Key Summary:

•    Electronics industry outlook for 2026: resilience through adaptation amid global uncertainty
•    Key trends shaping electronics manufacturing, supply chains, and workforce strategy
•    AI investment growth, realistic timelines, and competitive implications
•    Workforce skills shortages emerge as the top constraint on industry expansion
•    Strategic supply chain diversification replaces full decoupling
•    Raw materials and sustainability become critical policy and business priorities

What does the future hold for the global electronics industry? Few organizations are better positioned to answer that question than the Global Electronics Association. With a unique, global perspective spanning the electronics supply chain, we work at the intersection of industry, policy, technology, and workforce development by engaging with member companies, governments, and partners across major regions worldwide.

In this blog series, Global Electronics Association experts will share informed perspectives on the forces reshaping the electronics ecosystem, including geopolitical dynamics, regulatory change, supply chain resilience, sustainability, and technological innovation. Drawing on real-time industry engagement and long-term trend analysis, these insights are intended to help electronics leaders anticipate change, manage risk, and position their organizations for continued growth.

We begin with insights from Global Electronics Association President and CEO John W. Mitchell, who examines what resilience through adaptation will look like for the electronics industry in 2026, and what companies should be preparing for now.

Resilience through adaptation: What to expect from the electronics industry in 2026 

By John W. Mitchell, President and CEO, the Global Electronics Association

Despite volatility from tariffs, geopolitical tensions, and economic uncertainty, the electronics industry is expected to demonstrate remarkable adaptability in 2026. 

Companies have evolved from reactive crisis management to proactive strategic planning by developing sophisticated tariff response strategies, building robust supply chain visibility systems, and positioning to serve concentrated growth sectors in artificial intelligence, defense, and advanced computing, among others. 

Important growth sectors:

STRATEGIC DIVERSIFICATION

In 2026, we'll see nations accelerate efforts to reconfigure their electronics supply chain dependencies, but the reality is that true decoupling is impossible. Instead, expect strategic diversification, where countries build redundancy in critical areas while accepting that global interdependency in electronics manufacturing isn't a weakness to eliminate but a reality to manage more intelligently. 

ARTIFICIAL INTELLIGENCE

The AI investment boom has likely saved us from recession, but companies will confront a sobering truth: the transformative returns everyone anticipated will take longer to materialize than the hype suggested. Patience, not panic, will separate the AI winners from the overextended. 

WORKFORCE 

The global electronics manufacturing expansion is expected to hit a hard ceiling in 2026, and it won't be due to factory space or equipment. Workforce skills will emerge as the scarcest, most critical resource in our industry. We can build facilities in months, but we cannot accelerate workforce expertise at the same pace. This skills shortage will become the defining constraint on localization and manufacturing ambitions worldwide. 

RAW MATERIALS

Countries will increasingly treat raw materials as matters of national security in 2026. Expect aggressive investments in domestic mining and processing of rare earth elements, even when economics don't favor it. The electronics industry will witness a fundamental shift from lowest-cost sourcing to closest-to-home sourcing, reshaping decades of supply chain optimization. 

 SUSTAINABILITY  

Investments are expected to accelerate in 2026 as the business case becomes undeniable; however, we’ll simultaneously see fragmentation in global standards, which will create new inefficiencies. The challenge won't be convincing decision-makers that sustainability matters; it will be navigating an increasingly complex patchwork of regional requirements that could slow the very progress we've made. 

Why This Matters for the Electronics Industry and the World

This matters because electronics are the foundation of global innovation, economic competitiveness, and resilience in every industry. Decisions made today around supply chains, materials, manufacturing, and infrastructure will determine which companies and regions lead in the decade ahead.

Looking Ahead

Success increasingly depends on strategic positioning relative to growth sectors, operational agility to handle continued trade uncertainty, and technological sophistication to serve evolving product requirements. 

I’d love to hear your thoughts about the future of our industry.  You can find me on LinkedIn at https://www.linkedin.com/in/johnwmitchell.

Key Summary

• U.S. economic growth remains resilient, but manufacturing continues contracting under tariffs, high input costs, and weakened domestic and export demand.
• U.S. manufacturing PMIs show sustained contraction, declining employment, weak new orders, and margin pressure despite modest production stabilization.
• Eurozone manufacturing weakened further, with falling orders, rising input costs, persistent employment declines, and tariffs intensifying pessimism.
• China manufacturing returned to marginal expansion, driven by short-term stockpiling amid property sector stress and weak consumer demand.
• Asia outside China outperformed, supported by AI and semiconductor demand, export growth, and stronger manufacturing momentum than Western economies.

Welcome to Industry Intelligence Insights, your monthly briefing on the trends, risks, and opportunities shaping the global electronics manufacturing ecosystem.

First, this month’s market analysis from Chief Economist Dr. Shawn DuBravac highlights a growing divergence between resilient headline economic growth and continued strain across global manufacturing. While the U.S. economy continues to expand at a moderate and sustainable pace, factory activity in the United States and Europe remains under pressure, weighed down by tariffs, high input costs, and softer demand.

Also in this issue, you’ll find the latest PCB and EMS Book-to-Bill results, updated global sentiment data showing improving demand conditions, and a regional deep dive into how manufacturers across Europe and Asia are navigating uneven recoveries, supply chain realignments, and AI-driven demand.

We also highlight new resources, including our latest white paper on AI-driven electronics design, recent policy and trade analysis from the Global Electronics Association, and upcoming industry events shaping the year ahead.
Read on for all the latest industry intelligence from the Global Electronics Association.
 

Thiago Guimarães 
Director of Industry Intelligence, Global Electronics Association

Market Analysis from Global Electronics Chief Economist Shawn DuBravac

The broader U.S. economy continues to show notable resilience. Real GDP grew at a strong 4.3% annualized pace in the third quarter of 2025, powered in large part by solid consumer spending. While labor market momentum has cooled, conditions remain relatively tight. The November employment report showed nonfarm payrolls rising by 64,000, with the unemployment rate holding at 4.6%. Inflation also appears well contained. The Consumer Price Index increased 0.2% between September and November and is up 2.7% over the past year, while core CPI rose 2.6%. Taken together, these indicators point to an economy that is expanding at a moderate and sustainable pace.

That underlying strength has not translated into a broad-based recovery in manufacturing. As the new year begins, the U.S. manufacturing sector remains under pressure. The manufacturing PMI fell to 47.9 in December 2025, its lowest reading since October 2024 and the tenth consecutive month below the 50 threshold that separates expansion from contraction. The ISM survey indicates that roughly 85% of manufacturing GDP is contracting, with 43% of industries in strong contraction. New orders remained weak at 47.7, inventories dropped sharply to 45.2 as firms worked down stockpiles, and factory employment declined for the eleventh straight month. Production edged slightly into expansion at 51, but tariffs and geopolitical uncertainty continue to weigh on demand.

A separate survey from S&P Global paints a somewhat less negative, though still cautious, picture. The U.S. Manufacturing PMI eased to 51.8 in December from 52.2 in November, signaling continued expansion but at a slower pace. Output grew modestly, but new orders declined for the first time in a year, and export demand remained soft. Businesses added to inventories and hiring held up, while selling price inflation slowed to its weakest pace since early 2025. Business confidence deteriorated, reflecting growing concern about the outlook.

Taken together, the two surveys suggest that U.S. manufacturing remains subdued. High input costs and tariffs are compressing margins, while demand, particularly from foreign buyers, has softened. Hard data reinforces this view. Factory output was flat in November following a 0.4% decline in October, although production was still 1.9% higher than a year earlier. Employment trends are less encouraging, with manufacturers shedding roughly 63,000 jobs over the course of the year, underscoring the sector’s ongoing struggles.

In Europe, the broader euro zone economy has shown modest resilience despite some weakness. Real GDP growth in the third quarter of 2025 was revised up to 0.3% quarter over quarter, supported by stronger investment and government spending, even as household consumption slowed. Inflation continued to ease, with annual consumer price growth revised down to 2.1% in November, matching October, while core inflation held at 2.4%. The unemployment rate remained steady at 6.4% in October. Services activity and easing inflation are helping to sustain modest growth, even as manufacturing remains a drag.
Manufacturing conditions in the euro zone deteriorated further toward the end of the year. The HCOB Eurozone Manufacturing PMI fell to 48.8 in December from 49.6 in November, its lowest level in nine months. Production declined for the first time in ten months, and new orders fell at the fastest pace in nearly a year. Germany posted the weakest performance among the eight countries surveyed, while Italy and Spain slipped back into contraction. France was a notable exception, recording a 42-month high PMI. Input cost inflation accelerated to a 16-month high, yet firms continued to discount selling prices for the seventh time in eight months. Employment fell for the thirty-first consecutive month, and survey responses point to deepening pessimism as U.S. tariffs bite and global demand slows.

In China, economic growth remains constrained by ongoing stress in the property sector, even as net exports and manufacturing provide partial support. Authorities are targeting around 5% GDP growth in 2026, but most analysts expect growth closer to 2½–3%. Many caution that recent improvements in sentiment may prove temporary. Policymakers continue to deploy targeted stimulus, including measures to support housing and local government finances, while maintaining relatively loose monetary conditions.

China’s official manufacturing PMI rebounded to 50.1 in December 2025 from 49.2 in November, ending an eight-month streak of contraction. The production subindex rose to 51.7, and new orders increased to 50.8, both the strongest readings since March. Export orders, however, remained in contraction at 49.0. The rebound likely reflects pre-holiday stockpiling rather than a durable shift, given persistent property weakness and ongoing overcapacity.

Other economic indicators remain mixed. Industrial output rose 4.8% year over year in November, slightly below October’s 4.9% and short of expectations. Retail sales growth slowed sharply to 1.3% from 2.9%, while fixed asset investment declined 2.6% over the January to November period. Inflation remains very low, with consumer prices up just 0.7% year over year in November, even as food prices returned to positive territory.

Outside China, Asia’s export-oriented economies are benefiting from strong global demand for semiconductors and AI-related products. Singapore’s economy grew 5.7% year over year in the fourth quarter of 2025, lifting full-year growth to 4.8%. Biomedical manufacturing and electronics were key drivers, supported by robust demand for AI-related semiconductors. While 2025 was boosted by front-loading ahead of new U.S. tariffs, policymakers caution that growth could slow in 2026 if trade pressures intensify. Inflation across the region is mixed. Japan’s core inflation remained near 3% in November, above the Bank of Japan’s 2% target, while South Korea’s inflation has eased to around 2%, giving policymakers room to hold rates steady.
Overall, Asia’s manufacturing hubs ended 2025 in stronger shape than their counterparts in the United States and Europe. Manufacturing activity rebounded in several economies as export orders improved, and demand for AI-related hardware accelerated. Export growth has surged across much of the region, and the near-term outlook for Asia’s export-oriented manufacturers remains relatively favorable.

Southeast Asia continues to post steady growth, though momentum has moderated. Indonesia’s manufacturing PMI eased to 51.2 in December from November’s nine-month high of 53.3, marking the fifth consecutive month of expansion. New orders and employment grew more slowly; foreign sales declined for a fourth month, and capacity pressures persisted. Input costs remained elevated, though inflation in those costs eased to a four-month low, and business confidence improved.

Vietnam also recorded a modest slowdown, with its PMI dipping to 53.0 from 53.8 in November. Output expanded for an eighth consecutive month, supported by continued growth in new orders. Supply disruptions from storms and flooding weighed on activity, while employment rose to address backlogs. Input costs surged at the fastest pace since mid-2022 and firms passed those costs through to customers. Despite these pressures, business sentiment strengthened to its highest level since March 2024. Together, Indonesia and Vietnam illustrate how Southeast Asian manufacturers are navigating supply disruptions and tariffs while benefiting from shifting supply chains and AI-driven demand.

India remained Asia’s fastest-growing major manufacturing economy, though signs of cooling are emerging. The HSBC India Manufacturing PMI slipped to 55.0 in December, down from 56.6 in November and marking the weakest improvement in two years. New orders and export growth softened, with export demand expanding at its slowest pace in fourteen months. Employment growth was marginal as firms judged current staffing levels sufficient, and business confidence fell to its lowest level in nearly three and a half years. Even so, with the PMI well above 50, manufacturing activity in India remains firmly expansionary.

Recent data highlight a clear divergence across the global manufacturing landscape. The United States and Europe remain in contraction, weighed down by tariffs, high input costs, and softer demand. U.S. factories face their most challenging conditions since late 2024, while euro zone manufacturers report falling orders and rising costs. China’s manufacturing sector has returned to marginal growth, but the rebound appears tentative and likely driven by short-term factors. In contrast, Asia outside China stands out as the bright spot. Japan’s factory sector has stabilized, India continues to expand despite slower momentum, and South Korea and Taiwan have returned to growth as global technology demand rebounds. Southeast Asia continues to grow, though at a more measured pace.

Looking ahead, global manufacturing will continue to contend with tariffs, supply chain realignments, and weakening demand from Western economies. Asian exporters appear better positioned to benefit from the AI and semiconductor cycle, but they remain vulnerable to shifts in U.S. policy and global demand. While the broader economy continues to expand in most regions, supported by services activity and resilient consumers, the persistent gap between manufacturing and the rest of the economy underscores the uneven nature of the recovery.
 

Book to Bill

PCB: November PCB Data Signals Sustained Growth as Book-to-Bill Remains in Expansion

EMS: November EMS Data Shows Short-Term Pullback but Book-to-Bill Signals Underlying Stability

Global Sentiment

The Current Sentiment of the Global Electronics Manufacturing Supply Chain

The December 2025 Global Sentiment Report shows that all measures of demand strengthened in December, pushing overall demand to its highest level since 2022. The Backlog Index rose to 100, edging out of contraction for the first time since August. The New Orders Index posted a notable increase, while both the Capacity Utilization Index and the Shipments Index also moved higher.

Recent Reports

The Transformation of A.I.-Driven Electronics Design: Redefining Processes, Skills, and Standards in Electronics Development

This new white paper from the Global Electronics Association examines the evolution, implementation challenges, and future trajectory of AI in electronics design, emphasizing how innovation, validation, and human oversight must evolve together.
 

Articles 

USMCA Review: A Critical Opportunity to Fortify North American Electronics
By Chris Mitchell, Chief Advocacy Officer
 

Global Electronics Association Calls for Expansion of EU Chips Act to Support Critical Industries
A new blog from the Global Electronics Association.

Social Media

A proportionate, risk-based approach is urgently needed to address functional-critical PFAS in electronics, especially fluoropolymers and other materials with no viable alternatives. Watch this video to learn what’s coming, what’s required, and how to help represent the voice of the global electronics industry on PFAS

Upcoming Events:

• March 16–19, 2026 — APEX EXPO, Anaheim, California: The Global Electronics Association’s flagship event will feature keynote addresses from IBM Quantum’s David Lokken-Toyli, futurist Zack Kass, and Association President & CEO John W. Mitchell, offering bold insights on quantum computing, artificial intelligence, and the future of global electronics innovation. Register HERE 

by Diana Radovan, Global Electronics Association Sustainability Policy Director

Key Summary

• ECHA published guidance and PFAS use mapping to support stakeholders preparing for the SEAC consultation on PFAS restrictions.
• The consultation will open after SEAC’s March 2026 meeting and run for 60 days through EUSurvey.
• Guidance outlines two surveys, required evidence, confidentiality rules and limits on attachments.
• Sector-specific questions focus on alternatives, PFAS volumes and organisational and societal impacts.
• Updated PFAS use mapping defines sectors, sub-uses and SEAC evaluation levels for accurate classification.
• Companies are encouraged to prepare evidence early and identify their SEAC evaluation levels.

The European Chemicals Agency (ECHA) has released guidelines and an extensive mapping of PFAS uses to support stakeholders participating in the consultation process on the draft opinion of the Committee for Socio-Economic Analysis (SEAC) regarding PFAS restrictions. https://echa.europa.eu/hot-topics/perfluoroalkyl-chemicals-pfas. 

The guidance is consistent with the information provided in the recent ECHA webinar on this matter and describes the structure and procedures of the two types of planned surveys, as well as the specific questions that will be asked, which will include single and multiple choice, numerical, and open-ended responses, with a character limit of up to 5000.  The consultation will open shortly after SEAC’s meeting in March 2026 (now scheduled for 9-13 March) and will run for 60 days. 

Below we provide further explanations on each document, how it will be used, and next steps. 

    A) Guidance for Respondents of the SEAC draft opinion consultation

This is the practical handbook for anyone planning to submit input. It sets out how the consultation will work and what SEAC needs from respondents. There will be two survey tracks: 

• Sector-specific survey: focusing on sector-specific evaluations of uses for 14 sectors of use and for PFAS manufacturing. 
  The scope of the SEAC evaluation will vary by sector and information requested will range from specific sues to sub uses and individual applications as described PFAS use mapping. This scope is referred as the SEAC evaluation level. 
  The questions of this survey focus on alternatives, volumes and impacts for the organisation and the society. For the relevant sectors there is a question on the cost of feasibility of Restriction Option 3.
• General survey: This survey contains questions related to the main sections of the SEAC draft opinion, which apply across all sectors. Comments should clearly reference the corresponding sections and conclusions of the opinion and specify the relevant sectors from which the comments are drawn.

The emphasis is on socio‑economic evidence—availability and feasibility of alternatives, expected costs and benefits, timing for substitution, potential business impacts (including profits and jobs), and practicality/enforceability of the options under discussion. SEAC will not consider hazard or exposure data (such tasks belong to the Committees for Risk Assessment (RAC). 

The Guidance also covers the logistics (EU Login, EUSurvey, saving drafts securely) and how to flag confidential information correctly so sensitive data is treated appropriately. Attachments and external links will not be accepted—everything will be typed into the survey fields. 

The Guidance already includes the full set of draft survey questions that we will see in EUSurvey (Section 4), so that we can start preparing your answers now (wording, character limits, conditional logic are all shown). Minor adjustments may still occur before launch.

    B) Updated draft mapping of PFAS uses

The document describes each PFAS sector, breaks it down into use categories → sub‑uses → applications, and ends at the SEAC evaluation level—the unit SEAC uses in its assessment. It also clarifies what is in scope and what is not for each sector, so that misclassifying a use can be avoided. Beyond the 14 sectors SEAC evaluated, the annex lists the 8 additional sectors identified in the updated Annex XV report that are covered via the general survey.

The final version is expected to be published when the SEAC consultation opens in spring 2026.

We recommend to:

• Locate your uses in the Use‑mapping and note the corresponding SEAC evaluation levels you intend to comment on.
• Start drafting concise evidence per evaluation level on: alternatives (existence and sufficiency), technical/economic feasibility, safety aspects of substitution, PFAS tonnages used/imported, substitution timelines, and the likely operational/employment/product‑availability impacts if PFAS cannot be used.
• Review implementation costs where relevant (e.g., reporting requirements; site‑specific PFAS management plans; monitoring of emissions at industrial sites) so you can indicate magnitude where the survey asks for it.
• Set up your EU Login early and plan to copy/paste prepared responses into EUSurvey (attachments and external links won’t be accepted).

The Global Electronics Association will also submit consolidated answers on behalf of members across the entire electronics value chain. To get involved, contact me at DianaRadovan@electronics.org. 

by Diana Radovan, Global Electronics Association Sustainability Policy Director

Key Summary

• EFRAG provided technical advice to the European Commission on simplified ESRS revisions developed under the 2025 Omnibus package.
• The simplified ESRS aim to reduce reporting burden while maintaining EU Green Deal objectives and improving interoperability with IFRS SDS.
• Key updates include DMA simplification, narrative clarity, reduced granularity and streamlined disclosure structures.
• Mandatory datapoints were reduced by 61 percent and voluntary disclosures removed, cutting the full disclosure set by 70 percent.
• New reliefs address data availability, acquisitions, disposals, anticipated financial effects and undue cost or effort.
• The European Commission will next adopt a Delegated Act to revise ESRS based on EFRAG’s advice.

The European Financial Reporting Advisory Group (EFRAG) has submitted its technical advice to the European Commission (EC) on the draft simplified European Sustainability Reporting Standards (ESRS). This is a key step in the Omnibus package, released in February 2025, after a call from stakeholders and ‘wave 1’ companies that ESRS were unnecessarily complicated and a huge burden for companies.

Our position

We welcome the ESRS revision by EFRAG and the timely provision of technical advice to the EC. As the revisions are very significant, it is too early to fully understand their impact on reducing reporting burden. Without having seen the final legal text adopted through a delegated act by the EC (pending in early 2026), we anticipate that reporting will still remain a significant effort for companies. However, we support the EC’s goal of achieving ESRS simplification, especially regarding the simplification Double Materiality Assessment (DMA) and the increased inter-operability of standards.

Background

Since the Corporate Sustainability Reporting Directive (CSRD) came into force on 1 January 2023, there have been increasing demands in the European Union to streamline the requirements and reduce the reporting burden associated with sustainability reporting. In November 2024, the EC announced its intention to introduce a proposal to amend three key pillars of the European Green Deal through an Omnibus package: CSRD, the Corporate Sustainability Due Diligence Directive (CSDDD) and the Taxonomy Regulation. The Omnibus package, released in February 2025, has resulted in several sets of proposals to date – revising the existing ESRS is one element of the proposals. For this, the EFRAG have been tasked by the European Commission to provide technical advice for the adoption of a delegated act to revise and simplify the existing ESRS. On 31 July 2025, EFRAG issued Exposure Drafts (EDs) revising all 12 existing ESRS, with a 60-day public consultation period. On 3 December 2025, after considering consultation feedback, EFRAG submitted its technical advice to the European Commission (EC) on the draft simplified ESRS. 

Summary of modifications

To simplify the ESRS without compromising the objectives of the EU Green deal, the EFRAG revisions to the ESRS focused on several key simplification areas. This summary is not an exhaustive list.

Areas of simplification

 ‘Bottom-up’ review of all datapoints

EFRAG’s data gathering efforts showed that companies found narrative datapoints to be too granular, preferring a more principles-based approach, and that many datapoints could be removed without an impact on the quality of data and information. Therefore, EFRAG has cut mandatory datapoints by 61% and eliminated voluntary disclosures, resulting in a 70% reduction in the full disclosures set. Revisions that reflect a less granular approach to narrative disclosures for PATs and eliminating the least relevant datapoints, i.e. those not directly meeting the disclosure objectives. 

Next steps

As next step, the EC needs to adopt a new Delegated Act revising the first set of ESRS based on EFRAG’s technical advice, in order for this to be transposed into legislation.

Contact 

For more information, contact me at DianaRadovan@electronics.org.