This result was a remarkable turnaround after one of the biggest downturns in EMS history in 2023. As in the past, the top-tier suppliers benefited the most, with companies like EMS giants Hon Hai Precision Industry (Foxconn), BYD Electronics, and Celestica achieving the most positive gains. Other suppliers like Pegatron, Jabil, Sanmina, USI, and Flex, experienced double-digit revenue losses in 2024. This means that the mid-tier EMS firms like DBG, Dixon Technologies, Fabrinet, and Cyient were left to pick up the slack and propel the overall positive result.

Overall, the APAC region accounted for around 80.9 percent of the Top 50 EMS revenue, while the Americas accounted for 17.1 percent and EMEA for 2.0 percent. APAC achieved 20.0 percent revenue growth in 2024 while EMEA and Americas lost market share by growing -5.6 percent and -10.9 percent, respectively. It took a minimum of $521 million in sales to make the Top 50—an increase of $87 million in revenue.

For 2024, the top 10 EMS companies accounted for 87.6 percent of Top 50 sales, down from 88.7 percent in 2023, illustrating that the EMS industry remains top-heavy. The bottom 40 together produced a good 15.8 percent growth rate, increasing to $75.4 billion in 2024. The growth rates of the Top 50 are a proxy for the rest of the industry, as this group usually accounts for approximately 85–90 percent of total industry revenue.

In addition to ranking providers by 2024 sales, the MMI Top 50 listing includes sales growth, previous rank, number of employees, number of plants, facility space, number of SMT lines, and customer data. This special data was published in the March 2025 edition of MMI, and in April the newsletter will include market segmentation data obtained from the MMI survey. Contact the publisher for the purchase of individual reports.

MMI is a monthly newsletter specializing in the EMS (electronics manufacturing services) industry, and tabulates its ranking information through an annual survey of over 100 of the largest EMS companies worldwide. Founded in 1990, MMI is a division of New Venture Research Corp. For more information, please see www.mfgmkt.com/.

The post Release: the Top 50 EMS companies worldwide grew 12.7 percent in 2024 appeared first on New Venture Research.

For a short time only, The Worldwide Electronics Manufacturing Services Market – 2024 Edition, and The Worldwide OEM Electronics Assembly Market–2024 Edition, can be purchased for $6,000 combined (includes spreadsheet). A savings of $1990 off of our normal price.

These two reports give the most complete picture of the EMS and ODM electronics manufacturing services market worldwide.

Report#1: The Worldwide Electronics Manufacturing Services Market – 2024 Edition

The first report examines the 100 largest EMS companies and their position in the market. Features of this report include:

• Market Size and Composition
• Total Available Market (OEM)
• Market Forecasts, 2023–2028
• Financial Metrics and Benchmarks
• Contains over 1,140 manufacturing locations
• Analysis of 57 countries and 46 product segments

Find our brochure with further details here

Report #2: The Worldwide OEM Electronics Assembly Market–2024 Edition

The second report examines the total available market (TAM) by OEM company and includes many performance metrics such as:

Product Segment Analysis, 2023

• Automotive
• Communications
• Computers/Peripherals
• Consumer Electronics
• Industrial/Medical
• Aerospace/Military/Other Transportation

COGS Assembly Revenue, 2023

• 381 OEM Companies
• Outsourced/In-House Assembly Revenue Assembly by Company and Product
• Revenue by 3 Regions
• Assembly Revenue by 46 Products

Click here for our OEM report brochure with more details

Special 25% Discount

When you order these reports before January 17, 2025, your price price is $6,000 – a discount of 25%! (Sold separately, these two reports sell for $7990.)

To order, please call your order in at the number below or send a message via our Contact page form ASAP. I can’t wait to share our findings with you via this special offer.

I look forward to hearing from you.

Sincerely,

Randall Sherman

Publisher
New Venture Research
www.newventureresearch.com/
Tel. 1-530-265-2004

The post Limited-Time Discount On Our Two Most Popular Reports appeared first on New Venture Research.

Manufacturing Market Insider, a newsletter specializing in the EMS (electronics manufacturing services) industry, has released its annual MMI Top 50 list of the world’s largest EMS providers. In 2022, Top 50 sales accounted for $457 billion in revenue—an increase of $40 billion from 2021, or 9.5%. MMI tabulates its ranking information through an annual survey of over 100 of the largest EMS companies worldwide.

Top 50 sales expanded dramatically from the previous year, exceeding the growth of the OEM market by more than double. It was an outstanding achievement, largely among the top ten mid-tier EMS manufacturers.

In recent years, Top 50 expansion has received a boost from EMS giant Hon Hai Precision Industry (Foxconn) because of its size and strong growth rate. This year, Foxconn’s revenue depressed the total industry growth by only expanding 0.6% in 2022. Industry participants cannot expect the company’s revenue to continue to expand at double-digit rates, as these large numbers are difficult to sustain compared to those of Tier 2–4 suppliers, which have grown rapidly over the last few years due to acquisitions.

An example of this was Pegatron which experienced negative growth in 2022 of –0.2%. But better results were reported by Wistron, which achieved positive 7.1% revenue growth, along with Jabil, which experienced 15.1% revenue growth, moving it into a third-place position in the industry. As far as the fastest growing companies, GPV Group ranked in first place with y-o-y growth of 65.1 percent, followed closely by Kitron with growth of 56.3 percent, Kaga Electronics with growth of 55.6 percent, and DBG with 43.9 percent growth. All MMI international currency conversions are based on average annual conversion rates established by the U.S. Federal Reserve.

Overall, the APAC region accounted for around 77.6 percent of the Top 50 EMS revenue, the Americas represented 20.4 percent of revenue, and the EMEA region constituted 23.1 percent, mainly due to extensive activity in acquisitions. It took a minimum of $444 million in sales to make the Top 50—an increase of $12 million in revenue.

For 2022, the top 10 accounted for 89.0 percent of Top 50 sales, down from 92.8 percent in 2021, still illustrating that the EMS industry remains top-heavy. The bottom 40 together produced an excellent 12.2 percent growth rate, increasing from $44.5 billion in 2021 to a reported $50.0 billion in 2022

In addition to ranking providers by 2022 sales, the MMI Top 50 listing includes sales growth, previous rank, number of employees, number of plants, facility space, space in low-cost regions, number of SMT lines, and customer data. This special data was published in the March 2023 edition of MMI, and in April the newsletter will include market segmentation data obtained from the MMI survey. Contact the publisher for the purchase of individual reports.

Founded in 1990, Manufacturing Market Insider is a monthly newsletter providing dedicated coverage of the EMS industry, and is a division of New Venture Research Corp. For more information, please see www.mfgmkt.com/.

The post Manufacturing Market Insider Announces the Top 50 EMS Providers for 2022 appeared first on New Venture Research.

OEMs still dominate the majority of assembly production despite the terrific gains contract manufacturers have made over the years. Both EMS firms and ODMs will experience the strongest growth from production in the industrial and automotive market segment. Specifically, EMS companies will find good growth in industrial and medical products, while ODMs are projected to experience a return to growth in cellular servers, storage systems, and smart home, wearable, and A/V equipment.

The largest market in size is the communications segment, with its dominance by smartphones that has overshadowed the computer market. The computer market will always see growth driven by upgrades and new developments such as generative AI that will be demanding more raw compute power and storage. The consumer market ranks third and is sustained by strong demand for digital TVs and monitors. The industrial market ranks fourth in size, followed by the automotive and aviation/defense/other transportation segments, and lastly by the medical equipment market. Together, these market segments for electronics product assembly totaled approximately $1.5 trillion in assembly revenue and will grow to $1.8 trillion or higher during the forecast period.

New Venture Research (NVR) has followed this industry for over 30 years and is pleased to offer our latest update on this continually expanding market. Our report, The Worldwide Electronics Manufacturing Services Market – 2025 Edition, is the most comprehensive market research report on the EMS industry. This analysis focuses on the leading players, growing market segments, total available market (TAM), and emerging manufacturing opportunities and technologies by numerous products and countries.

The Worldwide Electronics Manufacturing Services Market – 2025 Edition, is the product of hundreds of hours of research. The report sells for $3995, with extra single-user licenses at $500 and a corporate license at $1500. This report is available in PDF format and is delivered by email. An Excel spreadsheet of all data and tables may also be obtained for an additional $1,000.

Also available: The Worldwide OEM Electronics Manufacturing Market – 2025 Edition

The post The Worldwide Electronics Manufacturing Services Market – 2025 Edition appeared first on New Venture Research.

The table below summarizes electronic assembly production value, both outsourced and performed in-house, during 2021 by market segment. The same data is available by region (Americas, EMEA, and APAC), and by OEM company. Nearly 390 OEM companies were profiled.

NVR has tracked the electronics assembly market for over 25 years, producing research reports that focus on all aspects of this industry. This special report summarizes all electronics production across three primary geographies (Americas, EMEA, APAC), seven market segments, and in-house versus outsourced production among 46 unique product application areas. The report’s market/product segments include:

• Automotive (ECU, instrumentation, safety, entertainment)
• Communications (smartphones, cellular infrastructure, other phones, enterprise LANs, wireless LANs, DSL/cable modems, PBX/CPE, carrier-class switches, and other telecom devices)
• Computers/Peripherals (notebooks, desktops, tablets/e-readers, servers, workstations, enterprise systems, monitors, printers, other computer products)
• Consumer Electronics (digital TV, MP3/4, smart home/AV/wearables, games, set-top boxes, camcorders, DVD/DVR, digital cameras, other consumer devices)
• Industrial (process control instrumentation, test and measurement, other industrial, and clean energy)
• Medical (diagnostics, pharmaceuticals, surgical, and monitoring)
• Aerospace/Military/Other Transportation (in-flight entertainment, flight navigation [commercial and military], weapons, C3, other military, other transportation)

Production data is ranked by leading OEMs within each product/market segment and includes:

• COGS Assembly Revenue
• Electronics COGS Assembly Revenue
• Outsourced/In‐House Assembly Revenue
• Assembly Revenue by 3 Regions
• Assembly Revenue by 46 Products

The almost 390 leading OEMs surveyed were chosen not only for their size but also for their leadership within their industry/product segment and their market share. For example, in the smartphone sector, the OEM database ranks 17 manufacturing companies in terms of COGS production value, product and market share, and with whom and where manufacturing takes place.

This database (Excel) report is the only available source of market share information on OEM electronics production for both in-house and outsourced assembly. The report contains over 64 Excel tables and PowerPoint slides. For more information, contact Karen Williams at New Venture Research at 408‐888‐5667 or visit www.newventureresearch.com.

The post The Worldwide OEM Manufacturing Assembly Market – 2023 Edition. appeared first on New Venture Research.

Top 50 sales expanded dramatically from the previous year, exceeding the growth of the OEM market by almost double. It was an outstanding achievement, largely among the top ten EMS manufacturers—Foxconn, Pegatron, Wistron, Jabil, Flex, BYD Electronics, USI, Sanmina, New Kinpo Group, and Celestica—which had growth rates ranging from –1.8% (Flex) to 35.5% (BYD Group). Tier 2 EMS companies also achieved impressive results in 2021. Connect Group had a growth rate of 274 percent and DBG grew by 141 percent. These were followed by LACROIX, which at the end of the year purchased Firstronic (62.8 percent), Creation Technologies, benefiting from its acquisition of IEC Technologies (58.3 percent), Orient Semiconductor Technologies (47.9 percent), BYD Electronics (35.5 percent), SMT Technologies (31.3 percent), and SIIX Corporation of Osaka, Japan (30.1 percent). KATEK SE grew by at least 25.6 percent. Foxconn reportedly achieved revenue growth of 10.9% from 2020 to 2021 and accounted for almost half (48%) of the Top Ten revenue. All MMI international currency conversions are based on average annual conversion rates established by the U.S. Federal Reserve.

Overall, the APAC region accounted for around 82.0 percent of the Top 50 EMS revenue, the Americas represented 16.0 percent of revenue, and the EMEA region constituted 1.9 percent, mainly due to extensive activity in acquisitions. The EMEA region has been a main beneficiary of the communications and computer replacements and upgrades that took place in 2021. The medical equipment market expanded strongly for all three regions, as did the automotive market due to surging interest in EVs.

In addition to ranking providers by 2021 sales, the MMI Top 50 listing includes sales growth, previous rank, number of employees, number of plants, facility space, space in low-cost regions, number of SMT lines, and customer data. This special data was published in the March 2022 edition of MMI, and in April the newsletter will include market segmentation data obtained from the MMI survey. Contact the publisher for the purchase of individual reports.

Founded in 1990, Manufacturing Market Insider is a monthly newsletter providing dedicated coverage of the EMS industry, and is a division of New Venture Research Corp. For more information, please see www.mfgmkt.com/.

The post Manufacturing Market Insider announces the Top 50 EMS companies worldwide appeared first on New Venture Research.

The focus of this report is primarily on the original equipment manufacturer (OEM) market in China. These companies are often, but not always, large corporations that perform electronics assembly of products using their own brand or label. While they often outsource the actual assembly of their products, OEMs design and ultimately own the intellectual property rights to their products. The forecast of assembly value (or electronics cost of goods sold, COGS) of this category of manufacturing supplier is shown in Table 1. In 2020, the total market for OEM suppliers was about $201.1 billion, accounting for more than 58 percent of the total China electronics market. OEMs will grow through 2025 at a CAGR of 3.6 percent, to a total of $240.5 billion. However, its percent of the total market will decline slightly as more suppliers rely on contract manufacturing, and especially EMS, firms.

China holds a unique position in the global electronics industry sector. It possesses, simultaneously, the largest manufacturing capacity for every type of electronics product made, and nearly the largest consumer market of those products. Also, as a partner for electronics corporations from around the world, the country is, at once, the best location for establishing manufacturing and assembly facilities and a very difficult place for foreign-based corporations to do business. On the plus side, China has a seemingly infinite supply of engineering and design talent available at relatively low wages (although that advantage has nearly disappeared in recent years), and a low-cost supply base for components and well-organized infrastructure for providing a supply chain to assemble component parts into finished goods, and for shipping those goods to anywhere in the world. The downside, however, of basing one’s manufacturing in China means partnering with the centrally controlled government, known for negotiating contracts favorable to its domestic competitors and which is regularly accused of conducting unfair trade practices and outright theft of intellectual property.

The total China OEM market was nearly $201.1 billion in 2020 and will grow to $240.5 billion by 2025, a CAGR of 3.6 percent, more than three times the rate of growth of COGS outside China. Computers will be the fastest growing industry segment as the industry recovers from a shortage of semiconductor components, caused by the pandemic, and a gradual shift away from consumer electronics products. Thus, computer products will grow fastest with a CAGR of 7.6 percent. The communications sector will also grow sharply, though slightly less quickly, at a CAGR of 6.9 percent. Medical and automotive products will also grow at a CAGR of 6.7 percent and 6.0 percent, respectively. Consumer products are by far the largest industry segment for China OEMs in 2020. However, in part because of increasing outsourcing among consumer OEMs to large EMS firms, the growth of this industry segment will be much slower—just 2.3 percent CAGR.

OEMs profiled in this report include many of the largest electronics companies in the world, and virtually all of them operate in China. The leading OEMs with assembly facilities in China include household names: Samsung, Sony, Panasonic, and Robert Bosch. However, China-based OEMs dominate within the China domestic market. Table 2 shows the China-only revenues of the top ten OEM suppliers operating in China in 2020. Although there are hundreds of OEMs manufacturing in China, the top ten alone accounts for more than half of revenues earned through operations in China, and based on 2020 revenues, eight of the top ten OEMs in China are headquartered in China.

For more information, see https://newventureresearch.com/wp-content/uploads/China-OEM2021-RS.pdf/ or visit NVR’s website at www.newventureresearch.com.

The post New Venture Research Examines OEM Electronics Manufacturing in China in New Report appeared first on New Venture Research.

Figure 1 The Worldwide CM Market ($M), 2015–2020

Source: New Venture Research

The CM market was sustained by the strong demand for notebooks, servers, and smart phones, and capital spending in wireless infrastructure and enterprise LANs was driven by the building of various 5G wireless networks. Computer notebook growth was still increasing and the computer industry as a whole (which includes servers and workstations) will see above-average growth as growth in computer replacement and upgrades expand. Additional high growth rates for electronics assembly products were found in the medical and industrial markets. Unfortunately, the COVID pandemic negatively affected the transportation sector (automotive and aerospace), as well as certain consumer electronics products, due to the fear of travel and a decline in disposal income.

The impact of COVID-19 on the contract manufacturing services market caused declines in mainly the first and 2nd quarters with regard to orders. The transportation industry was negatively hurt as air travel and vehicle commuting almost come to a halt and it will take at least another year to fully recover presuming the vaccines proves successful. In 2021, the retail sector is expected to rebound as demand for consumer electronics (TVs, wearables, smart home devices) spending increases over the next five years.

For the eleventh year in a row, the industry was profitable, at $11.4 billion (for 35 EMS public companies and 15 ODM public companies). Foxconn accounted for a little over one-third of all the money made by the EMS industry in 2020, down from approximately half of earnings over the last several years. Luxshare Precision ranked second in total earnings ($1.3 billion), followed by Delta Electronics ($1.1 billion), Quanta Computer ($614 million), and Wistron ($491 million). Figure 2 presents the total available market (TAM) for electronics assembly in 2019 by segment.

Figure 2 The Worldwide Market for Electronic Products Assembly by Market Segment, 2020 ($1.4T)

Source: New Venture Research

The COVID pandemic initially depressed the EMS industry starting in the 1Q20 with work slowdowns and the implementation of new organization protocols for virus safety. In early 2Q20, orders were being cancelled or postponed as industries like automotive were having trouble obtaining parts. But it was the 4Q20 that the downturn experienced a recovery and the total CM market recorded a positive gain.

In 2021, the NVR report profiled 104 large CM companies ($100 million+ in revenue) dominated by the computer, communications, and consumer market segments, while medium-sized and small CM companies excelled in the automotive, industrial, medical, and military/defense/other transportation industries.

The Worldwide Electronics Manufacturing Services Market – 2021 Edition is over 600+ pages in length, and examines the leading EMS and ODM suppliers across 51 countries, 46 product industries, and more than 900 manufacturing locations. For more information, contact Karen Williams at New Venture Research at 408‐888‐5667 (kwilliams@newventureresearch.com) or visit www.newventureresearch.com for more details.

The post The Worldwide Electronics Manufacturing Services Market – 2021 Edition appeared first on New Venture Research.

OEM20 chart

The worldwide electronics assembly market has experienced continuous growth over the last 20 years, stimulated by the trend to outsource electronics assembly to EMS (electronic manufacturing service) and ODM (original design manufacturer) companies. NVR has tracked the electronics assembly market for over 20 years, producing research reports that focus on all aspects of this industry. This special report summarizes all electronics production across three primary geographies (Americas, EMEA, APAC), seven market segments, and in-house versus outsourced production among 46 unique product application areas. The report’s market segments include:

• Automotive
• Communications
• Computers/Peripherals
• Consumer Electronics
• Industrial
• Medical
• Aerospace/Military/Other Transportation

Production data by leading OEMs within each product/market segment include:

• COGS Assembly Revenue
• Electronics COGS Assembly Revenue
• Outsourced/In‐Housed Assembly Revenue
• Assembly Revenue by 3 Regions
• Assembly Revenue by 46 Products

The nearly 390 leading OEMs surveyed were chosen not only for their size, but also for their leadership within their industry/product segment and their market share. For example, in the smart phone sector, the OEM database ranks 24 manufacturing companies in terms of COGS production value, product and market share, and with whom and where manufacturing takes place.

This database report is the only available source of market share information on OEM electronics production for both in-house and outsourced assembly. The report contains over 64 Excel tables and 86 pages of PowerPoint presentations. For more information, contact Karen Williams at New Venture Research at 408‐244‐1100 or visit www.newventureresearch.com.

The post The Worldwide OEM Manufacturing Assembly Market – 2021 Edition. appeared first on New Venture Research.

What the years have wrought

After years of lackluster growth, the semiconductor industry had a breakout year in 2018. During a year of double-digit growth, the global semiconductor market posted record sales of $469 billion, according to the Semiconductor Industry Association (SIA). The IC packaging market segment, which New Venture Research (NVR) has tracked for more than two decades, likewise did very well, growing by more than 13% and generating close to $70.3 billion.

Beginning near the end of 2018 and through most of 2019, however, the semiconductor industry faced an abrupt reversal, with global sales unexpectedly contracting by double digits. There were, perhaps, a number of factors that created the downturn, including general uncertainty in global economies. While the U.S. economy was in the midst of a record-breaking expansion, many other countries were not doing so well. The global trade war set off by the Trump Administration had been particularly destructive to markets in Asia and especially China, where worldwide IC manufacturing is concentrated. Coupled with such external factors, were a number of internal supply and demand issues. The greatest immediate factor in the contraction was oversupply of devices, with memory leading the downward spiral. Naturally, the IC packaging market was also impacted, but packaging is a more dynamic market, especially among advanced packaging products, and the market segment continued to grow, but at a modest 3%, reaching $72.3 billion.

Fortunately, by the end of 2019, the overall market appeared to be recovering, despite continuing uncertainty in trade relations between the U.S. and China. The sharp decline of the first half of 2019 had softened, and we (and others) expected to see modest to strong growth return in 2020, followed by even stronger growth in the years to follow. For example, at the end of 2019, the SIA’s respected WSTS forecasted that the semiconductor industry would grow by 5.9% in 2020. We were not quite so optimistic; NVR’s reports, forecasted IC devices would grow by only about 2%, and that the worldwide packaging market segment would grow by 4.7% in 2020. However, regardless of the specific numbers, there was a general expectation that 2020 would be the start of a new expansion in the entire electronics sector.

Alas, the expansion was not to be. With a suddenness that shocked the global economy, the novel coronavirus created a whole new reality. First striking in China, and quickly spreading around the globe, the COVID-19 pandemic forced countries to effectively close up shop one after another. As with virtually every sector of the global economy, the impact on the semiconductor industry was quite significant, and wreaked havoc on the carefully structured forecasts of market researchers everywhere.

The silver lining, if it exists, is that some (but by no means all) economists are expecting a return to growth in the second half of the year – resulting in a so-called V-shaped recession. In terms of the semiconductor market, as China and other Asian countries, where the majority of devices are manufactured, reopen their economies, industry observers agree that growth will definitely be slower this year than what was originally anticipated. How much slower, however, is still open for debate. In June, the WSTS published its forecast for the semiconductor industry that anticipates an annual growth of 3.3% to $426 billion (down from 5.9%). Other analyses are not quite so sanguine. Gartner Research, for example, published a forecast in April that forecasted that the market will decline by –0.9% percent in 2020, down from their previous forecast of 12.5% growth for the year. We suspect that the reality will be somewhere in between the optimists (SIA) and pessimists (Gartner).

So, what went wrong with all those rosy forecasts? Why could the people who are expected to know where the market is heading not anticipate where the market would head? And more importantly, why should anyone believe our predictions, now? I’m going to let you in on a secret known only to analysts in my field: market research is not rocket science. OK, this is obvious. Markets do not obey fixed laws of physics; outside or unexpected events—such as the emergence of a new disease that leads to a global recession—can never be factored in before the fact. Even without having something quite so catastrophic take place, there are numerous factors that can only be understood in the perspective of hindsight. With this understanding about the reliability of market research forecasts in these uncertain times, the remainder of this article will present some thoughts and, yes, some updated forecasts from NVR’s own research into the IC packaging market.

Current trends in IC packaging: tentative forecasts, at best

Modern IC packaging products are extremely diverse, encompassing numerous packaging products ranging from simple 3-pin plastic transistor outline (TO) packages—originally designed for discrete devices, but sometimes used for analog ICs such as amplifiers and voltage regulators—to plastic or ceramic IC packages equipped with hundreds of solder “bumps” arrayed across the surface of the package (such as ball grid arrays [BGAs] and fine-pitch BGAs [FBGAs]), to complex multi-chip packages with a thousand or more I/O connections (e.g., system in package (SiP) devices).

As noted earlier, the growth rate for the worldwide IC packaging market was accelerating coming into 2020. But the emergence of COVID-19 put the brakes on the growth during the first half of the year. Still, as the economies of China and other countries begin to restart, we expect at least some of that lost momentum will return. At the end of 2019, NVR forecasted the packaging market would grow at a healthy 4.7%, in this year. However, based on current trends, we anticipate that the overall packaging market will grow by just 2.5% (Figure 1). Presumably, the second half of the year will see improvement, but real recovery will not take place until 2021, as the global economy emerges from the effects of the current recession.

Figure 1 – Total IC Packaging

Of course, the situation is still very much in flux, and this forecast presupposes that a vaccine for COVID-19 will have been developed and that pent-up demand takes hold to return to “normal” economic conditions. In truth, the full impact of the coronavirus is still unknown. There are countries where the disease is still not under control – most notably and ominously, at the time of this writing, in the United States. Unless and until a viable vaccine is widely available, no one can predict with certainty what may happen in the coming months, if then. Also, there is debate whether the recession will be V-shaped, with a rapid recovery once the coronavirus has been mastered, or U-shaped reflecting hidden weakness in the economy that predated the pandemic. Moreover, disease is certainly not the only cataclysm that can – without notice – negatively impact the marketplace. One will recall the earthquake and tsunami that struck Japan in 2011 and led to significant months-long adverse effects in the electronics supply chain.

On the other hand, it would be incorrect to conclude that current (and even previous) forecasts are without value. The point is that while we can rely, generally, on the direction that the market is taking, it is times such as these that require closer attention to the details—and not merely seeing only the forest, as it were.

Naturally, total market forecasts provide value; they point out the direction that the industry is moving. But the most valuable information lies in the details (or to carry the analogy further, in the trees) in the many market segments that make up the total market. In the case of IC packaging, the trend (or more to the point, the money) is in advanced packaging types. Take for example the BGA/FBGA market segment. First developed in the 1980s, this substrate-based packaging format is both more flexible, and less costly per I/O than other formats and has come to be the most widely used. The packaging type accounted for nearly a quarter of all IC packaging shipments in 2019, and as shown in Figure 2, nearly two-thirds of all revenues generated in the market.

Figure 2 – packaging types market share

Moreover, the more advanced FBGAs are particularly dominant, owing to their breadth of possible applications. FBGAs have an I/O-count ranging from four I/Os to more than 2,500 I/Os, and their size is quite small relative to the number of I/Os that they are capable of supporting. These characteristics alone make FBGAs an ideal packaging type to be used with the most advanced 3-D packages, multi-chip modules and system-in-packaging (SiP) formats. No wonder, despite the size of the market segment (with shipments exceeding 60 billion units in 2019), they continue to capture an increasing market share. In fact, only wafer-level packaging is growing at a faster pace than FBGAs, and for much the same reason: chip-scale package (CSP)-size, relatively inexpensive to manufacture, relatively high I/O-counts, and with the added factor of starting from a smaller installed base. These segment trends, as well as many others, on top of the broader industry trends continue irrespective of the wider economic impact of COVID-19 or the recession it has initiated. Helping to understand these trends within trends is the function that market research—with its many tables and figures—provides.

Application markets: the change will be small

The societal impact of COVID-19 has been most obvious in the use of widespread shelter-in-place orders in many countries. People are working from home as never before. Students are getting their schooling online, rather than in the classroom. Cars are left in driveways and garages everywhere, and rush hour (for those who still must drive for their essential services) is a breeze. All these changes have also had a small but measurable impact on applications for IC devices.

An important segmentation of our packaging reports has been the applications for which ICs are ultimately used. In our reports, we identify five major application categories: consumer products, automotive applications, computers and peripherals, communications, and industrial and other applications (Table 1). In recent years, the main drivers of the growth in the IC market have remained largely consistent, although we have monitored gradual changes over time. For example, while demand for once-hot mobile products like smartphones and tablets appears to have leveled off (and even declined, in the case of tablets), other product applications are driving semiconductor manufacturers in new directions. The automotive industry has seen an uptick in demand as auto manufacturers have begun to look at futuristic features such as autonomous vehicles and sophisticated safety and comfort features. In the communications sector, networking providers have finally begun to expand into 5G networks, which may eventually lead to a resurgence not only for the communications infrastructure, but for a new generation of smartphone and other mobile devices. And further out, the Internet of Things (IoT), artificial intelligence (AI), and machine learning (ML) are the markets that will drive future growth in the semiconductor industry.

Table 1

All of these macro trends pre-date the current crisis and in many ways will reassert themselves once the industry returns to “normal.” Meanwhile, we have observed some striking consequences of the virus-caused recession. The computer and peripherals application category, while an obviously dominant application for ICs, and therefore IC packaging, has not been particularly dynamic in recent years, as, say, communications have been. Yet, with the sharp increase in stay-at-home workers and students, there has been a small, if temporary, increase in this segment (we estimate close to 2% in 2020), mostly at the expense of automotive and consumer markets, both of which have seen a drop in sales due to the abrupt halt to economic activity.

The long-term trend remains, however, and computer applications are gradually losing market share, primarily to communications and industrial/other applications (Figure 3). Nevertheless, the impact is measurable and will endure for several years to come. We expect the market share of computers to be about a half percent higher in 2023, than we had forecasted in our pre-COVID-19 forecasts.

Figure 3 – Applications by share of Packaging Revenues

Summary

Considering all the “adjustments” NVR (and other organizations) have made to estimates for the industry in the past six months, can it be said that our initial forecasts for 2020 were wrong? Well, yes. In the hard glare of reality, that fact cannot be denied. Moreover, looking at the record of high-tech market research, market forecasts are often wrong. But here’s the thing: despite the presentation of detailed tables and figures showing multiple years of growth for any given market, in the final analysis, they are merely estimates based on known historical trends coupled with assumptions about future supply and demand, technological progress, and a myriad other factors that go into selling products and services. They are, in effect, educated guesses that (and here’s the important thing) tell a story about how the product will grow over time. And when an invisible foe suddenly appears, or looking farther back in time, when the bottom suddenly falls out of the housing market, or when terrorists strike at the heart of our financial industry, when any of these unexpected calamities occurs, it throws a large wrench into the workings of our carefully thought out forecasts.

So, if forecasts are so easily upended, does that mean that market research is not useful? As I just pointed out, the point of market research forecasts is to tell a story. Events big or small may well change individual forecasts, but in the long term, what is most valuable are the trends and long-range impacts that are revealed in those forecasts—in other words, the narrative that emerges from the data we present. Product managers and executives rely (or should do so), not merely on whether the IC packaging market will grow by 4.7% or 2.5% in 2020. Rather, what is more crucial to long-term success is understanding how the various market segments interact, thereby allowing us to see both the forest and the trees.

Biography

Jerry Watkins is Senior Research Analyst at New Venture Research, Nevada City, CA. He has more than 20 years of experience as both writer and manager at leading market research and consulting firms such as Frost & Sullivan, Lucid Information Services, and NSI Research. He has authored numerous syndicated reports on a variety of technologies, including telecommunications, office automation, merchant embedded computing and more recently in semiconductor packaging markets. He holds a BA in History and an MA in International Relations and International Management. Email jwatkins@newventureresearch.com

SOURCE: Chip Scale Review

The post Market research in uncertain times: the forest, or the trees? appeared first on New Venture Research.