For decades, the electronics manufacturing services (EMS) industry has accepted a tiering system that categorises providers by revenue size: Tier 1, Tier 2, Tier 3.
It is simple. It is familiar. And it is increasingly unfit for purpose.
Tiering was never created to help EMS companies grow. It exists to help OEMs simplify risk. In a world where outsourcing electronics manufacturing carries material, commercial and operational consequences, buyers needed shorthand. Revenue became a proxy for capability, resilience, and continuity.
Bigger meant safer. Smaller meant riskier.
However, the EMS market has undergone significant changes, both structurally, operationally, and commercially, while tiering has remained relatively unchanged. Today, tiering no longer acts as a neutral descriptor. For many EMS companies, particularly Tier 2 and Tier 3, it has become a constraint: shaping perception, access, and pricing long before real capability is assessed.
The result is a growing disconnect between what EMS companies actually do and how the market perceives them.
And that disconnect has consequences.
Tiering compresses complexity into a single variable: size. It assumes linearity where none exists.
A £40M EMS with deep DfM capability, vertically integrated test, and decades of experience in regulated sectors is not meaningfully comparable to a £40M EMS focused on general industrial PCBA. Yet tiering treats them as equivalent.
Likewise, a £250M EMS with strong regional depth and medical or aerospace expertise is often grouped alongside Tier 1 global providers, despite operating under very different economic and organisational realities.
For Tier 2 and Tier 3 EMS companies, this creates three persistent problems.
OEM shortlists are often filtered before meaningful engagement can occur. Tiering becomes a gatekeeper rather than a guide. Being perceived as “not Tier 1” can exclude a supplier before relevance is tested.
Tiering creates asymmetrical expectations. Tier 2 and Tier 3 EMS firms are often expected to deliver Tier 1 reliability at lower cost. This compresses margins and commoditises genuine capability.
In response, many EMS companies prioritise scale over clarity, adding customers, capabilities, or geographies without a coherent positioning logic. Complexity increases, but differentiation does not.
Tiering tells the market how big you are.
It does not tell them what you are best suited to do.
Positioning is often misunderstood as a marketing exercise. In EMS, it is something far more fundamental: commercial risk signalling.
OEMs do not buy SMT lines or factory square footage. They buy outcomes:
Positioning shapes whether an OEM believes you are structurally designed to deliver those outcomes before a meeting, an RFQ, or an audit ever takes place.
Without deliberate positioning:
With clear positioning:
This is where many EMS companies underestimate the strategic importance of how they describe themselves.
In practice, OEMs do not buy acronyms. They buy operating models.
EMS and CEM are often used interchangeably, particularly in Europe and North America. Importantly, many EMS companies are deeply partnership-oriented, providing:
In many cases, it is within EMS organisations that OEMs find the strongest expertise in manufacturability.
The distinction is not semantic — it is behavioural.
OEMs care about:
Positioning fails when language over-promises or under-signals reality. It succeeds when narrative, operating model, and customer expectation are aligned.
A clear and observable pattern exists in the EMS market.
As EMS companies grow, most expand beyond PCB assembly and SMT into:
This shift is not accidental.
OEM demand drives it. As products mature and volumes scale, OEMs want:
At a certain scale, remaining PCB-only becomes commercially limiting. EMS companies that stop at the board level risk being positioned as subcontractors rather than partners.
There is also an economic logic. PCB assembly is increasingly price-transparent and competitive on its own. System integration increases the share of wallet, raises switching costs, and embeds the EMS more deeply into the product lifecycle.
At scale, vertical integration becomes a necessity.
Conversely, many smaller EMS companies deliberately remain focused on PCBA and SMT.
This is not a lack of ambition. It is a strategic choice.
Vertical integration introduces:
Many smaller EMS firms compete successfully by specialising in:
Importantly, many OEMs actively prefer specialist board-level partners — particularly where system integration is handled elsewhere or where design ownership remains internal.
The problem emerges when the market assumes that more integrated automatically means better.
It does not.
This is where many Tier 2 and Tier 3 EMS companies struggle.
They add box build, harnessing, or test because:
However, without clear positioning, expanded capabilities create ambiguity rather than advantage.
Two EMS companies may offer the same services — PCBA, box build, test — yet be structurally optimised for entirely different OEM problems.
Without positioning, buyers see capability sprawl, not strategic fit.
Positioning cannot be generic, because EMS companies are not structurally identical.
These firms are typically specialised, engineering-led, and relationship-driven. Their challenge is not one of competence, but rather visibility. As OEM buying becomes more centralised and digital-first, relying on reputation alone becomes insufficient.
Positioning here must surface specialisation and translate tacit strength into explicit relevance.
This is the most vulnerable segment. Too large to rely on founder relationships, too small to benefit from Tier 1 gravity, these firms often suffer from identity drift.
Here, positioning must act as a strategic constraint — clarifying where to compete and where not to.
These companies face false equivalence. They are compared to Tier 1s on footprint, but without the same leverage or brand gravity.
Their advantage lies in selective globality, sector depth, and agility — but only if articulated deliberately.
OEM behaviour has shifted.
Supply-chain disruptions, geopolitical risks, and cost volatility have driven a reassessment of concentration risk. Many OEMs are actively diversifying away from over-reliance on Tier 1 providers.
OEMs are not looking for “smaller”.
They are looking for fit-for-purpose partners.
This creates opportunity for Tier 2 and Tier 3 EMS — but only for those who can clearly articulate why they are the right partner for specific products, volumes, and risk profiles.
That articulation is positioning.
EMS companies cannot opt out of being tiered.
But they can outgrow its limitations.
The EMS organisations that will outperform over the next decade will not be those that chase tier upgrades, but those that:
In a market where many suppliers look interchangeable, clarity becomes a competitive advantage.
For EMS, positioning is no longer optional.
It is the difference between being shortlisted and never being seen at all.