Electronic Manufacturing Trends in 2023 – How We See It

By Joel Scutchfield, General Manager of SMT Business Operations & Director of Sales, Koh Young America, Inc.

Not every company celebrates twenty years in business, even less celebrate the success and market leadership enjoyed by Koh Young. As leader of a startup in 2002, I am sure Dr. Koh had not imagined the success of the team he built and the innovations that changed the industry.

As well as celebrating our 20-year anniversary in 2022, we also installed our 20,000th inspection machine. And in the Americas alone, we installed nearly 500 machines. All in all 2022 was another banner year on the back of numerous years of growth and innovation. So, as we look to 2023, we do so with guarded enthusiasm.

Challenges like tightening financial policies, interest rate hikes, and a destabilizing geopolitical landscape are fueling concerns about 2023, however, there are opportunities. 

Voice of customer 

Many of our customers have shared that they have big backlogs and orders to carry them through 2023 and are feeling confident themselves. Order cancellations and continued part  shortages are their only real concerns at this point. And while many are waiting for demand to soften, few are seeing it as of yet. 

Perhaps there is an interesting dynamic protecting the EMS industry from a downturn. Some economists with an intimate knowledge of the tech sector suggest that growth in the use of technology in certain sectors, like EVs and cloud computing will offset any overall downturn in consumer spending. Others believe that the sectors in which companies operate may well dictate their fortunes in 2023 and beyond. What is clear is that the use of electronics in all products and industrial sectors, continues to grow substantially.

Could lack of available talent slow reshoring?

It appears that some reshoring plans have been slowed or scaled back as a result of an inability to find good engineering (and production operator) talent in both the US and Mexico. It would be a pity to see talent shortages slow a regionalization trend that has been growing as a result of geopolitical issues and an understanding that shorter supply chains can be economical and sustainable.

Over the last year or so, many EMS companies have reported a trend of new projects focused on North America as a manufacturing location. While those that saw their supply chains disrupted during COVID and are still seeing lockdowns causing problems, are exploring ways to reduce  their dependence on China in part, or in some cases, all together. And it’s not just disruption driving this trend. Consumer sentiment and environmental challenges are also driving a desire to manufacture closer to the end market.

And could automation mitigate this slow down?

Many EMS players, particularly the larger ones, agree we may need to deploy more automation into post SMT processes to tackle higher labor costs in the US and Canada and the talent shortage throughout the region. Over the last few decades, we’ve successfully focused on reducing the labor requirement on the SMT line. Our own equipment, software, and processes have contributed to the SMT line being heavily automated. We have helped reduce the number of operators required while also ensuring those operators can multitask and be quickly trained and deployed.

But once a PCBA (Printed Circuit Board Assembly) leaves the SMT line, the processes often rely heavily on human intervention and manual operations. While these assembly processes have become more efficient thanks to lean techniques, few EMS companies have truly embraced adaptable automation throughout post SMT assembly and box build. Some have, and with huge success, driven the labor element of manufacturing much lower to ensure they can compete in high cost geographies. 

I suspect this will be a major area of consideration in 2023 and beyond. Companies continue to drive the fourth industrial revolution and search for that elusive digital dividend as they transform assembly, supply chain, and business processes. The idea of the autonomous factory still exists, as does a more digitally enabled and transparent supply chain, especially with parts being constrained. Watch out for some exciting new developments in both hardware and software in this area.

Backing the right industries

At Koh Young, we feel like we are aligned with the right kind of customers to be able to get through any downturn in better shape than many. Customers in EV, 5G, Cloud, Solar, Mil Aero, Advanced Packaging, and those that place an emphasis on Smart Factory realization continue to explore and engage with the solutions we provide. Newer innovations in pre-reflow AOI and the dispensed material inspection are growing in popularity and demand. We remain grateful that the industry recognizes our ability and passion to partner with them to produce better products more efficiently, and we expect that to continue.

Having enjoyed twenty years of success in the electronics manufacturing world, we are optimistic and pragmatic about 2023. Those two decades have taught us to be innovative, passionate, and tenacious. These traits are part of the Koh Young DNA and will serve us in the coming decades. We have also learned, especially in recent times, how resilient, agile, and innovative our industry can be. As an industry, we’ve rolled with the punches of trade wars, a pandemic, and extreme supply chain disruptions and we’ll meet the next set of challenges with the same mindset.

We’re proud of what our industry has achieved and confident in its ability to continue to survive and thrive, whatever is thrown at it.