EMS Transactions Down in Q3 2018


Reading time ( words)

There were six EMS transactions recorded in Q3 2018, slightly down from the nine recorded in Q2 2018. EMS consolidations accounted for two transactions in Q3 2018, or 33% of total activity, compared to 67% in the prior quarter.

In Q3 2018, there was one vertical/horizontal convergence, the same amount recorded in Q2 2018, or roughly 17% of total activity for this quarter. There were three Private Equity Investment transactions, or 50% of total activity, representing an increase over the previous quarter, where no Private Equity transactions were recorded.

Transactions categorized as diversification into EMS and EMS Divestitures did not account for any transactions in Q3 2018. In terms of geography, North America recorded four transactions, representing 67% of total activity in Q3 2018. The remainder of activity took place between high-cost regions, representing two transactions and 33% of total activity for this quarter. No transactions in Q3 2018 occurred between a high-cost region and a low-cost region, within Europe, Asia or South America.

In terms of transaction size, Large Tier EMS providers accounted for one transaction in Q3 2018, representing 17% of activity. Mid Tier EMS providers did not account for any transactions during the quarter. The remainders of transactions for Q3 2018 were classified as Small Tier EMS providers, representing five transactions, or approximately 83%, of the total.

EMS industry revenue increased by 10.7% in 2017, following the 1.0% decrease exhibited in 2016.

Overall LTM Q3 2018 revenue increased substantially across Large, Mid and Small tier EMS providers. Large tier EMS providers’ revenue increased 8.0% on an LTM Q3 2018 basis versus an increase of 4.2% in LTM Q3 2017. The Mid tier experienced improvement as well, with LTM Q3 revenue increasing 6.0% year-over-year from 3.0% in LTM Q3 2017 to 9.0% in LTM Q3 2018. Small tier EMS providers experienced the largest growth, representing 9.6% in LTM Q3 2018, versus a decrease in growth of 8.9% in LTM Q3 2017.

In the most recent industry forecast, the communications segment is expected to exhibit the most significant growth within the EMS industry over the next five years, with a CAGR of 9.2% from 2017 to 2022. The automotive and computer segments are also expected to show strong growth, with CAGRs of 8.4% and 7.6%, respectively, over the next five years. Also anticipating strong growth are the medical and industrial segments with expected CAGRs of 6.2% and 5.9%, respectively, through 2021. Overall, the global EMS market is expected to grow 5.4% annually from a $365 billion market in 2017 to a $520+ billion market in 2022 The global shift in production to low-cost offshore areas appears to have ceased given that there are many low-cost countries in every key geographic region. However, OEM customers continue to require their EMS partners to manufacture products near the regions where they are being sold. Certain high-volume products, including consumer electronics, require OEMs to achieve the lowest cost in manufacturing, leaving China, and other Asian countries, as preferable destinations. Yet, certain circumstances, such as low-volume production, transportation and logistical issues, have made the labor cost differentials of offshoring less significant.

Offshoring will still occur, according to New Venture Research’s estimates, but in many cases production will return to areas in which the product is sold.

Share

Print


Suggested Items

Driving Down Cost in the Supply Chain

04/08/2021 | Meghan Zou, EPOCH
Driving cost out of the supply chain goes beyond reduction of raw material cost. Though many of the manufacturers today concentrate on negotiation with their raw material supplier(s) the hidden cost of internal supply chain goes undetected. To address the cost of the entire supply chain we should not only look at direct material cost but also the cost of internal supply chain. At Epoch we looked at four areas in particular which include: planning/tracking, storage/delivery, inventory management, and supplier relationships.

Electronics Additive Manufacturing for Defense and Space

10/27/2020 | Nolan Johnson, I-Connect007
At the SMTA Additive Electronics TechXchange, Dr. Kourtney Wright spoke about Lockheed’s DoD work and explained why Lockheed is interested in additive. Nolan Johnson shares the highlights.

Real Stories of Applied Advanced Analytics in the Electronics Manufacturing Smart Factory

08/26/2020 | Derek Ong, BscEE, Keysight Technologies
The smart factory is starting to become a reality, as part of the overarching Industry 4.0 paradigm. With the technology enablers, such as industrial IoT (IIoT) and cloud computing, electronics manufacturing operational technology (OT) are on a converging course with traditional information technology (IT). Beyond the challenges of data acquisition and transformation, the true “proof in the pudding” is in the quick ROI from advanced analytics. We will share examples of successful, profitable implementation of applied machine learning (ML) in the electronics manufacturing line, where measurement science meets data science.



Copyright © 2021 I-Connect007. All rights reserved.