The majority of makers direct efforts toward the industrial, medical, automotive and security segments to avoid competing with large players in consumer electronics.

China EMS companies maintain competitive leverage to keep benefiting from the expanding industry with the continuous transfer of global manufacturing capacity there. They emphasize flexibility to various requirements, especially low-volume and high-mix orders not usually accommodated by international suppliers in the region. To avoid direct rivalry with the latter, makers focus on nonconsumer electronics such as the industrial, medical, automotive and security segments.

Local manufacturers sustain facility upgrades by acquiring more SMT production lines. Leach International Co. Ltd added one each of SMT and assembly in October 2014, and now has three of the former besides two of DIP. Its SMT lines have Sanyo TCM200, Yamaha YV100XGP and Panasonic machines, with a daily capacity of 3 million points. The supplier covers mainly industrial, power supply, medical, networking and LED applications.

Shenzhen Leadsin Technology Co. Ltd installed three SMT production lines in 3Q14, bringing the total to five consisting of Juki units. It can now handle 8 million points a day from 3.5 million. The maker caters to the security, industrial, medical, networking and instrumentation sectors.

Shenzhen Eternity Technology Co. Ltd runs 13 SMT production, five DIP, eight assembly and six packing lines. The first includes Fuji NXT2, XPF and XP243, and Philips AX501 and AX201 equipment, with a daily capacity reaching 28 million points. The supplier can also churn out up to 35,000 PCB assemblies and 25,000 terminal products a day.

Manufacturers look forward to steadily increasing annual sales, which are projected to surpass 10 percent in the years ahead. Shenzhen Leadsin targets a 30 percent boost in coming months.

The upturn is reflected globally as outsourced manufacturing activities continue to rise. The EMS industry encompasses the computer, communications, consumer electronics, industrial, medical, automotive, aviation, defense and transportation sectors, with the first three accounting for more than 85 percent of the market. It is projected to hit $639 billion in 2018 and achieve CAGR of almost 8 percent from 2013, according to New Venture Research.

Key global production center

Despite the challenges of rising labor costs and an appreciating yuan, China is expected to keep its key role in the global EMS industry.

Major players Foxconn, Flextronics, Jabil, New Kinpo, Sanmina, Celestica, Benchmark and USI are among the 2,000 suppliers making up the sector in China. Mostly small and midsize local businesses are the rest.

The Pearl River and Yangtze River Delta regions, and the Bohai Bay Rim Economic Region are the main hubs.

One-stop shop

China EMS companies offer services from R&D, material procurement, production, testing, QC, finished products assembly, packaging to logistics and aftersales.

They have the capability to mount 0402, 0201, and 01005 SMD components, and can handle a range of IC packages such as SO, SOP, SOJ, TSOP, TSSOP, QFP, BGA and uBGA.

Products undergo function assessment using equipment, including automated optical inspection, in-circuit testing and X-ray machines. These conform to RoHS requirements.

Makers run facilities according to ISO guidelines, with most certified to ISO 9001. Shenzhen Leadsin’s operations comply with ISO 9001:2000, and Leach ISO 9001:2008. Shenzhen Eternity has ISO 9001:2008, ISO 13485:2003, ISO/TS 16949:2009 and ISO 14001:2004.

Due to intense competition, companies project no change in prices until year-end.