4 challenges the electronics market is facing today

Read time: 7 minutes

SHARE ARTICLE ON
        

Despite significant growth in the global semiconductor market in the last two years, the electronics market is expected to drop nearly 4 percent in 2023.

 

Many challenges, widely exacerbated by COVID-19, have carried far beyond 2020 and are still impacting the industry today. Between a potential global recession and the ongoing semiconductor shortage, we will continue to see new hurdles in the market. Read on to uncover 4 challenges the electronics market will face this year.

Global supply chain challenges slow down the electronics market 

The electronics market is not exempt from the global supply chain challenges industries have faced around the world. Now, many companies are prioritizing regional sourcing, often at higher prices, to secure the products they need.

The key challenge with a regional sourcing approach for the electronics market is that while many delays are estimated to be about four months, making a manufacturer switch could take more than a year due to the lead times, product complexity, and design. So, in 2023, as more and more consider regionalisation, the shift will be a long-term solution, with perhaps short-term turbulence to get there.

Potential recessions around the globe will make people more conservative

Researchers are predicting a global recession, with more than a third of the world economy contracting and a 25 percent chance of GDP growth by less than 2 percent in 2023.

Knowing this, consumers will cut back on big-ticket purchases and be more conservative with spending in 2023. The challenge is that while an “inventory correction,” has happened in the past to support the electronics market in such circumstances, a global recession will make it more difficult for the industry to bounce back as quickly as it has in the past.

Semiconductor production continues to be a challenge

To avoid the risks posed by geopolitical issues and build a more resilient electronics market that is not as susceptible to supply chain chaos, countries around the world are looking to expand their semiconductor manufacturing. But surprisingly enough, the predicted growth will be in Japan, U.S. and Europe. Experts predict a 7.5 percent decline in most of APAC, including China, where nearly 30 percent of the world’s semiconductors are currently produced.

But until the new fabs are built and running at full capacity, the world will still struggle to manufacture semiconductors to the fluctuating demand and market needs.

Are you interested in learning more about the semiconductor shortage and what’s next? Download our recent whitepaper exploring the key challenges, opportunities, and impact the semiconductor shortage is having on the electronics market and the 5 strategies we recommend for combating the semiconductor shortage.
ARTICLE BY
Sophie Pozzi

Market Manager & Product Manager
Industrial Solutions

 

About the author

Sophie Pozzi is a market manager and product manager at IMCD France. With more than 11 years working in electronics, Sophie has extensive experience in solutions for innovative high-technology adhesives for the manufacturing of microchips and electronics assemblies, products of high-tech industrial adhesives, UV adhesives, conductive adhesives and encapsulants.
2023 Outlook Update: What we saw in the first half of the year
Read more
Uncover the impact, challenges, and opportunities of the semiconductor shortage
Explore
Connect with our experts to see how similar solutions can work for you