Electronics Industry Demand Holds Steady Amid Tariff Turbulence

Electronics manufacturers are bracing for higher costs as profit pressures deepen according to IPC’s May Sentiment of the Global Electronics Manufacturing Supply Chain Report. Despite tariff concerns and rising material and labor costs, electronics industry demand is holding steady. The New Order Index expanded this month, signaling ongoing demand strength.

 

Material cost pressures remain elevated and are expected to intensify, with most electronics manufacturers anticipating further increases. Meanwhile, labor cost pressures have moderated, reaching their lowest index level on record, though the majority of electronics manufacturers continue to report higher labor costs. The Profit Margin Outlook Index fell to a low level, reflecting growing expectations of near-term pressure among manufacturers.

 

In response to special questions regarding tariff pressures, the percentage of electronics manufacturers not pulling forward shipments due to potential tariff risks has dropped from 65 percent in February to 53 percent in May 2025. This shift is most pronounced in Europe, where the share not pulling forward shipments fell nearly 40 percent (from 76 percent to 38 percent, while 19 percent now report pulling forward 26 percent–50 percent of shipments, up from zero percent as reported in the March 2025 analysis.

 

Paying for Tariffs

Shawn DuBravac, Ph.D., IPC chief economist and report author noted, “Electronics manufacturers expect more than two-thirds (68 percent) of announced tariffs will be paid by consumers.” 

 

Fifty-two percent of electronics manufacturers report they are adding a separate line item for tariff costs on invoices, while 38 percent are rolling those costs into the overall price without identifying them specifically.                              

 

Additional survey data show:

  • Over the next six months shipments, capacity utilization, backlogs, and orders are expected to rise, while profit margins are expected to decline.
  • Electronics manufacturers report tariff uncertainty is delaying investment or sourcing decisions (53 percent), and half of firms report greater-than-expected disruption—yet views are split on whether tariffs will be reversed (48 percent) or become permanent (48 percent).
  • Nearly two-thirds (64 percent) of electronics manufacturers indicate they have not started or increased efforts to secure manufacturing capacity in the past 60 days.
  • Over the next six months, profit margins are expected to rise more so for firms in APAC than for those in North America.
  • Electronics manufacturers expressed greatest concern regarding U.S. trade policies as it relates to overall economic impact (47 percent) and Impact on Business Operations (32 percent).                     

These results are based upon the findings of IPC’s Current State of Electronics Manufacturing Survey, fielded between April 15 and April 30, 2025.

Read the full report.