Global Demand Remains Strong, but Economic Environment is Softening

IPC releases September 2021 economic outlook report

Themes that IPC's Chief Economist Shawn DuBravac offered last month continue to play out. Global demand remains strong, but the economic environment is softening. We are starting to see some early signs that demand is slowing. While there are still many reasons to remain optimistic, growth moving forward will be more difficult to achieve. The pandemic remains the largest risk factor right now. Surging new COVID-19 cases are limiting the potential for growth.

In addition to DuBravac's  observations, you will also find U.S. and European data on economic growth, employment, consumer sentiment, manufacturers’ sentiment (PMI), manufacturing capacity utilization and end markets for electronics.

As referenced in this month’s report, IPC released a new report examining the current state of the global electronics supply chain. This research will be updated monthly in order to gauge the current pulse of the industry. The current report summarizes the current conditions well. Read findings from the global sentiment report.

Please contact DuBravac  if you have any questions regarding data in this month’s report or the global sentiment report. As always, IPC welcomes your thoughts and feedback.

READ SEPTEMBER REPORT

IPC and Apple to Develop New Standard for Green Cleaners to be Used in Electronics Manufacturing

IPC-1402 reflects industry commitment to advance green electronics and workplace safety

IPC, Apple and other international companies are developing a new standard, IPC-1402, Standard for Green Cleaners Used in Electronics Manufacturing, intended to define the criteria for what constitutes a green cleaner for electronics manufacturing and will specifically apply to cleaners used in the manufacture of electronic assemblies, components, and materials, including direct use chemicals to clean components, casings, and materials or to clean manufacturing machines during operation and maintenance.

“We are excited to bring together industry experts to launch the development of this standard,” said Matt Kelly, IPC’s chief technologist. “This is an important step forward in building a sustainable electronics manufacturing ecosystem. IPC-1402 will help engineers make informed decisions and select cleaners that are both safer for manufacturing employees and the environment. The standard will document the rigorous set of criteria for preferred cleaners and incorporates industrial hygiene requirements. The application of IPC-1402 will allow important health and safety requirements to be added to engineering drawings needed for product assembly.”

The subcommittee developing IPC-1402, the Green Cleaners in Manufacturing Task Group, chaired by Apple staff and co-chaired by Zestron, Inc, staff includes representatives from more than 20 international companies and government authorities.

 “People come first in everything we do, and we're proud to lead the industry in the responsible use of cleaners,” said Kathleen Shaver, Apple’s director of environmental and supply chain innovation. “We are glad to be working with partners on this new standard, which will help accelerate the adoption of safer materials and improve cleaning practices across industries.”

IPC-1402 is expected to be available in February 2022.

Registration Open for the 2022 WHMA 29th Annual Wire Harness Conference

Registration is now open for the 2022 WHMA 29th Annual Wire Harness Conference. Geared to wire harness manufacturers, their suppliers and customers, the event will take place in person, February 15-17, 2022 in Tucson, Arizona at the Westin La Paloma Resort and Spa.

In 2022, several noted industry experts and thought leaders will take to the keynote stage to deliver insight the industry, economy, geopolitical issues, manufacturing technologies and more. Lineup includes:

  • John K. Coyle, CEO, Design Thinking, a leading expert in "design thinking" and Innovation. An Olympic medalist, best-selling author and thought leader, Coyle will weave facts, examples, and business principles into engaging, accessible stories that will inspire attendees to make positive changes in their business and personal lives.
  • Cynthia A. Watson, Ph. D., Dean of Faculty and Academic Affairs, National War College, National Defense University, an expert on the professional military education, China’s modernization challenges, and U.S. military trends. Dr. Watson will provide insight into the question, "What keeps China’s leadership awake at night?"
  • Peter Zeihan, a geopolitical strategist who combines an expert understanding of demography, economics, energy, politics, technology, and security. Zeihan’s presentation, "Manufacturing a New Age," will guide attendee through the deglobalization whirlwind, providing information on how changes in consumption and labor will play out, in particular for automotive, aerospace, semiconductors, and electronics industries.
  • Shawn DuBravac, WHMA's chief economist, an internationally recognized thought leader, global futurist and trend caster who works to expand WHMA’s industry intelligence program and provide insights on issues facing the global electronics industry, including supply chain resiliency/uncertainty, trade wars, skilled workforce shortage, and the expanding role of electronics in the global economy. In his presentation, DuBravac will provide a detailed economic report and outlook for WHMA members.

“From keynotes, technical education workshops and roundtable sessions to an exhibition with industry leading suppliers showcasing their cutting-edge products and services and peer-to-peer networking, the annual WHMA wire harness conference offers leaders in the global cable and wire harness industry opportunities to learn, grow, share and connect,” said Rick Bromm, WHMA Board Chair/ALTEX President. “And, after nearly a two-year hiatus, we’re looking forward to connecting with everyone in person!”  

For more information on the conference including schedule, exhibition, speaker profiles, sponsorship opportunities, or to register for event, visit https://annualconference.whma.org.

IPC Commends U.S., EU Efforts to Strengthen Supply Chains, Urges Focus on Electronics Manufacturing

IPC issued the following statement by its President and CEO, John Mitchell, on today’s inaugural meeting of the U.S.-EU Trade and Technology Council.

“IPC commends U.S. and European leaders for reaffirming the strategic importance of the Transatlantic partnership on trade expansion, supply chain resiliency, technical standards, and technological innovation at the inaugural meeting of the U.S-EU Trade and Technology Council (TTC).

“We applaud the TTC for its immediate focus on strengthening the semiconductor supply chain and stemming a chip shortage that continues to roil the global economy. An IPC survey this month found the chip shortage is increasing costs for producers and extending lead times for 90% of electronics manufacturers. And companies expect the crisis to extend into at least the second half of 2022 without action.

“The TTC has rightly focused on identifying gaps within the semiconductor supply chain. The U.S. and Europe are far behind international competitors in advanced packaging, especially in advanced integrated circuit substrate fabrication. Regaining world-class advanced packaging capabilities is of paramount importance given the industry’s increasing migration to chiplet architectures to increase processing power. Without robust support for advanced packaging, the U.S. and EU will be unable to package chips domestically and will be forced to send chips abroad instead, creating new supply chain vulnerabilities.

“Ultimately, the TTC’s success will depend upon on addressing the challenges within the entire electronics manufacturing ecosystem. It is unsustainable to cherry pick segments of the supply chain based on transitory concerns with the expectation of strengthening transatlantic technological innovation, supply chain resiliency, and national security. Achieving these goals requires a holistic approach to manufacturing strategy—one that recognizes the importance of each segment of the supply chain. IPC urges the TTC to elevate the strategic importance of electronics manufacturing moving forward.

“As the TTC continues its work in the months ahead, IPC looks forward to working with the U.S. and EU leaders to cultivate and strengthen the electronics manufacturing ecosystem.”

IPC Rallies Electronics Industry Members to Contact Their Elected Officials About U.S. Tech R&D Bill

IPC is calling on the U.S. electronics manufacturing community to contact members of Congress about a bill that would boost investment in federal research and development (R&D) in 10 high-tech fields.

Background: The U.S. Innovation and Competition Act (USICA), which includes the Endless Frontier Act (EFA), seeks to bolster U.S. leadership and global competitiveness by boosting federal R&D investment in technologies including artificial intelligence; high-performance computing and semiconductors; robotics and automation; biotech; and advanced energy. This Senate-passed bill is now being reconciled with two House-passed bills: the National Science Foundation for the Future Act and the Department of Energy Science for the Future Act

By promoting R&D into cutting-edge technologies that depend on electronics manufacturing, the bills ostensibly promise a wealth of opportunities for electronics manufacturers, whose thin margins make investment in R&D difficult.

However, the legislation does not include a single reference to “electronics” or “electronics manufacturing!” By not prioritizing electronics manufacturing, the bill risks perpetuating the reality that the United States is increasingly a leader in designing technologies it can’t build.

IPC is asking Congress to make two modest changes in the bill, which would strengthen the U.S. electronics manufacturing sector and the wider economy:

  • Add language specifically listing electronics manufacturing alongside semiconductors as a “key technology focus area.”
  • Expand the National Advanced Packaging Manufacturing Program to include electronic interconnection.

Call to Action: To bring some grassroots firepower to the effort, IPC is providing an online platform that makes it easy for electronics industry members to contact their members of Congress on the issue. Anyone can participate by visiting IPC.org; clicking on “Advocacy” and then “Action Center.” It only takes a few minutes but can make a big difference for our advocacy effort.

Quote: “For far too long, the United States has been a leader in designing technologies it can’t build. IPC supports this legislation, but we believe that the bill as written misses an opportunity to make the United States more globally competitive in the critically important electronics sector,” said IPC president and CEO John Mitchell.

“Advancements in semiconductor technology have always been intricately linked to advancements in electronics manufacturing, such as printed circuit board (PCB) fabrication and assembly; and the interdependence is growing with current trends in microelectronics. This legislation will set the framework for federal R&D for the coming decade, and we must get it right.”

More resources available: IPC can offer interviews and additional background on this legislation and on electronics supply chain resiliency generally. Further information on the campaign is also available in a new IPC blog.

 

PCB Designers to Put Skills to the Test and Compete to Become IPC Design Champion of 2022

Three finalists to compete for title of best board designer at IPC APEX EXPO 2022

IPC announces a new IPC Design Competition, inviting printed circuit board designers to compete to become the IPC Design Champion of 2022. The IPC Design Competition is composed of two heats – a virtual preliminary heat and an in-person layout final for the three top contestants on January 25, 2022 at IPC APEX EXPO in San Diego, Calif.   

The preliminary heat will be held November 1, 2021 to December 1, 2021, allowing designers to use their preferred tools to complete a full board buildup within 30 days. Provided with only a schematic and a BOM (bill of materials), competitors will be judged against their interpretation and implementation of design per IPC standards and general DFX (design for excellence) principles. Three finalists will be invited to participate in the four-hour layout final at IPC APEX EXPO 2022. 

“Every year, design engineers spend hours completing and perfecting their designs. The IPC Design Competition gives us the chance to meet those designers and put their skills to the test,” said Patrick Crawford, manager, design standards and related industry programs. “We can’t wait to see the results and crown a design champion at IPC APEX EXPO.”

Registration for the IPC Design Competition is free, but space is limited to 20 contestants. Registration ends October 29, 2021. For more information, visit www.ipc.org/ipc-design-competition-2022.

North American EMS Industry Down 3.2 Percent in August

IPC Releases EMS Industry Results for August 2021

IPC announced today the August 2021 findings from its North American Electronics Manufacturing Services (EMS) Statistical Program. The book-to-bill ratio stands at 1.48.

Total North American EMS shipments in August 2021 were down 3.2 percent compared to the same month last year. Compared to the preceding month, August shipments grew 16.9 percent.

EMS bookings in August rose 27.5 percent year-over-year and grew 29.3 percent from the previous month.

“August brought another strong month of orders for the EMS sector. Year-to-date bookings are up 22 percent,” said Shawn DuBravac, IPC’s chief economist. “During the month we also saw shipments pick-up, a hopeful sign that manufacturers will be able to deliver on their growing backlog of orders.”

EMS book to bill ratio chart August 2021

View chart in pdf format

Detailed Data Available

Companies that participate in IPC’s North American EMS Statistical Program have access to detailed findings on EMS sales growth by type of production and company size tier, order growth and backlogs by company size tier, vertical market growth, the EMS book-to-bill ratio, 3-month and 12-month sales outlooks, and other timely data.

Interpreting the Data

The book-to-bill ratios are calculated by dividing the value of orders booked over the past three months by the value of sales billed during the same period from companies in IPC’s survey sample. A ratio of more than 1.00 suggests that current demand is ahead of supply, which is a positive indicator for sales growth over the next three to twelve months. A ratio of less than 1.00 indicates the reverse.

Year-on-year and year-to-date growth rates provide the most meaningful view of industry growth. Month-to-month comparisons should be made with caution as they reflect seasonal effects and short-term volatility. Because bookings tend to be more volatile than shipments, changes in the book-to-bill ratios from month to month might not be significant unless a trend of more than three consecutive months is apparent. It is also important to consider changes in both bookings and shipments to understand what is driving changes in the book-to-bill ratio.

IPC’s monthly EMS industry statistics are based on data provided by a representative sample of assembly equipment manufacturers selling in the USA and Canada. IPC publishes the EMS book-to-bill ratio by the end of each month.

North American PCB Industry Sales Down 11.7 Percent in March

IPC releases PCB industry results for March 2022

II

IPC announced today the March 2022 findings from its North American Printed Circuit Board (PCB) Statistical Program. The book-to-bill ratio stands at 1.05.

Total North American PCB shipments in March 2022 were down 11.7 percent compared to the same month last year. Compared to the preceding month, March shipments rose 5.6 percent.

PCB year-to-date bookings in March were down 25.9 percent compared to last year. Bookings in March fell 1.3 percent from the previous month.

“Stronger shipments suggest marginal improvement in supply chain dynamics but a drop in orders alludes to slowing demand across a number of downstream sectors,” said Shawn DuBravac, IPC’s chief economist.

March 2022 PCB book to bill ratio chart - 1

March 2022 PCB book to bill ratio chart - 2

View charts in pdf format

Detailed Data Available

Companies that participate in IPC’s North American PCB Statistical Program have access to detailed findings on rigid PCB and flexible circuit sales and orders, including separate rigid and flex book-to-bill ratios, growth trends by product types and company size tiers, demand for prototypes, sales growth to military and medical markets, and other timely data.

Interpreting the Data

The book-to-bill ratios are calculated by dividing the value of orders booked over the past three months by the value of sales billed during the same period from companies in IPC’s survey sample. A ratio of more than 1.00 suggests that current demand is ahead of supply, which is a positive indicator for sales growth over the next three to twelve months. A ratio of less than 1.00 indicates the reverse.

Year-on-year and year-to-date growth rates provide the most meaningful view of industry growth. Month-to-month comparisons should be made with caution as they reflect seasonal effects and short-term volatility. Because bookings tend to be more volatile than shipments, changes in the book-to-bill ratios from month to month might not be significant unless a trend of more than three consecutive months is apparent. It is also important to consider changes in both bookings and shipments to understand what is driving changes in the book-to-bill ratio.

IPC’s monthly PCB industry statistics are based on data provided by a representative sample of both rigid PCB and flexible circuit manufacturers selling in the USA and Canada. IPC publishes the PCB book-to-bill ratio by the end of each month.

 

Component Shortages are Driving Production Delays and Higher Costs for Manufacturers, According to a New Global Industry Survey

IPC found the electronics industry sees no immediate end to shortage woes, 58% expect problem to linger until late 2022 or beyond

A new global survey found that electronics manufacturers continue to be harmed by the global shortage in semiconductors and other components, parts and materials, leading to production delays, increased material goods costs, and a cloudy industry outlook. The survey, conducted by IPC, also found that companies continue to face significant challenges in hiring and keeping skilled talent.

“Supply shortages and other dislocations are impacting the global electronics supply chain and every downstream industry these manufacturers serve,” said Shawn DuBravac, IPC chief economist and lead researcher on the study. “Strong demand is helping industry sales, but shortages are delaying shipments and increasing backlogs. Manufacturers are facing higher prices as they compete for limited supply. This is a global phenomenon that is going to take well into next year to resolve.”

          The survey results found that:

  • Shortages are leading to delays. 88% of respondents have experienced increased lead times, and 31% saw production delays of eight weeks or more.
  • Companies report the issue will not be resolved soon. 58% of companies expect the shortages to end in the second half of 2022 at the earliest.
  • Global inventories – already depleted – are declining. 59% of respondents said that backlogs are increasing. 25% say inventory available to customers will continue to decline, and 48% say inventories will stay flat. 
  • Shortages are forcing companies to spend more to produce their products. 90% of respondents have paid increased prices to suppliers because of shortages.
  • Companies are increasing wages and upskilling workers to address workforce hiring and retention. 80% of respondents believe the challenge of finding qualified workers isn’t likely to ease. Firms have increasingly taken to upskilling their workers on their own (46% of respondents), boosting wages (44% of respondents) and other measures to fill the gaps.

“While there has been plenty of attention paid to the shortage in semiconductors, it’s important to point out that electronics companies around the globe are facing additional shortages and backlogs, experiencing diminished inventories, and paying higher materials prices,” added John Mitchell, IPC president and CEO. “The current situation is unsustainable. If the current shortages extend beyond 2022 as feared, they will continue to have serious consequences for all industries tied to electronics manufacturing.”

IPC surveyed hundreds of companies from around the world, including a wide range of company sizes and representing the full electronics manufacturing value chain. Survey respondents were from North America (44%), Asia (20%) and Europe (17%).