capital investment, escalating need to optimize resources, and improved product development emerged as key factors contributing toward the electronic contract manufacturing and design services industry growth across several end-use industries. The demand remains robust in sectors including medical, automotive, aerospace & defense, and consumer electronics, and IT & telecommunication.

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Regional Insights

Asia-Pacific is expected to exhibit the highest growth followed by North America during the forecast period. This is due to the rise of outsourcing activities in these regions. Asia Pacific held the largest revenue share in 2022 and is estimated to remain the fastest-growing region during the forecast period. Moreover, China accounted for more than 35% share in the region and holds a dominant position in electronics manufacturing. The mass availability of raw materials and low-cost labor are the major drivers expected to favor regional industry growth.

Furthermore, growth in the North America region is majorly driven by the healthcare and automotive industries. The healthcare industry is a high-mix-low-volume sector, that offers higher gross profit margins to electronic contract manufacturing and design services players in this region. Several R&D centers and medical institutes in North America work on advanced and portable diagnostic products, which they plan to source through contract manufacturers. All these factors are cumulatively expected to spur the North American contract manufacturing market growth during the forecast period. Key players such as FLEX; Sanmina Corp; and Jabil Circuit, Inc. are planning to expand their manufacturing facilities in Europe, thereby increasing their production capacity. In addition, a shift to advanced manufacturing techniques in America and Europe is estimated to spur the electronic contract manufacturing and design services demand in these regions during the forecast period.

Recent Developments

• In February 2022, Taiwan-based Compal Electronics, Inc., approved the acquisition of 65% shares of Poindus System Corporation, a hardware manufacturer of Point-of-Sale (POS) systems. Compal Electronics aims to increase its product portfolio and expand its market exposure with this acquisition.

Key Market Players

• Benchmark Electronics Inc.
• Celestica Inc.
• Compal Electronics Inc.
• Creating Technologies LP
• Flextronics International Ltd.
• Hon Hai Precision Industry Co. Ltd.
• Jabil Circuit Inc.
• Plexus Corporation
• Fabrinet
• Venture Corporation Limited.

Report Scope:

In this report, the Global Electronic Contract Manufacturing and Design Services Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• Electronic Contract Manufacturing and Design Services Market, By Service:

o   Solution

o   Services

• Electronic Contract Manufacturing and Design Services Market, By End- use Industry:

o   Healthcare

o   Automotive

o   Industrial

o   Aerospace & Defense

o   IT & telecom

o   Power & energy

o   Consumer electronics  

• Electronic Contract Manufacturing and Design Services Market, By Region:

o   North America

§  United States

§  Canada

§  Mexico

o   Europe

§  France

§  United Kingdom

§  Italy

§  Germany

§  Spain

§  Belgium

o   Asia-Pacific

§  China

§  India

§  Japan

§  Australia

§  South Korea

§  Indonesia

§  Vietnam

o   South America

§  Brazil

§  Argentina

§  Colombia

§  Chile

§  Peru

o   Middle East & Africa

§  South Africa

§  Saudi Arabia

§  UAE

§  Turkey

§  Israel

Competitive Landscape

Company Profiles: Detailed analysis of the major companies present in the Global Electronic Contract Manufacturing and Design Services Market.

Available Customizations:

Global Electronic Contract Manufacturing and Design Services market report with the given market data, Tech Sci Research offers customizations according to a company's specific needs. The following customization options are available for the report:

Company Information

• Detailed analysis and profiling of additional market players (up to five).