IPC: Higher Costs Continue to Dominate Electronics Industry Narrative

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Per IPC’s June Global Sentiment of the Electronics Supply Chain report, nine in 10 electronics manufacturers surveyed are currently experiencing rising material costs, while 86 percent of electronics manufacturers are concerned about inflation. Supporting data from IPC’s June Economic Report indicate there are three main forces exerting pressure on the economy, and conversely, the electronics manufacturing industry: geopolitical uncertainties, inflationary pressure, and China lockdowns exacerbating supply chain disruptions.

“Economic data from the last month makes the U.S. economy appear worse than it probably is, while the opposite is potentially true for Europe and China,” said Shawn DuBravac, IPC chief economist. “While Europe avoided a decline in the first quarter, it will continue to face a multitude of headwinds in the coming quarters.”

Additional survey results indicate:

• 78 percent of electronics manufacturers are worried about a recession in 2023
• 8 in 10 electronics manufacturers are concerned about extended supply chain disruptions due to a prolonged Russia-Ukraine war
• Rising labor costs appear most acute in North America where 86 percent of manufacturers report labor costs are currently rising. Only 58 percent of European manufacturers are experiencing an increase.

“The three key themes we laid out last month continue to hold: geopolitical uncertainties remain high in the shadow of Russia’s invasion of Ukraine, inflationary pressures are wreaking havoc on wide swaths of the economy, and China’s COVID lockdowns are exacerbating supply chain disruptions,” added DuBravac.