Summary of IPC Current Sentiment of the Global Electronics Manufacturing Supply Chain

In October, the IPC released a comprehensive document reporting the sentiment of the global electronics manufacturing supply chain. In this article, we have summarised some of the key points of both what the global data shows, as well as how APAC compares with some of the expectations in both Europe and North America.

You can also download the full and original IPC document here

Key Summary Points

• A majority of electronics manufacturers report profit margins are declining and the main reasons identified includes:
  • Nine out of ten manufacturers report rising material costs
  • Three quarters report a rise in labour costs
• Two-thirds of manufacturers raised their prices in 2021 and 71% percent of manufacturers expect to raise prices in 2022
  • However, only 52% of firms in APAC indicated they raised their prices in 2021 and this compares to 72% in North America, and more comparably 55% in Europe.
  • The average global increase this year was reported to be 14.5%

The sentiment from companies operating in APAC

• Material costs – 84% of manufacturers in APAC have seen a rise in the cost of materials
• Labour costs – 70% of manufacturers in APAC have seen a rise in labour costs
• Sales – 64% have seen a rise in sales
• Backlogs – 58% have experienced backlogs
• Orders – 56% have seen an increase in orders
• Capacity Utilisation – 44% have seen the utilisation of their capacity increase, which you’d expect to see with an increase in orders
• Profit margins – 39% have seen profit margins decrease
• Finding skilled talent – 35% have seen a decrease when it comes to finding skilled engineers
• Inventory availability – 43% have seen a decrease in the availability of inventory from suppliers

How APAC Compares with Europe and North America

• Labour costs – both APAC (70%) and Europe (64%) believe recruitment costs are going to rise and in North America, manufacturers expect this to happen more significantly at 95%.
• Material costs – all three regions expect material costs to continue rising with APAC reporting 84%, Europe 91% and North America 95%.
• Backlogs – both APAC (58%) and North America (62%) expect backlogs to continue to rise but only 41% in Europe expect this to be the case.
• Sales – 64% of APAC manufacturers expect sales to rise, whereas only 51% of manufacturers in Europe and 56% in North America say the same.
• Profit margins – 39% of manufacturers in APAC expect profit margins to decline and this sits between North America at 37% and Europe at 45%.
• Finding skilled talent – surprisingly only 35% of manufacturers in APAC expect the ease of recruitment to decline with 42% expecting it to remain the same. This compares with 70% of manufacturers in North America and 47% in Europe expecting to see a decline.

All of these figures make an interesting reading for the electronics industry, but it is important to put all of the figures into a regional context. For example, some of our customers find it a struggle to recruit skilled electronics engineers in Australasia and so it is surprising that only 35% expect the ease of recruitment to decline compared with 70% in North America. However, if finding skilled talent is already very difficult, it is no surprise that the majority expect it to remain the same.

Download the full summary

ipc.org. 2021. The Current Sentiment of the Global Electronics Manufacturing Supply Chain. [onlinehttps://emails.ipc.org/links/102021CurrentSentimentSupplyChain.pdf> [Accessed 17 November 2021].