19 - 22 June 2024

5 Trends Electronics Manufacturers Expect to See in 2023

- Electronics manufacturers must adapt to survive a volatile global economy, widespread inflation, market changes and material shortage risks from moving production out of China.

- It’s time to focus on domestic manufacturing to build a flexible supply chain.

- Embrace shifting consumer behaviors and government measures by adopting sustainable manufacturing practice.  

- Digitalization is here to stay and manufacturers can embrace it to upgrade their production efficiency.

2022 has been a year of change, with the global landscape as everyone knew it has been altered forever. The prolonged Russia-Ukraine war added with rising cost of living and inflation have a far-reaching impact on the global economy. This volatile economic condition remains a top concern for business leaders, and is set to take toll on the electronics industry. For electronics manufacturers, this means preparing new strategy to confront upcoming challenges in 2023. Here are 5 trends that businesses must be ready for.

1. The Impacts of Inflation on Electronics Manufacturing 

Growing infiltratory pressure is a very real concern for business leaders. 86% of electronics manufacturers are concerned over inflation, according to the IPC’s 2022 Global Sentiment of the Electronics Supply Chain report. Furthermore, the report said 9 in 10 manufacturers are experiencing rising material cost while high labor costs, recruitment and talent retention continue to pose challenges for the industry.

Despite raising the price of electronics products to wrestle higher costs, electronics manufacturers will need to stay competitive and focus on factors they can control and improve. Under this condition, electronics manufacturers should consider internal process optimization, fully leverage existing assets and enhance overall efficiency. Furthermore, digitalization is crucial for manufacturers to effectively manage their assets and inventory as well as help employees achieve higher efficiency with tools and automation process.

2. Developing Capabilities to Meet Changing Demand

Furthermore, high inflation, low demand in markets and potential recession in the global economy are creating tremendous uncertainty, putting business partners on edge. Such uncertainty leads to companies placing small orders and volume. Even with large orders, manufacturers must develop small batch manufacturing capabilities.

3. Moving Production Out of China Leads to Shortages

In 2022, China implemented the zero-COVID policy to prevent the spread of the coronavirus. This restrictive measure has a severe consequence in the manufacturing industry, with many global businesses have relocated their production plant out of China. According to CNBC, US manufacturing orders in China fell 40%. At the same time, US export control on semiconductor manufacturing technology is derailing China’s plan to lead and advance this sector’s manufacturing capabilities.  

Many large enterprises plan to diversify their supply chains and move production out of China, such as Apple’s plan to shift production to India. However, this production base relocation is time consuming for business. It’s vital that leaders consider a component and material shortages measure by using solutions to monitor materials in warehouse and factory, ensuring optimal resource usage. When China decides to lift its COVID-19 restriction, electronics manufacturers must closely monitor whether relocation plans will continue or cancel.

4. It’s Time to Revitalize Domestic Manufacturing

Doubling labor costs and higher logistics price since the pandemic have forced many manufacturers to find a new production base. One strategy that manufacturers are considering is domestic manufacturing, which can enable a flexible supply chain, better quality control, improved delivery time and minimize costs. This also ensures a proactive communication between manufacturers and suppliers.

5. Working Towards a Sustainability

The carbon footprint of the electronics manufacturing industry is 4% of global greenhouse gases emissions. Regulators in many parts of the world are trying to change the industry’s manufacturing process to comply with strict environmental regulations as consumers are demanding sustainable products from businesses. Therefore, manufacturers must operate its business sustainably and benefit society by identifying and preventing excessive material and energy consumption in their manufacturing process. This will help reduce waste generated by the electronics industry.

In this volatile global landscape, digital transformation is no longer an option but a necessity to empower production process through efficient operation control on production line and plant. Going digital can create new value, offering opportunities for manufactures to achieve higher growth and greater productivity.

Don’t let your business miss out on the latest news on 5G, digital transformation and electronics industries. Keep pace with change in the industry by reading our NEPCON Blog.

More importantly, get first-hand experience on the latest cutting-edge technology at “NEPCON Thailand 2023,” ASEAN’s number-1 international exhibition on assembly, measurement and testing technologies for electronics manufacturing, co-located with “Manufacturing Expo”, from 21-24 June 2023 at BITEC, Bangkok.