**London**: The EMS industry is shifting towards regionalisation and enhanced supply chain resilience in response to the pandemic and tariff challenges. Industry leaders advocate for localised operations, leveraging technology and collaboration to address market demands and improve efficiency in manufacturing processes.
The landscape of the electronics manufacturing services (EMS) industry is undergoing significant transformation, influenced by disruptions stemming from the COVID-19 pandemic and ongoing tariff challenges. Recent discussions among industry executives indicate a marked shift towards enhancing supply chain resilience, a trend that some are dubbing “Regionalization 2.0”. This new approach suggests that agility in operations may be more critical to survival than sheer size or strength.
Among the key voice contributing to this conversation is Markus Aschenbrenner, a Member of the Executive Board at Zollner, who articulated his company’s strategy during an IPC Podcast hosted by Philip Stoten. He noted, “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, and be more responsive to the local needs.” This localisation is proposed as a long-term strategy to enhance responsiveness directly from within the markets.
Bo Lybaek, President and CEO of GPV, echoed Aschenbrenner’s sentiments, highlighting the acceleration of regional manufacturing due to the impacts of US tariffs implemented during the Trump administration. Lybaek stated, “(The Trump tariff disruption means) in region for region will move forward faster.” He further noted a parallel movement within customer organisations towards decentralising operations to be closer to clientele.
Historically, the electronics manufacturing sector has centred capabilities in areas like Asia, particularly China, which raises questions about the feasibility of replicating these capabilities globally. Industry leaders are contemplating whether the requisite talent and ecosystem can be established to achieve such agility in electronics manufacturing. While immediate workarounds, like Apple’s recent move to ship 1.5 million iPhones from India to circumvent tariffs, demonstrate a responsive strategy, long-term agility poses more complex challenges regarding operational standards and processes.
The role of advanced technology, including AI and real-time data analytics, is anticipated to be substantial in enhancing this resilience. However, EMS providers have approached software implementations cautiously in the past, following experiences where expectations were not met. There remains a need to validate the business case for new technology solutions that genuinely understand the intricacies of electronics manufacturing.
To accommodate this shift, industry players advocate for greater standardization across equipment, business practices, and corporate culture globally. Intel’s concept of “copy exact” emphasises the prolonged effort required to synchronise operations across regions, alongside maintenance costs, thus highlighting the intricacies involved in global manufacturing integration.
A critical component of achieving this operational agility lies in building strong relationships with component supply chain partners capable of adapting swiftly to fluctuating market demands. Historically, there has been a degree of mistrust between the EMS sector and component suppliers, complicating efforts to increase transparency regarding forecasts and inventory management.
As the semiconductor industry itself evolves and adapts to new business models and realities—including the added complications posed by tariffs—the EMS sector must proactively engage with distributors and component suppliers to establish a more collaborative framework. This cooperation ensures an understanding of the benefits and challenges inherent in supply chain agility.
Education for both OEM customers and suppliers regarding the intricacies of supply chain agility is underscored as essential in this progressive journey. As highlighted in previous discussions, the EMS industry historically promotes itself as providing “manufacturing as a service,” positing the vision of being able to produce and deliver products efficiently from anywhere at any time.
The shift towards “build in region for region” is increasingly resonating within the EMS community and among multinational OEM clients. This strategy, cultivated through years of strategic planning, is now being intricately woven into operational decision-making across various levels. As this cultural shift progresses, it helps pave the way for heightened operational efficiencies that align with the overarching goal of achieving the agility to deliver “anything, anytime, anywhere.”
Source: Noah Wire Services
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