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IT industry outlook (2): The roles and plans of EMS firms in Asia
Colley Hwang, DIGITIMES, Taipei 0

In addition to the rise of Chinese manufacturers in recent years, there are some EMS firms from countries in ASEAN. The amount of international news coverage on their business practices is relatively limited. To give our readers a general grip on these manufacturers, we will give a snapshot of their recent business initiatives.

Within Asia's EMS firms outside Taiwan, China-based BYD and DBG have become members of Apple's supply chain. BYD is a big company with annual revenues of over US$10 billion, and DBG has started to build new production bases in India, Bangladesh, and Vietnam. China's EMS manufacturers are hungry for orders and eager to cash in on any business opportunities from notebook, handsets or car electronics sectors. They take orders regardless of the size of the orders, and now they are expanding abroad where they are engaged in coopetition with Taiwanese firms. They pose the biggest threats to the Taiwanese supply chain.

Hong Kong-based Vtech, which focuses on niche market segments, takes outsourcing orders and also runs its own-brand business. It has production bases in Malaysia and Mexico. The Philippines-based Integrated MicroElec runs production mostly in Johor, Malaysia, and has deployed resources in India and Indonesia. Malaysia's ATA, Thailand's Hana and SVI are all key local players. Will the local magnates cooperate with Taiwanese enterprises or compete head to head against them?

Basically, Chinese EMS manufacturers start from computer and communication products, and gradually expand to vehicle and medical sectors. Since their patterns of development are quite similar to those of Taiwanese firms, it is inevitable for the two to compete head to head. As for the local EMS manufacturers in ASEAN, catering to local demands is their top priority. It is worth everyone's attention whether there leaves room for collaboration with Taiwanese manufacturers.

During the maturity stage of the industry, success lies in low error rates and competitive edges that the ecosystem and capital market can bring. Since some EMS manufacturers in China are not publicly listed, it is not easy to track various business indicators. Thanks to global capital financing support, Asia's local EMS firms are getting well developed, engaging one another in coopetition. DIGITIMES is well positioned to track and deliver first-hand information we gather from the supply chains.

Taiwan EMS/ODM take 75% of global sales (unit: US$m)

IT supply chain outlook

Note: Bracketed numbers and signs in "2020 Rank" column indicate changes in 2019 rankings.
Source: DIGITIMES Research, July 2021

(Editor's note: This is part of a series of analysis on the IT supply chain by DIGITIMES Asia president Colley Hwang.)

Colley Hwang, president of DIGITIMES Asia, is a tech industry analyst with more than three decades of experience under his belt. He has written several books about the trends and developments of the tech industry, including Asian Edge: On the Frontline of the ICT World published in 2019, and Disconnected ICT Supply Chain: New Power Plays Unfolding published in 2020.
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