Page 20


www.us- tech.com


March, 2021


Growth, Trends and the Competitive Landscape of Electronics Manufacturing


By Bob Klenke, Principal Consultant, ITM Consulting


terruptions in the wake of COVID-19, even as many component manufacturers begin to reestablish production and reengage interna- tional shipping. On a brighter note, a strong rebound in


T


GDP growth is forecasted for 2021 after the steep decline in 2020. Recent positive re- sults of several COVID-19 vaccines and widespread distribution that began this year has resulted in a much more upbeat outlook for the rest of 2021. The forecast for the electronics manu-


facturing industry remains positive as many segments of the industry show signs of improving driven by increased spending for medical systems as well as telecom and communications infrastructure.


Market Segmentation The global electronics manufacturing


industry is highly segmented with board- level electronics assembly companies in- cluding merchant contract electronics manufacturers


(CEMs and EMS


providers), original design manufacturers (ODMs) and original equipment manufac- turers (OEMs). These various companies range from large multinational Tier 1


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he global electronics manufacturing market continues to face various com- ponent shortages and supply chain in-


CMs, ODMs and OEMs with numerous man- ufacturing sites worldwide to small Tier 4 CEMs with as few as one regional facility, as well as numerous mid-sized Tier 2 companies. Most Tier 1 companies are publicly-trad-


ed CEMs and ODMs with greater than $5 bil- lion USD in annual revenue and large multi- national operations. Tier 2 ranges approxi- mately from $1 to 5 billion USD in revenue.


Tier 3 occupies a space between $500 million and 1 billion USD and Tier 4 typically gener- ates no more than $500 million USD per year. There is an enormous difference in head-


count in the respective segments. There are roughly 15 Tier 1 companies worldwide. Tier 2 companies number in the hundreds. Tier 3 and 4 companies number in the thousands. Overall, small and mid-sized Tier 3 and 4 companies vastly outnumber those in tiers 1 and 2 and it is estimated that the total number of worldwide CEM compa- nies is greater than 2,500. Most Tier 1 companies are very ac-


tive in telecom with participation as high as 70 percent, 68 percent active in the consumer segment, and 50 percent ac- tive in the automotive segment. While at the same time 40 percent


of Tier 1 companies are active in the in- dustrial market segment, and 30 percent are active in the medical and military markets. Data indicates that 81 percent of


SMT manufacturing, long dominated by Asian manufacturers, is being pulled from the region due to the global pandemic, rising labor costs and supply disruptions.


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Tier 2 companies are highly active in the industrial market segment with 54 per- cent active in the telecom and military market segments. Meanwhile, 54 per- cent of Tier 2 companies are active in the telecom and military market segments,


Continued on next page


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