A Brief Summary of the Electronic Manufacturing Services Industry

Electronic Manufacturing Services (EMS) is the term used for companies that offer electronics design, manufacturing and product management services for Original Equipment Manufacturers (OEMs) or electronic product companies. Electronic product companies and OEMs often outsource their manufacturing operations to EMS companies to realize cost and operational efficiencies.

The birth of the EMS industry was marked by IBM's entry into the personal computer market in 1981, which started a trend to outsource what was considered to be outside a company’s “core competence.” This sparked a feedback cycle of outsourcing, giving the electronic product companies a way to obtain better economies of scale. In addition, many electronic product companies sold off their production units to EMS providers. For example, in 1998 Hewlett Packard sold the manufacturing assets of its LaserJet Solutions Group to Jabil. These developments led to a shift in market power from electronic product companies to large EMS providers, and have led to a rapid centralization of the EMS industry.

As EMS providers grew larger, many began to offer a broader spectrum of services in addition to manufacturing. Today the trend continues with many EMS providers becoming Original Design Manufacturers (ODMs). ODMs offer complete electronic products for retail companies skipping the electronic product companies all-together.

As EMS providers grew larger, many began to offer a broader spectrum of services in addition to manufacturing. Today the trend continues with many EMS providers becoming Original Design Manufacturers (ODMs). ODMs offer complete electronic products for retail companies skipping the electronic product companies all-together.

The EMS industry has undergone a major shift since 2000. During technology's late-1990s heyday, EMS providers routinely acquired manufacturing assets in high-cost locations. EMS providers largely focused on printed circuit board fabrication, leaving system assembly to the electronic product companies. And EMS companies largely disdained industries outside of information processing (computers) and communications. In recent years, EMS providers have shifted production to low-cost geographies; embraced non-traditional industries including consumer electronics, industrial, medical, and instrumentation; and added substantial vertical capabilities, stretching from design and ODM through system assembly, test, delivery and logistics, warranty and repair, network services, software and silicon design, and customer service.

EMS has also started to provide design services used in conceptual product development advice and mechanical, electrical, and software design assistance. Testing services perform in-circuit, functional, environmental, agency compliance, and analytical laboratory testing.

EMS providers are located throughout the world. They vary in terms of production capabilities and comply with various quality standards and regulatory requirements.