Cost Pressures Continue to Recede for Electronics Manufacturers

IPC Releases June Global Sentiment of the Electronics Supply Chain Report

Cost pressures continue to recede and demand remains positive, with Orders Index rising to 107, the highest level in three months, per IPC’s June 2023 Global Sentiment of the Electronics Supply Chain Report.

“Cost pressures are continuing to recede,” said Shawn DuBravac, IPC chief economist. “The majority of survey respondents are still reporting that labor costs and material costs are rising, but the number of companies experiencing rising costs declined again this month. Less than half of respondents believe material costs will rise in the coming months.”

Additional survey results indicate:

  • The Backlog Index slipped further into contraction territory this month, hitting the lowest level on record.
  • Over the next six months, electronics manufacturers expect to see continued increases in both labor and material costs, although to somewhat of a lesser extent with respect to materials.
  • While two-thirds (68 percent) of firms operating globally report rising customer inventory, only 26 percent of firms in Asia Pacific and 28 percent of those in Europe are experiencing a current increase, with European firms instead more likely to indicate customer inventory is holding steady.
  • Per special questions asked about worker recruitment and retention, most manufacturers indicate employee retention this year is comparable to 2022. Roughly 18 percent indicate retention is more difficult this year, 18 percent indicate is it easier than in 2022 and 55 percent report it is about the same.
  • In an effort to hire new employees, two-thirds (66 percent) of electronics manufacturers have raised salaries/rates beyond what was anticipated, with more than half (54 percent) looking for potential employees in non-traditional places. About 39 percent report they have improved benefits packages to attract new workers.

For the report, IPC surveyed hundreds of companies from around the world, including a wide range of company sizes representing the full electronics manufacturing value chain.

View full report.