2023 Events That May Disrupt Global Electronics Industry
• The United States is putting the global electronics supply chain at risk by restricting export of chips to China.
• Trade sanctions will lead to a shortage of raw materials and increase the manufacturing cost of electronic products.
• While consumers look for electronic products that comply with environmental initiatives, are innovative, and have all necessary features at reasonable prices, various negative factors could pose challenges that prevent manufacturers from finding a balance between the selling price and the cost they need to shoulder.
The electronics industry thrives on complex global supply chains, which could be at a risk of disruption from factors such as trade disputes, natural disasters, and political instability. These factors could affect the production viability, the distribution, as well as the cost of electronic parts and raw materials.
Recently, the US government has imposed restrictions on the exports of chips and advanced equipment that are key materials in the manufacture of electronic products to China. National security is cited as an excuse, and there is a possibility that the Netherlands and Japan will soon adopt the same strategy. This could raise the level of global tensions that come back to haunt the United States later, because China is the world's largest consumer of semiconductors. Not only would such trade protection add to geopolitical uncertainty in the global electronics supply chain, but lead time as well as labor costs will also skyrocket.
An expert in international relations, Assistant Professor at Lee Kuan Yew School of Public Policy in Singapore Ryu Yongwook, says chips are essential for almost every electronic device we use in our daily lives including smartphones and vacuum cleaners. Currently, China consumes more than 50% of the world's supplies, but produces only 15% of the total amount manufactured globally. More importantly, China lacks the knowhow to produce advanced 7nm chips, so the country is almost 100% dependent on imports from Taiwan and South Korea.
Chinese Foreign Ministry spokesperson Wang Wenbin referred to The United States’ move as an tempt at a technological blockade, and that the United States as a “Free trade champion” has lost their “moral basis” through their chip policies that boycott Chinese firms.
“The irrational actions of the United States will incite the youth of China's tech industry to come up with ways to rip apart the technology barrier since many young students are now studying and researching in this field,” said Gao Yusun, a 23-year-old graduate student in AI at the University of Hong Kong.
In addition, as consumers are demanding more environmentally friendly, innovative, and feature-rich appliances at reasonable prices, which go against the steep prices of raw materials, manufacturers are under a heavy pressure to control their cost while keeping their price points competitive in the market.
As the number of connected devices and IoT increases, so is the risk of cybersecurity. The electronics industry hence needs to invest in strong security measures to protect sensitive information, intellectual property, and consumer privacy because a single breach can entail dire consequences for both the companies and the consumers.
On the other hand, although consumers have high demand for electronic products with features mentioned above, there is a tendency they may halt their plan to purchase new electronics devices especially laptop, mobile phones, televisions and other expensive household items due to rising interest rates, volatile stock market, and fears of recessions in 2023.
These various factors combined mean the global electronics industry this year will be under more pressure than ever. Unsurprisingly, a more flexible supply chain management and diversification are essential to maintain the stability of this industry.
To get more updates on the electronics industry, be sure to follow the future editions of NEP Blogs, and make sure you don’t miss "NEPCON Thailand 2023", ASEAN's #1 international exhibition on assembly, measurement & testing technologies for electronics manufacturing. The event will be packed with technologies and innovations from more than 420 brands around the world. Interested participants can pre-register your visit today and attend the show during 21-24 June 2023 at BITEC, Bangkok.
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