According to the IPC May Report on the global sentiment of the electronics supply chain, nine out of ten electronics manufacturers surveyed are currently experiencing rising material costs, while nearly four-fifths are experiencing rising labor costs. Supporting data from IPC May economic reportshow that there are three main forces exerting pressure on the economy and vice versa, the electronics industry: Russia’s invasion of Ukraine, inflationary pressures that increase costs, and China’s tight policy on COVID, which hampers Chinese production and complicates existing ones. supply chain problems.

“Russia’s invasion of Ukraine is a negative supply shock for already strained supply chains. It will take many months to fully determine the full impact it has on the electronics industry, “said Sean DuBravack, chief economist at IPC. “While the invasion has more serious negative consequences for Europe, the effects are being felt worldwide.

The additional results of the study show:

  • Inventories remain limited – Results this month show that available inventories of suppliers have deteriorated in the last month.
  • The government is not doing enough to stimulate innovation and capacity in the semiconductor industry – Only three out of ten electronics manufacturers believe their government is moving at the right latitude to stimulate innovation and capacity.
  • Defaults are rising faster in North America than APAC – While 59% of North American manufacturers say the gap is currently widening, only 33% of APAC manufacturers say the same.

“Risks of decline have increased, but a recession in the United States in 2022 is still unlikely. Risks of recession in 2023 have increased somewhat,” DuBravac added. “In Europe, the likelihood of a recession in major economic markets has increased. Several countries will see steady quarterly growth for several consecutive quarters, which could easily turn negative and lead to a recession in 2022.

The IPC surveyed hundreds of companies around the world, including a wide range of sizes of companies representing the entire value chain of electronics manufacturing.

See full reports:

Rising Material Costs Remain Key Pain Point for Electronics Manufacturers

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