Current Conditions for the Electronics Supply Chain Remain Challenging: Two New Reports from IPC

Material and labor costs continue to be the two largest issues facing the electronics supply chain while inventory and transportation constraints continue to be a major impediment to growth.

Results from our monthly sentiment study find:

• Nine in 10 electronics manufacturers report rising materials costs with nearly three-fourths reporting rising labor costs.
• While order flow remains positive, higher costs are hurting profit margins; 58% reported expanding orders, but 40% reported a decline in profit margins, and 19% reported profit margin improvement

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The December economic outlook report shows:

• Despite uncertainties, supply chain disruptions have resulted in unfilled pent-up demand that should help carry growth into the first half of 2022. While we have lowered our forecast somewhat, 2022 should still be a historically strong year.

• Incoming data is consistent with IPC’s monthly sentiment study. There is capacity to buy, among both consumers and businesses, but supply chain constraints have limited potential growth in spending and investment. Manufacturers report strong order growth, but growth is being offset by higher costs and as a result profit margins are declining.

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