Electronics/ICT Industry Trends November 2024

Global performance

• Global electronics/ICT production growth is expected to achieve 8.2% in 2024 and to robustly remain above 5% in both 2025 and 2026.

• The primary drivers of demand will be accelerating digitalisation, industrial automation and the increased need for advanced semiconductors.

• Computers & office equipment sales growth will be robust in 2025 and 2026, as computing devices bought during the pandemic come to an end of their lifecycles.

• Semiconductor sales are forecast to grow by more than 10% annually in the coming two years, driven by the AI boom. High-powered chips will be an important driver of manufacturing and productivity growth.

• After a stagnation in 2024, we expect robust telecommunication equipment production and sales in 2025 and 2026, driven by mobile and broadband infrastructure upgrades.

 

USA: Semiconductor output to drive robust growth in the near term

• We expect US electronics and computer production to grow by 6.6% in 2024, followed by increases of 2.9% in 2025 and 5.2% on 2026. Investment growth in the industry will remain high.

• Growth is being driven by the electronic components and boards subsector, which we expect to expand by 8.3% this year and by 4.5% in 2025. Semiconductor investment and production will be boosted by the 2022 CHIPS and Science Act. Cloud computing and storage, automated data processing, and cybersecurity are increasingly becoming priorities for businesses. 

• If the incoming Trump administration implements its fiscal policy proposals of substantial tax cuts, this would benefit US technology businesses. A considerable number of them are highly leveraged and capital-intensive.

• However, a steep increase of tariffs on Chinese imports could lead to a supply chain disruption of components made in China, resulting in delivery delays and higher production costs.

Japan/South Korea/Taiwan: High-tech goods enjoy growth, but US restrictions present a downside risk

• Growth of high-tech goods will be robust in these East Asian markets in 2024 and 2025. The long-term outlook is good. All three markets should benefit from increased demand for semiconductors.

• Despite major efforts in Europe, China and the US to expand semiconductor production, we expect that high-end chip production capability will mostly remain in Taiwan.

• However, additional US restrictions on advanced chip exports to China could curtail sales and profits of East Asian high-tech producers.

China: High-tech is a key sector for China, and US tariffs are likely to have a deep impact

• We expect Chinese electronics and computer production to increase by 11.3% in 2024 and by 5.2% in 2025. Increasing worldwide demand for computers and office items andupgrades to telecommunications equipment should benefit China.

• Chinese production of electronics and boards (including semiconductors) is forecast to grow by 27% this year. The high-tech sector is a key area of the government´s targeted industrial strategy, with subsidies of about USD 150 billion spent over the past ten years.

• However, an increase of tariffs on Chinese imports to a reported 60% by the incoming US administration would have far-reaching consequences. China's output of electronics would decline by 6% and total Chinese electronics exports decrease by 13% in such a scenario.

Europe: 2025 rebound will be driven by manufacturing demand

• After a 0.8% contraction in 2024 we expect that the production of electronics and computers in the EU and UK will rebound by 3.7% in 2025 and 4.4% in 2026.

• The telecommunication sector is set to recover by 3.7% next year after a 2.5% contraction in 2024. Electronic precision instruments are forecast to increase by 3.0% after a 1.3% decrease this year.

• Until recently, Europe has not produced any advanced chips. The EU Chips Act is set to invest EUR 43 billion in local semiconductor production and research. Current estimates suggest the EU´s target of 20% of global production by 2030 is likely to be beyond reach, constrained by limits on subsidies and location disadvantages compared to Asia (e.g. operating and labour costs).

For more a more comprehensive assessment of the growth drivers and downside risks of the electronics/ICT industry please download the report below.