IPC: High Material, Labor Costs Continue to Challenge the Electronics Manufacturing Industry
January 27, 2022 | IPCEstimated reading time: 1 minute
New data from IPC show that supply chain challenges remain acute, but may have peaked, while lead times remain high. IPC’s February economic update and global electronics manufacturing supply chain sentiment reports found that high material and labor costs are expected to continue for at least six months while recruiting and finding skilled talent continues to be difficult.
Among other conclusions, the global electronics manufacturing survey results show:
- Nearly nine in ten electronics manufacturers report material costs are rising, with an additional four-fifths reporting rising labor costs
- Only 13 percent of the electronics manufacturing supply chain reports inventory is growing and one in ten say inventories from their suppliers are growing
- Ease of recruitment and profit margins are currently declining, along with inventories, especially those available from suppliers
- The electronics supply chain reports orders, shipments, and capacity utilization are expanding, but weak inventory availability and higher costs for materials and labor hurts profit margins
The data on future economic outlook suggests growth is decelerating, but good growth is expected in the year ahead. After growing 6.1 percent in 2021, global growth is expected to slow to 4 percent in 2022 and close to that in 2023. In North America, growth will fall from 5.4 percent in 2021 to 3.7 percent in 2022. In 2023, growth is expected to slow further, anticipated at 2.6 percent. In Europe, growth is expected to slip this year from 5 percent to 4 percent and decline to 2.4 percent next year. In Asia, growth is expected to fall from 6.7 percent to 4.8 percent this year. Five percent growth in Asia is predicted for 2023.
“While growth slows this year, this should not necessarily be interpreted as weak growth,” said Shawn DuBravac, IPC chief economist. “Growth rates in 2022 will generally be higher than they were headed into the pandemic.”
IPC surveyed hundreds of companies from around the world, including a wide range of company sizes representing the full electronics manufacturing value chain.
Suggested Items
New Yorker, Major League Electronics Sign New Franchised Distribution Agreement
05/06/2024 | New Yorker Electronics Co.New Yorker Electronics, global distributor of electronic components, recently announced a new franchised distribution agreement with Major League Electronics, renowned manufacturer of interconnect products.
AT&S Brings High-Tech to the Museumsquartier
05/06/2024 | AT&SAT&S, as a “MQ goes Green” partner, has prepared special highlights for the occasion: Visitors aged eight and above can embark on an interactive journey through the fascinating world of microelectronics.
May Issue of SMT007 Magazine: Coming to Terms With AI
05/06/2024 | I-Connect007 Editorial TeamIn the May 2024 issue of SMT007 Magazine, we examine the profound effect artificial intelligence and machine learning are having on manufacturing and business processes. We follow technology, innovation, and money as automation becomes the new key indicator of growth in our industry.
I-Connect007 Editor’s Choice: Five Must-Reads for the Week
05/03/2024 | Nolan Johnson, I-Connect007This week’s most important news is strategic—and telling. When one puts together the IPC industry reports, we simply have to include the recent conversation with Shawn DuBravac and Tom Kastner. On the design side, check out the latest “On The Line With…” podcast featuring Brad Griffin from Cadence Design Systems, discussing SI and PI in the realm of intelligent system design.
IMI Welcomes New CEO
05/03/2024 | IMIIntegrated Micro-Electronics, Inc. (IMI),The IMI Board of Directors announced, in a disclosure dated April 25, 2024, the appointment of Louis Sylvester Hughes, Chief Executive Officer (CEO).