EIPC Summer Conference 2023: The Keynote Session

Estimated reading time: 12 minutes

Editor's note: This is part one of a three-part report from Pete Starkey; you will find links to the other articles at the end of this one.

My trips to Munich usually involve my reporting at productronica, which takes place in November, where I’m most often enveloped in the gloom and drizzle of late fall. For EIPC’s recent Summer Conference, it was nice to be in Munich for blue skies, warm sunshine, and longer, brighter evenings. I thoroughly enjoyed being in the Schwabing area, north of the city.

Delegates were warmly welcomed by EIPC president Alun Morgan, rather more casually dressed than is customary since Lufthansa had “thoughtfully” deposited his suitcase in Frankfurt. He began with a tribute to the late Martin Cotton, the much-loved and long-term supporter of EIPC. Morgan showed a collage of photographs that reflected an assertive professional with the wacky sense of humour that characterised Cotton’s personality. 

Morgan can always be relied upon for some fascinating technological observations in his conference introductions. His examples on this occasion illustrated the validity of Amara’s Law—we tend to overestimate the effect of a technology in the short term and underestimate its effect in the long run. In the case of the video phone, recent developments have surpassed science fiction. Artificial intelligence is currently perceived as a threat. Morgan referred to an open letter by Eliezer Yudkowsky, a leading researcher and advocate of friendly artificial intelligence titled “Pausing AI developments isn't enough. We need to shut it all down.”¹

But Morgan sees opportunities, using generative AI in applications like chatbots and digital image editing. He demonstrated how quickly and flawlessly he can modify and transform photographs and videos, and challenged the audience to identify which of a series of portraits were real and which were false. In fact, they were all false. None of them had ever been seen before because Morgan had created them just seconds before. 

He finished his introduction with an abstract of one of his recently-published articles: 

“AI is not going to subjugate and supersede in the foreseeable future. This is not to deny that its effects are already transformative. Today’s AI-powered generative tools like ChatGPT can significantly accelerate creative activities and can already offload routine processes such as writing letters and emails. 

“Although it’s clear that businesses will need to adopt them if they are to remain competitive, the standard of work produced is not high enough to take over more sophisticated tasks. Yet. 

“But perhaps we can draw comfort from the fact that AI is the perfect learner. It improves every time without repeating mistakes. We can hope to see our cities and infrastructures get closer to our concepts of sustainability and become more supportive of cleaner living.” 

Keynote Review
The keynote session was introduced and moderated by EIPC technical director Tarja Rapala-Virtanen and began with a comprehensive business outlook prepared by Jon Custer-Topai of Custer Consulting, which was delivered by Alun Morgan. 

Custer’s review of the year to date indicates a world economy in the doldrums, with weak economic growth, stubborn inflation, and rising interest rates in the major developed economies clouding the near-term economic outlook. Legacy effects of the COVID-19 pandemic, the protracted war in Ukraine, and the exacerbating effects of climate change are impeding a rebound of global growth.

In the Euro area, the real rate of economic growth is forecast to decline from the 2022 figure of 3.5%, to 0.8% for 2023.

Average global inflation was projected to decline from 7.5% in 2022 to 5.2% in 2023 amid lower food and energy prices, and softening demand, especially in the large developed economies. Inflation will, however, remain well above central banks’ targets in many countries, exacerbating in particular the economic well-being of those living in poverty. 

A perspective on costs of re-shoring can be drawn by comparing average salaries of production workers and machine operators. Custer’s chart showed Germany and the U.S. to be far ahead of China, which in turn are well ahead of Thailand, Malaysia, and Vietnam, with Mexico and India a long way behind. Average salaries for production managers and supervisors showed a similar spread, although China is on a par with Thailand, Malaysia, and Vietnam, and Mexico is ahead of them. 

The next “great migration” is expected to be from China to other areas of Southeast Asia; for example, Indonesia, Malaysia, Thailand, and Vietnam, but not a great deal to the U.S. or the UK despite recent hype. Dr. Nakahara at N.T. Information has predicted that Thailand will be overcrowded with PCB makers, and in five to six years, Thailand’s output might exceed that of Taiwan.  

Regarding the supply chain, factors like global container freight rates are stabilising, although manufacturers are holding more days-worth of inventory. The global purchasing managers’ index is close to the neutral point, although the index for the Eurozone is still showing a contraction while that for the ASEAN region is slightly positive. The Euro-to-U.S. dollar exchange rate indicates a strengthening dollar. 

European motor vehicle production is recovering toward 2019 levels, and car registrations show double-digit year-on-year growth, led by Spain and Italy. The global EV market continues to grow, particularly in mainland China.  

Although European loaded electronic board production is on a strong upward trend, the bare circuit boards are mostly not made in Europe. The world PCB market is growing, from $82.41 billion in 2022, forecasted for $87.08 billion in 2023, and projected to reach $128 billion by 2030. But Western Europe and North America represent only a very small part of the total, at about 3.9% and 5% respectively, and the growth will come from Asia while the European index is showing a year-on-year decline. Higher technologies might provide an answer for Europe but there is no room for complacency. 

Comments on the global outlook from Focus Economics began with, “We can’t sugarcoat this; the prospects of a robust global economic recovery remain dim for the rest of 2023 due to inflation, rising interest rates, and the continued uncertainty. Unfortunately, the global economy faces the risk of a prolonged period of low growth as the effects of COVID and other factors have pushed growth down.”

Focus continued, “Global trade remains under pressure due to geopolitical tensions, weakening global demand and tighter monetary and fiscal policies. The volume of global trade in goods and services is forecast to grow by 2.3% in 2023, well below the pre-pandemic trend.” They also remarked on the growing demand for sustainable electronics and the rising popularity of AI solutions.  

Energy costs continue to be of great concern in Europe. Morgan concluded the presentation by reminding us that countries like Germany are paying more than six times the price paid by China, and more than twice the price paid by the United States. EIPC is endeavouring to bring these facts to the attention of government and to seek support for industries made uncompetitive as a result.Page 1 of 2

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