European EMS Industry Reached $29.2 Billion in 2016

• Market value and manufacturing revenue expected to increase by 2020
• Consolidation expected in the industry
• Foxconn and Sharp building U.S. manufacturing plant

After contracting for two consecutive years, the European EMS industry reached $29.2 billion in 2016, according to a report by Reed Electronic Research, up from $11.5 billion in 2015.

By 2020, the industry will reach $12.4 billion in Western Europe as the market segments to serve multiple markets such as aerospace, automotive, control and instrumentation, defense, industrial and telecom, and medical.

Growth will be hampered by the increased demand for local manufacturing and pricing.

In 2015, manufacturing revenue was $17.7 billion.  As long as global EMS providers remain committed to Europe, Reed Electronic Research forecasts the market will reach $19.5 billion. by 2020.

The leading 50 companies in the industry produce 77% of the total sales, approximately $22.3 billion.

Acquisitions are the main means of  consolidation within the industry.  Future consolidation is expected as Europe deals with the following factors:  development and aftercare services to customers, downward price pressure, requirement to broaden and deepen the design, and slow economic growth

Foxconn Building Plant with Sharp

One of the top players in Europe, Taiwanese multinational electronics company Foxconn Technology Group, is looking to the United States, not Europe for its latest manufacturing plant.

The plant will manufacture LED display panels with Sharp Corp., which will either operate the plant itself or have it operated by Hon Hai Precision Industry, its TV panel venture with Foxconn.  Foxconn owns two-thirds of Sharp.

Construction will begin this year, and the plant will be operational by the end of 2020.  The factory was announced in January and will cost and estimated $7.13 billion.

The plan has been in consideration for years, Foxconn chief executive Terry Gou told Reuters, and had nothing to do with Japanese Prime Minister Shinzo Abe’s meeting with U.S. President Donald Trump.

Foxconn Employs Robots

Meanwhile, Foxconn, a major supplier of iPhone parts, plans to employ robots in its Chinese plants.

The plans were published in DigiTimes and would occur in three phases.  By 2020, Foxconn plans to be 30% automated.  The goal is to eventually be 100% automated.

The company already uses 40,000 robots in its manufacturing process, and in March 2016, the workforce was cut by 60,000 as these workers were replaced by robots.

In 2016, Foxconn employed 1.2 million, the majority residing in China where Foxconn has been criticized for its work conditions.

European EMS Industry

• By 2020 Austria, Germany and Switzerland will be a major nations for growth.
• Foxconn, Flex and Jabil Circuit are the top three companies worldwide. They accounted for 45% of European EMS revenues in 2015. Globally, more than 1,000 companies, compete in the industry.
• The focus will continue to be on higher volume products in the consumer, computing and communications, or 3C, segments. Production is expected to transfer from higher cost sites in Western Europe.