**London**: The EMS industry is evolving towards greater supply chain resilience and flexibility, with leaders advocating for localized production to meet market demands. This shift, termed Regionalization 2.0, highlights collaborations for agility and transparency as companies navigate post-pandemic challenges and tariff disruptions.
The EMSNOW publication has recently highlighted an emerging trend within the electronics manufacturing services (EMS) industry, reflecting significant changes influenced by disruptions such as the COVID-19 pandemic and ongoing tariff conflicts. This trend is primarily focused on achieving greater supply chain resilience and flexibility, indicating a potential transition towards what the article refers to as “Regionalization 2.0.”
Markus Aschenbrenner, a Member of the Executive Board at Zollner, articulated this shift during an appearance on the IPC Podcast, MADE IN EUROPE, hosted by Philip Stoten. He noted the growing demand among multinational companies for localized supply chains to improve responsiveness to market needs. “Our customers are multi-national operating companies. They need to serve different markets. Right now they want to localize their supply chains so they can serve the markets faster,” Aschenbrenner said. His comments underscore a strategic pivot for Zollner towards establishing production capabilities closer to various markets.
Similarly, Bo Lybaek, President and CEO of GPV, echoed these sentiments, suggesting that the ripple effects from previous tariff disruptions are prompting a faster shift towards regional production strategies. “If we look at what is happening within our customers’ organizations, they are also decentralizing so they can be closer to their customers. So we are following their in region for region thinking,” he stated. This suggests a mutually beneficial alignment between EMS companies and their clients, as both are adapting to the changing economic landscape.
The article raises fundamental questions about the viability of achieving widespread agility within electronics manufacturing, a sector renowned for its complex operations. Historically, manufacturing capabilities have been centralised predominantly in Asia, especially China, raising doubts about whether such capabilities can be replicated in other regions. Despite the challenges, companies are exploring temporary solutions to facilitate this transition. For instance, Apple has reportedly commenced shipping 1.5 million iPhones out of India to circumvent tariffs, indicating a strategic effort to adapt supply chains in real-time.
However, achieving long-term agility will demand overcoming several hurdles, including the integration of advanced software systems for Industry 4.0, and establishing standardised processes across global operations. EMS companies have exhibited caution regarding the adoption of new technologies owing to past disappointments with software implementations. A focus on demonstrating tangible business cases and a thorough comprehension of manufacturing challenges will be crucial for future advancements.
The article also highlights the importance of collaboration within the component supply chain, which has previously been marked by mistrust between EMS providers and component manufacturers. Moving forward, transparency concerning forecasts and inventory management will be essential to bolster agility. The semiconductor industry, currently undergoing substantial shifts in business models due to tariffs and other factors, is an example of the complexity that needs to be navigated.
Furthermore, the commitment to educating both original equipment manufacturers (OEMs) and suppliers about the dynamics of supply chain agility forms a critical part of this developing narrative. The EMS industry has long championed the concept of “manufacturing as a service,” advocating for capabilities that facilitate production “Anyplace, Anytime, Anywhere.” The strategic alignment noted by executives such as Lybaek and Aschenbrenner hints at a consensus forming around the idea of “build in region for region.” This concept has gained traction within organisations and is informing decision-making processes across various levels.
As the EMS industry continues to adapt, the prospects of achieving a true capacity for “Anything, Anytime, Anywhere” appear to be more feasible, as leaders in the industry actively work to implement innovative solutions in response to the evolving market landscape.
Source: Noah Wire Services
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