$231 bn in worldwide contract manufacturing forecast for 2005
1 August 2001
News
Contract manufacturing services will continue to grow for the foreseeable future. The worldwide market will more than double from $103 bn in 2000 to $231 bn in 2005, according to a recent IDC report. The increase in scope of these services is a major driver of the market's growth, it says. CM services debuted in the mid-1970s to handle the overflow of board assembly in the technology sector, but today have grown to include industrial design and enclosure services, global distribution and logistics services, and warranty and repair services, to name just a few.
"The contract manufacturing services industry has significantly evolved in the last decade. The industry has moved from being one-stop shops to providing services for almost every aspect of the manufacturing supply chain," said Kevin Kane, Manager of IDC's Contract Manufacturing Services research program. "Today, the ultimate goal of a contract manufacturing vendor is to become a critical partner of a branded system vendor, and providing additional services helps to further integrate the contract manufacturing vendor into a branded vendor's business."
According to IDC, the most successful vendors in the market, based on revenues, are Solectron and Flextronics with 2000 market shares of 13,7 and 11,8%, respectively - no other vendor's market share was over 10%. The computer and telecommunications sectors of the IT industry represented the largest opportunity for contract manufacturing services in 2000, which together accounted for 46% of industry revenue. The IT marketplace has changed dramatically since, however, and IDC expects industry revenue will become more evenly distributed among all IT sectors by 2005.
North and South America together represent the largest geographical opportunity for contract manufacturing services. IDC reports that through 2005, they will account for more than 55% of the market's revenue, with Europe and Asia representing the fastest-growing regions.
www.idc.com
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