Outsourcing offers significant market opportunities

Oxford, UK, July 2005

Despite significant restructuring following the downturn in 2002 and 2003 the European contract assembly industry remains one of the most importnat sectors within the electronics market. Following the recovery in 2004 the West European CEM industry, according to the latest research from RER, will expand from Euro 19.7 billion to Euro 47.1 billion in 2009.

Germany accounted for the largest share of the market in 2004 at 23%, followed by the UK at 18.1% and France 13%. All the larger companies have set up operations or extended their operations in the eastern European countries so that approximately 17% of the total European CEM activity is located in Eastern Europe with this forecast to be approaching 20% by 2009.

The computer segment accounted for the largest share of the market in 2004. Automotive continues to be one of the fastest growing sectors, a trend which is expected to continue throughout the period to 2009. Another important sector remains industrial which provides a major opportunity for smaller to medium-sized CEM companies. There are few industrial applications with extremely large volumes, where competition would be feared from larger companies. Despite smaller volumes the larger companies are looking to increase their presence within the industrial area with the trend to establish business units to focus on specific market areas, such as medical.

Although the underlying trends which are driving the move to outsourcing will continue and underpin strong growth the structure of the European CEM industry will continue to evolve. In 2004 the industry was still dominated by the leading 10 companies, accounting for an estimated 64%. However, their dominance has receded as the major tier one Companies scale down their production activities in Western Europe . Europe’s strength in automotive and industrial, including medical, has helped the small to medium sized European CEMs, and in particular those companies specializing in low-volume high-mix assembly, to report healthy growth.

Reed Electronics Research (RER) specialises in providing international business information sources designed to assist senior management, marketing and business development personnel, industry watchers and analysts in keeping abreast of changes, developments and other factors affecting their business. RER is part of the global Reed Electronics Group a part Reed Business Information a leading provider of critical information and marketing solutions to business professionals and a member of Reed Elsevier.