Not in any particular order. Happy New Year everyone!
# The amount of time it takes technology used and deployed by EMS manufacturing industry to catch up to the technology used and deployed by OEM equipment companies will extend to 24 to 30 months this year, compared to the 18 to 24 months previously, and based on hundreds of electronics industry discussions.
# EMS M&A transactions among EMS providers with revenues less than $500 million will be predominantly consolidations compared to vertical integrations.
# European electronic OEM product manufacturers with product consumption in the US and, seeking EMS factories on US soil, will continue to favor non-European-headquartered EMS companies – even if those European EMS companies own divisions/factories on US soil – due to unusually high debt|equity ratios for many European EMS companies.
# EMS providers serving non-traditional markets currently have higher likelihood of being less leveraged. This will likely continue for the foreseeable future.
# Significant jump in acquisitions (transactions) in the lower EMS tiers (sub $100 million) as rising energy costs, rising operating costs and rising taxes eat into profits, especially poorly-run EMS firms. Will be a buyer’s market.
# A tier-2 EMS provider will deploy real artificial intelligence capability, not just machine learning and SEO marketing speak, a result of prodding by existing customers, or one large new prospective customer as a condition of signing. The AI solution deployed will be from a third-party solution vendor, not created in-house by the EMS provider. Habitual fear of innovation and budgetary scarcity are long EMS demons. (More on this here. It’s a long read.)
# Increasing numbers of EMS manufacturers with revenues under $500 million will be open to mergers and acquisitions to grow top-line revenues, grow and diversify their customer base, and expand into new/more markets. Or, simply to sell to an interested buyer. EMS companies servicing non-traditional industries and offering profitably managed front-end services will be targets, for both sides.
# Electronics distributors will continue to acquire front-end design houses, and tier-5 and -4 contract EMS manufacturing providers in hopes to remain relevant as the components distribution industry sees more semi vendors grow their sales forces and go direct to OEM prospects.
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