Electronics manufacturing services (“EMS”) market comprises contract manufacturers that offer outsourced manufacturing and adjacent services to electronics OEMs. European players cater to a wide variety of B2B sectors including automotive, industrial, defence & aerospace, aviation, telecommunications and medical sectors.

The European EMS players are vastly different from their Asian counterparts in terms of production volumes and end-markets due to labour costs and different regulations. European providers focus on high-mix low-volume products (high emphasis on quality, small production runs and embedded systems), while Asian peers are prevalent in the low-mix high-volume segment (fewer types of assemblies and larger production runs, inherent for stand-alone electronics). This leads to a higher level of fragmentation in the European market with ~2,000 active players, of which ~80% generate less than €10m in sales. Nevertheless, the share of large-scale businesses is steadily increasing with ~60% of European EMS output attributable to businesses with >€250m in annual revenue.

Investor-led interest has been moderate, with >40% of identified players being sponsor-backed (February 2024). Investors are primarily attracted to (i) stable demand from the continued adoption of electronics and electrification globally, (ii) profitability improvements from investments in automation and AI and (iii) increasing outsourcing rates for electronics manufacturing driving demand for their services. On the flip side, (i) rising inventory levels for raw materials and (ii) structural labour shortage may act as detractors for investors.

ESG topics primarily relate to environmental and social aspects. Herein, environmental topics relate to greenhouse gas emissions generated by electricity-heavy manufacturing operations and transportation. As such, players are implementing low-emission manufacturing processes and adopting the materials of recycling and recovery schemes. On the social side, the key topics relate to responsible supply chain and safe working conditions.