Find electronics services: (888) 860-1193

Questions surface on 2009-2014 global EMS industry forecast Letters to the Editor

We received a note from the CEO of Hong Kong-based EMS provider VTech Communications seeking clarification on some key points in a recent article I wrote discussing the worldwide EMS forecast (2009 through 2014). That letter, with explanation, follows:

Dear Mark,

I am one of the readers of

I have read every single article released by you in the past two years.

In your recent article (November 15), on the above topics, the global forecast of EMS business are projected as $136B, $168B and $185B in 2009, 2010 and 2011, respectively. (See: ‘Worldwide EMS / ODM five year forecast’)

To my understanding, the top 50 players of the EMS market accounts for more or less 90% of the total EMS business. As most of the top 50 EMS players are public-listed and we can get their top line figures easily.

It is therefore not a difficult job to work out the exact global market size of the EMS industry by adding the turnover of these top 50 players together.

Based on the collected figures from these top 50 players, the size of the  global market of EMS industry should be in the range of $90B to $110B.

I wonder why there is differences between these figures and the figures generated from your latest article? It would be appreciated if you could advise the source of your figures?

Andy Leung
VTech Communications, Ltd.


In preparing this response for Mr. Leung, also reached out to Michael J. Palma, senior
 research analyst,
 consumer device semiconductors and electronics manufacturing services (EMS) with leading research firm IDC, whose firm is attributed with the article’s research.

In appreciating Mr. Leung’s comments, while also acknowledging the basic thought process Mr. Leung states in his query is appropriate, Palma’s take on this is the situation is a bit more nuanced than one might assume when creating forecasts.

“The largest EMS companies’ share of the market varies by product segment. In the more established segments, the named companies I track generally account for between 85% to 95%,” says Palma.

In other segments Palma tracks, the named companies account for a far lower share of total revenues, as low as 40%.

Palma goes on to state that while, generally, this concentration is increasing, there are still a large number of mid-sized and smaller firms active in these segments.

“Overall, the named companies’ share fluctuates based on the mix of product segments. These segments’ share of the total market vary from quarter to quarter, based on different demand patterns,” he adds.

For 2009, Palma’s research reveals the named companies accounted for less than 80% of total revenues while for the first half of 2010, the share is just over 80%.

“Therefore, it is critical to understand the named company revenue contributions from the different segments, to get an accurate view of the market size for the industry,” says Palma.

Meanwhile, without the actual data on product mix, faulty assumptions can be built into market sizing.

On this note, one of the ‘checks’ Palma performs is to also review total available market (TAM) penetration and end-market demand by market segment to understand the total market. “This way, I arrive at a market size through two different calculations.”

Talking further, Palma warns, “It is difficult to project market size by just adding projected revenues for the named companies.”

Indeed, forecasting future individual company performance can be challenging.

“I base my forecasts on penetration rates and end-market demand forecasts, which has proven to be an accurate forecasting methodology.”

Submit your Letters to the Editor, Opinions

What's on your mind?

Join GlobalNet for free and post in the discussion.  When you log in, you can comment and post your own discussions.

Add your comment


Leave a Reply

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

TIP: Anyone can post article comments whether or not you are registered. But, if you register or log in you can attribute your posts to your user profile in GlobalNet Community.

Your email address will not be published. Required fields are marked *



You might also like:

Webinar: Hardware Cybersecurity Risks - Register Now!

About is the leading online destination helping electronics OEM outsourcing decision makers make more informed decisions and reduce risk. We offer educational Webinars, thousands of original articles and helpful tools, a community of influencers who understand the challenges facing your company today, and a comprehensive directory of electronics provider services.

Copyright 2014 Venture Outsource, LLC. All Rights Reserved
The material on this site is for informational purposes only and is not a substitute for legal, financial or professional advice. Distribution and use of this material are governed by our User Terms Agreement and by copyright law. By using our Website you agree to site Terms and Privacy policies. For questions please contact at 1-888-860-1193 or visit