Electronics Manufacturing Outlook Continues to Darken, Prices Increase as Component Shortage Drags On

Estimated reading time: 1 minute

A new global survey found that the global shortage of semiconductors and other components continues to have serious consequences for electronics manufacturers, leading to rising costs and higher prices. The survey, conducted by IPC, the global electronics manufacturing association, also found that companies continue to face difficulty in finding qualified talent, with only 15 percent of respondents indicating that the situation is improving.

“Even as sales expectations for electronics manufacturers have improved, they face increases to both material and labor costs, leading to declining inventories and increasing backlogs around the globe,” said John Mitchell, IPC president and CEO. “The longer the shortage crisis continues unresolved, the more difficult it will be to overcome these compounding problems and return to normal.”

Among other conclusions, the survey results found that:

The six-month outlook for electronics manufacturing as a result of the supply chain crisis has deteriorated – again. Expectations for sales have improved but material costs, labor costs, inventories and backlogs are all expected to continue to get worse.

Two-thirds of manufacturers were forced to raise prices in 2021. 71% expect to have to do so again in 2022. Shortages and supply chain and other issues have led manufacturers to increase costs by an average of 14.5% this year. Firms expect to raise prices another 7-8% next year.

Nine in ten manufacturers report rising costs. 75% report rising labor costs, both of which have led a majority of electronics manufacturers to report profit margin decreases.

Electronics manufacturers continue to face a lack of skilled talent to hire, in North America and beyond. Only 15 percent of companies see the situation as improving.

“Electronics manufacturers are expecting more problems on the horizon as a result of ongoing shortages, both in terms of the six-month outlook and for expected prices in 2022, as the crisis appears to have no end in sight,” said Shawn DuBravac, Chief Economist at IPC and lead researcher on the study. “Heading into the holiday season, these issues and backlogs could have serious repercussions for consumers in the United States and beyond.”

IPC surveyed hundreds of companies from around the world, including a wide range of company sizes and representing the full electronics manufacturing value chain. Survey respondents were from North America (44%), Asia (20%) and Europe (17%).