April 2025

Warm regards,

Thiago Guimarães
Director of Industry Intelligence, IPC

Market Analysis from Shawn DuBravac 

United States

Incoming economic data remain broadly stable but are showing signs of emerging weakness which increases our concerns for the outlook. U.S. factory output was up 0.7% year-on-year in February, boosted by an 8.5% surge in motor vehicle production that had seen two straight months of declines. However, U.S. manufacturing activity showed renewed weakness in March. Tariff threats have begun to weigh on factories. The manufacturing PMI fell to 49.0 (from 50.3 in February), indicating a return to contraction and input prices are rising at the fastest rate since mid-2022. U.S. consumers have also become more cautious amid economic uncertainty. Headline retail sales managed a +0.2% month-over-month uptick in February (and were 3.1% higher than a year ago), but this was largely due to necessities and online shopping. Sales at electronics and appliance stores actually fell 0.3% in February, indicating softness in consumer tech spending. Uncertainty has dented consumer sentiment, which sank to its lowest in about 2½ years in March. 

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Market Trends and Outlook with Christoph Solka

While 2023 was a record-breaking year for EMS companies in Europe, bringing celebrations across the industry, early signs of a market correction were already on the horizon. Central banks around the globe applied the brakes, raising interest rates to levels not seen in years. Meanwhile, early indicators in the electronics industry began to show warning signs. New orders slowed, as evidenced by the electronics components market in Germany, which experienced a steady decline in orders. Full warehouses—stocked up during the "chip crisis" out of fear of component shortages—further amplified concerns among industry observers. 

These concerns proved accurate, as shown in the annual statistics for the European EMS industry compiled in collaboration with IPC’s partner in4ma. For 2024, participating companies—representative of the broader market—reported an overall revenue decline of 14%. However, this drop must be viewed in context: 2023 was an exceptional record year. Both large and small companies across Eastern and Western Europe were affected by this decline. 

To better understand these dynamics, let’s take a closer look at inventory levels and focus industries among the companies surveyed by IPC and in4ma: 

In 2024, companies reduced their inventory levels by double-digit percentages. This adjustment was partly a response to declining demand but also a correction following the massive inventory build-up during 2021–2023. However, due to declining revenues, the relative ratio of inventory to sales improved only slightly compared to the previous year. The pre-pandemic benchmark (2013–2019) of approximately 15% remains far out of reach. 

A few additional words on inventory: 
The "chip crisis" drove revenue growth for electronics manufacturers by 16% in 2022 and another 2.5% in 2023. This surge cannot be explained solely by catch-up effects from the pandemic and deviates significantly from typical annual growth rates. A key factor was OEMs’ fear of being unable to meet demand, leading them to increase inventories as a risk mitigation strategy. Therefore, this growth was not purely demand-driven. By 2024, this situation resulted in lower revenues for EMS providers as OEMs utilized their existing inventories. 

Focus industries provide further insights into revenue declines. In Germany—the largest EMS market in Europe—key sectors such as automotive and measurement and control saw disproportionate declines of around 25%. In contrast, products for agriculture and defense presented a different picture. Given the overall state of German industry, further declines remain a topic of discussion. 

The outlook for European EMS providers in 2025 is cautious. Almost none of the surveyed companies expect a return to higher revenues during this year. However, optimism is evident for 2026. In light of ongoing geopolitical tensions, it remains to be seen whether this optimism will hold. 

EMS:  
North American EMS shipments rose 1.7% in February compared to last year, while bookings dipped 3.6% year-over-year but improved from January. Despite mixed year-to-date trends, strong February orders pushed the EMS book-to-bill ratio to its highest level since May 2024 at 1.33, according to IPC. 

PCB: 
North American PCB shipments jumped 11.3% in February compared to last year, with bookings surging nearly 18%. Strong demand continues to drive growth, pushing the industry’s book-to-bill ratio to a record-high 1.33, according to IPC’s latest report. 

IPC’s latest Global Sentiment Report showed that electronics industry demand surged in March, reaching its highest level in nearly a year, with strong shipment growth and increased capacity utilization. However, manufacturers continue to face rising material costs and lingering hiring challenges despite easing labor constraints. 

Evolving Compliance and ESG Requirements for Electronics Suppliers - Part 1  
IPC's solutions team explores how e-mobility electronics suppliers can navigate rising sustainability demands, with a focus on the regulatory drivers behind an automotive-specific materials reporting system. This first installment breaks down the evolving ESG data structure and harmonized requirements shaping today’s compliance landscape. 

Wired for Change: Electronics Industry Sentiment on Sustainability 
IPC Evolve was launched with this new report that reveals strong industry momentum toward sustainability, with 59% of companies planning to expand efforts in 2025. This insightful report highlights key drivers, barriers, and the growing need for collaboration to turn sustainability into a competitive advantage. 

Guide to Safer Alternatives in Electronics Manufacturing 
IPC Evolve offers practical guidance for electronics companies looking to replace hazardous chemicals with safer options. Developed in partnership with the Clean Electronics Production Network, this resource helps improve worker safety, reduce compliance costs, and boost competitive advantage across the supply chain.

Sustainability as a Competitive Edge 
IPC’s Dr. Kelly Scanlon shares fresh survey insights revealing strong industry momentum toward sustainability, with 59% of electronics companies planning to expand efforts in 2025. The post also announces Evolve, IPC’s new program to support the industry with tools, standards, and collaboration opportunities to help companies turn sustainability challenges into long-term competitive advantages. 

EMS Industry Navigates Economic Uncertainty and Shifting Global Trade Policies 
Shawn DuBravac and Philip Stoten explore how electronics manufacturers are adapting to market volatility, evolving tariffs, and geopolitical tensions. Despite uncertainty, strong book-to-bill ratios and ongoing tech innovation, especially in AI, signal resilience, while IPC’s latest insights help EMS companies stay agile in a rapidly shifting global landscape. 

Community Articles:
IPC Introduces New Director of Industry Intelligence 
The lastest edition of IPC Community featured a Q&A with Thiago Guimarães, who shares how data-driven insights can strengthen IPC’s global advocacy. With a background in policy and market analysis, Thiago brings a fresh perspective to helping the industry navigate shifting geopolitical and economic forces. 

The Rising Term Premium
In this new article by Dr. Shawn DuBravac, IPC Chief Economist, the Spring 2025 issue of IPC Community explores the recent surge in term premiums to their highest level in a decade. DuBravac outlines how this shift signals increased economic uncertainty and poses new challenges for policymakers, investors, and manufacturers navigating volatile market conditions. 

Economic Webinar:  
UPCOMING: Join us on April 28 at 3:00 PM EST for a timely economic update, Crosswinds & Crises: Navigating the Economic Crossroads of 2025. Chief Economist Dr. Shawn DuBravac will unpack the latest data on trade tensions, inflation, labor markets, and global growth risks, helping you prepare for what’s ahead.

Other: 
Navigating Economic Headwinds in the Electronics Industry 
In a recent interview with RealTime with IPC, IPC Chief Economist Dr. Shawn DuBravac discusses the economic forces shaping the electronics industry in 2025. Dr. DuBravac highlights how shifting term premiums, labor market constraints, and evolving global demand are impacting manufacturers' outlooks and decision-making. 

UPCOMING: Join IPC’s Government Relations team on April 3 at 1:00 PM ET for an exclusive member webinar covering the latest U.S. tariff actions. Get the inside scoop on newly announced tariffs and learn how IPC is advocating for trade policies that impact the electronics industry.   

IPC industry intelligence aims to provide valuable insights into the entire global electronics ecosystem. Through in-depth reports and expert analysis, industry thought leaders provide trend evaluations designed to benefit the electronics manufacturing industry. Learn more and explore IPC’s industry intelligence today.

Contact the team:  
Thiago Guimaraes, Director of Industry Intelligence, North America 
Christoph Solka, Director of Industry Intelligence, Europe  
Shawn DuBravac, Chief Economist  
Kate Koger, Public Affairs Coordinator