Opportunities Abound for EMS Providers in the U.S. Automotive Industry

DUBLIN, Ireland-- The growing shift in the automotive industry - from conducting all operations in-house to outsourcing certain key operations - has created huge opportunities for electronic manufacturing service (EMS) providers. Moreover, as mechanical components are increasingly replaced with electronic ones, automotive original equipment manufacturers (OEMs) and tier one suppliers are looking for outsourcing partners that not only have the relevant technical knowledge, but are also cost effective. Thus, the increasing amount of electronic content in cars combined with the rising trend toward outsourcing has created a market with vast untapped opportunities and significant revenue generation potential.

"EMS providers bring to the automotive industry experience enriched from functioning in other verticals as well as optimized manufacturing capabilities," remarks the analyst of this research service. "With OEMs and tier one suppliers recognizing the considerable benefits provided by EMS providers, the trend of automotive outsourcing is expected to steadily increase and develop into a full-blown profitable market for EMS providers."

Infotainment Systems Hold Greatest Potential

The North American opportunity for EMS providers is expected to increase at a compound annual growth rate (CAGR) of 16.8 percent. Demand for automotive electronics is spread across three major categories, namely infotainment, safety, as well as other electronics such as powertrain, body/chassis, and navigation. The demand for infotainment is the largest among these, followed by navigation and under-the-hood electronics. The opportunity for infotainment electronics is expected to have a CAGR of 17.8 percent. Safety electronics are expected to witness greater demand as the focus on safety increases and various mandates are passed to this effect.

However, penetrating the automotive industry is not an easy task and is expected to be a considerable challenge for EMS providers. Both OEMs as well as tier one suppliers are not only highly demanding, but also maintain extremely high quality standards that providers will have to adhere to. "EMS providers that discover and implement strategies and techniques, which can help them penetrate the automotive industry can look forward to plentiful opportunities to capitalize on," says the analyst. "Growth in the automotive industry is a continuous journey and successful EMS providers are likely to enjoy long-term contracts as well as fairly stable demand from the consumer end."