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As the amount of electronics that go into a car increases, the car is becoming less of a mechanical thing consisting of a few electronics and more of a computer with wheels.
The electronics' share of vehicle value for a state-of-the-art automobile is already at 40% for traditional, internal combustion engine cars, and it could reach 75% for electric or hybrid electric vehicles. This percentage value will definitely rise in the next few years.
Automotive electronics rose by 7.3% in 2014 to about $205 billion and will continue to grow at the same growth rate to 2020, at close to $315 billion based on a report by Research and Markets. The advanced driver assistance systems (ADAS) market will have a 14.9% CAGR from estimated revenue of $39 billion in 2015 to $78.2 billion in 2020, according to Industry ARC.
According to New Venture Research, of the $91.2 billion worldwide automotive electronics assembly value in 2014, 86% was done in-house by the OEMs; 1% by the ODMs; and 13% by the EMS providers.
The automotive industry continues to grow rapidly as a high-growth market for EMS providers as it transitions steadily from mechanical to electronics. The total automotive EMS value of $12.1 billion in 2014 was contributed mainly by the top players that include Flextronics International; Hon Hai Precision Industry Co. Ltd (Foxconn Technology Group); Jabil Circuit Inc.; Zollner Electronik AG; and Integrated Micro-Electronics Inc.
Merely board stuffers—these are not today’s EMS providers in the automotive space. They’ve gone far beyond board stuffing.
The EMS providers are end-to-end solution providers, assisting the automotive electronics makers or automotive manufacturers in product realization. They engage in design and product development, advanced manufacturing engineering, and test and test system development.
Their manufacturing expertise includes PCB and FPCB assembly services, module assembly, and box build assembly. They can offer high-volume manufacturing as well as low-volume and high-mix manufacturing. Some EMS companies can do product reliability and failure analysis, calibration, and product repair services.
Further, while it is common for the tier-one EMS providers to have plastic injection capability, there are also mid-tier EMS players that can offer plastic injection. We can say that the automotive EMS players have expanded their role through vertical integration and venture into the realm of non-electronics manufacturing.
Editor's Note: This article originally appeared in the September 2015 issue of SMT Magazine.