The global economic crisis is certain to have an impact on outsourcing in the electronics industry. What’s not certain is whether the crisis will spur a new round in outsourcing or prompt a contraction among EMS (electronic manufacturing services) companies and ODMs (original design manufacturers).So far, projections for 2009 show a flat year for EMS providers and ODMs. “Based on projections of a zero-growth years for the global electronics industry, it is estimated that 2009 revenue in the EMS sector will be flat to less than 1% growth,” said Charlie Barnhart, principal at Charlie Barnhart & Associates in Hawaii. Barnhart notes that even in a flat year, outsourcing market share is shifting from EMS providers or CMs (contract manufacturers) to ODMs.
Barnhart’s research projects CMs will see growth that is flat to a 3% drop in 2009, while ODMs will see flat to a 3% growth. “This is predictive of a continuation in the transfer for market share from the CM to the ODM solution,” he said. Barnhart noted the movement of market share from CMs to ODMs could be further exacerbated by particularly weak economic growth in all G7 countries.
