North American EMS Market Growth is Slowing, but First-Quarter IPC Report Indicates Growth Opportunities in Some Segments

By Sharon Starr, director, IPC market research The North American electronics manufacturing services (EMS) industry continued to enjoy positive year-to-date growth in the first quarter of 2019, but growth rates for both sales and orders are slowing, according to IPC’s first-quarter 2019 North American EMS Market Report. Order growth contrasts sharply with last year’s business results. EMS orders in 2018 were 13.5 percent above the previous year. In Q1 2019, orders were up just 1.0 percent year over year. Rapidly slowing growth is also in the forecasts for the industry in 2019 and 2020. The report contains IPC’s own four-quarter sales forecast and a North American market forecast from New Venture Research, and their prognoses as of Q1 2019 are consistent. The first-quarter data showed some interesting differences between markets. First-quarter sales growth was strong for box build and other production, but modest for PCB assembly. Among the industry’s vertical markets, first-quarter sales to the military and aerospace market was up 25 percent this year to date. Sales growth to the lighting and medical/instrumentation markets was also strong. This year the IPC North American EMS Statistical Program began collecting data on sales and orders of wire harness and cable assemblies by EMS companies. Although growth data from this new segment will not be available until next year, we noted with interest that this type of business is heavily concentrated in the smallest company size tier. Among the EMS companies in IPC’s survey sample, wire harness and cable assemblies accounted for nearly 14 percent of the quarter’s sales for companies with annual sales of less than $10 million. No revenue from this type of production was reported by the largest-company size tier in Q1 2019. The quarterly North American EMS Market Report is available free to participants in IPC’s EMS Statistical Program. It is available to others by subscription in IPC’s online store. We welcome your feedback and insights about what may be driving the industry’s business results. Is box-build becoming a larger part of your business? What about vertical markets? Last year, automotive grew the most. This year, mil/aero is off to a roaring start. Are more military equipment makers outsourcing assembly? There is always lots to discuss in this ever-changing industry. For more information on IPC’s market research services, go to www.ipc.org/IndustryData, or contact the market research team at MarketResearch@ipc.org or +1 847-597-2868.