Digitalization Use Cases to Alleviate Electronics Manufacturing Challenges

Electronics Manufacturing Services (EMS) face a complex array of challenges, from geopolitical volatility and labor shortages to increasing demand for High-Mix, Low-Volume (HMLV) production and increasing sustainability expectations. In response, electronics manufacturers are turning to digital technologies to enhance resilience, flexibility, and efficiency across their operations. This report summary outlines how digitalization is being strategically applied to address critical bottlenecks and streamline electronics production processes.

Market Overview

The electronics sector is under mounting pressure to adapt to rapidly evolving market demands, particularly as consumer electronics, medical devices, telecommunications equipment, and automotive electronics grow more intricate. Manufacturers are navigating disrupted global supply chains, resourcing limitations, and increasingly fragmented market preferences. This especially rings true where customization and high-quality standards are critical.

HMLV manufacturing, now a key trend in electronics, is reshaping production requirements. The shift calls for unprecedented levels of flexibility and precise quality control across diverse product batches. Manufacturers are simultaneously contending with geopolitical risk factors, such as trade wars and tariffs, which are prompting major players like Apple to diversify their sourcing strategies and relocate production hubs.

In Europe and North America, efforts toward reshoring and reducing reliance on foreign suppliers are met with labor and cost challenges. The talent shortage in Europe, in particular, affects its competitiveness in high-tech electronics segments like aerospace and defense. Meanwhile, the demand for software-defined Programmable Logic Controllers (PLCs), digital twins, and cloud-native infrastructure continues to increase, reflecting a broader movement toward flexible and scalable automation solutions. ABI Research now believes data are needed in real time at all stages of manufacturing to ensure effective planning and optimization.

Factory Planning Through Digital Twins

One of the earliest opportunities to achieve efficiency lies in the design phase of factory operations. By employing Computer-Aided Design (CAD) tools, Computer-Aided Engineering (CAE), and digital twin technologies, manufacturers can simulate and optimize factory layouts, production workflows, and robotics integration before any physical deployment. For example, Altium Designer integrates schematic and Printed Circuit Board (PCB) design editors with Mechanical Computer-Aided Design (MCAD) and third-party Product Lifecycle Management (PLM) solutions to create a digital electronic design solution for enterprises. This use case helps manufacturers accelerate design time, improve quality, and reduce costs.

A preemptive approach toward digitalization allows engineers to model task-specific robot movement and production sequencing. Augmented Reality (AR) and Virtual Reality (VR) further support this design phase by enabling collaborative planning sessions in immersive digital environments. With this, stakeholders can align efforts before physical assets are acquired.

Robotics and Automation to Streamline Production

To meet the demands of HMLV production and compensate for labor shortages, electronics manufacturers are accelerating investments in Manufacturing Execution Systems (MESs), robotics, and Artificial Intelligence (AI)-powered automation. Robotics solutions range from fixed arms used in PCB assembly and inspection to Autonomous Mobile Robots (AMRs) for intralogistics.

MES platforms are evolving to orchestrate these automation layers, optimizing material flows, line balancing, and task scheduling. The integration of AI-driven systems is proving essential for minimizing production errors and increasing throughput, especially in facilities juggling frequent product changeovers.

Quality Assurance with AI and Optical Inspection

Quality management in electronics manufacturing is multifaceted, given the precision required to meet international design standards. AI-based Quality Management Systems (QMSs) now enable automated data collection and real-time analysis during inspection stages.

Automated Optical Inspection (AOI) tools using machine vision technology have become standard for visually scanning PCBs for defects, while digital twin simulations allow manufacturers to test product durability and stress resistance virtually. On the software side, Application Lifecycle Management (ALM) ensures that embedded systems in consumer electronics function correctly throughout their lifecycle.

Agile HMLV Production and Outsourcing Strategies

Digitalization is critical to enabling cost-effective HMLV production. Robotics and AI provide the agility required to handle complex designs and rapid prototyping, while Three-Dimensional (3D) printing is increasingly used for custom part fabrication and PCB prototyping.

Outsourcing to specialized EMS providers that are digitally equipped to handle HMLV production is another common strategy. These vendors often offer pre-integrated automation, design simulation tools, and modular production capabilities tailored to fluctuating demand and custom requirements.

Enhancing Resilience and Supply Chain Visibility

Fluctuating consumer demand, material shortages, and transportation disruptions require manufacturers to build more resilient operations. AI-powered forecasting tools and inventory optimization algorithms enable manufacturers to better align production with market conditions.

Scenario planning and simulation tools also allow stakeholders to assess risk impacts and develop contingency strategies. By leveraging predictive analytics, firms can proactively mitigate delays and optimize component sourcing in dynamic global environments.

Creating and Leveraging the Digital Thread

A cornerstone of digital transformation in electronics manufacturing is the creation of a digital thread—a seamless flow of data across the product lifecycle. Centralizing data from design, PLM, MES, Internet of Things (IoT) sensors, and Enterprise Resource Planning (ERP) systems provides a foundation for real-time visibility and cross-functional collaboration.

With strong Information Technology (IT) infrastructure and integration tools, manufacturers can break down operational silos and establish feedback loops that enhance responsiveness, traceability, and product iteration. These capabilities are essential for meeting both customer expectations and regulatory requirements, such as those around battery traceability and Environmental, Social, and Governance (ESG) compliance.

Dive Deeper

Download the full report, Electronics Manufacturing Challenges: Tariffs, Labor Shortages, Data Silos, and Legacy Systems, to explore how electronics manufacturers are deploying digital technologies to improve flexibility, manage quality, and ensure resilience across a volatile global landscape.