Despite hitting a year-high demand in March 2025, electronics manufacturing faces soaring costs, recruitment struggles, and tariff challenges, pushing firms to rethink supply chains and operations.
Global electronics manufacturing recorded its strongest demand in nearly a year this March, according to a report by the Institute of Printed Circuits (IPC).
The survey highlighted that the demand index climbed to 107.25, reflecting broad expansion in customer activity and production levels. The shipment index also rose to 109, its highest point since March 2024, indicating firms’ growing ability to meet demand while maintaining strong supply chain performance.
Furthermore, capacity utilisation increased to 113, the highest level since late 2023, suggesting efficient operational deployment across manufacturing units.
However, rising costs remain a concern. 59% of electronics manufacturers reported increasing material costs, pushing the material cost index to 127. Likewise, 52% observed rising labour costs, raising the labour cost index to 125. These figures reverse prior downward trends, pointing to renewed inflationary pressures.
At the same time, other indicators are weakening. Only 14% of firms saw rising profit margins, while 56% reported no change and 30% saw declines, resulting in a profit margin index of 92, the lowest across all tracked indicators.
Recruitment conditions are also deteriorating. Just 13% of respondents reported an improvement in the ease of finding skilled talent, while 63% saw no change and 24% experienced worsening conditions. The recruitment index stands at 95.
In terms of supply, 77% of firms reported stable inventory from suppliers, but 9% noted declines, pushing the supply inventory index to 103, only slightly above the expansion threshold. Meanwhile, 21% reported an increase in inventory available to customers, while 74% said it remained unchanged, placing the Customer Inventory Index at 109.
When asked about current supply chain strategies in light of tariffs:
- 31% have invested in automation or optimisation,
- 28% have switched to non-tariffed suppliers,
- 61% are considering renegotiating supplier contracts.
Workforce caution is rising: 18% of manufacturers have implemented hiring freezes, with 36% contemplating the same.
Looking forward, IPC noted that electronics manufacturers expect continued high labour and material costs, along with increased orders and shipments. Meanwhile, 29% of supply chains remain reliant on Chinese suppliers.
Concerns over U.S. trade policy were significant too; 47% of firms cited overall economic impact as their top concern, followed by 32% focusing on the effects on business operations.
