The outlook for the electronic components industry in 2024 is expected to be positive despite challenges. Sales sentiment remains volatile, with improvements from June to August somewhat dampened by September and October results falling below expectations, as reported by the Electronic Components Industry Association (ECIA). “The good news is that the October sales sentiment score improved over September by 2.1 points reaching 88.8,” said Dale Ford, ECIA chief analyst.
However, there is still general optimism for 2024 and beyond. The global semiconductor industry, for one, is on track for a recovery, notwithstanding near-term headwinds, according to industry association SEMI. This is attributed to the electronics industry’s overall good health, with sales forecast to exceed the peak achieved in 2022.
Still, there are challenges that will likely persist for the manufacturing industry in general in 2024. In addition to economic uncertainty, they include “the ongoing shortage of skilled labor, lingering and targeted supply chain disruptions, and new challenges spurred by the need for product innovation to meet company-set net-zero emissions goals,” according to a report by Deloitte.
Growth drivers
Nevertheless, there are factors that will collectively contribute to the positive outlook for the electronic components industry in 2024 and beyond.
A projection from Precedence Research is a 6.83 percent CAGR from 2023, with value reaching about $368.4 billion by 2032. This is based on increasing demand in various industries such as consumer electronics, automotive, telecom, industrial automation and others.
Widening 5G deployment, which GSMA said would mean 1.2 billion connections by 2025, is a key driver as it supports further advances in technologies used in both current and future devices. By application, Precedence Research finds the automotive segment the biggest impetus, as it continues to incorporate different electronics and technologies to attract market attention.
The tech innovations that can lead to upgrades in components, devices and other hardware include ongoing R&D on many fronts. The top 10 initiatives listed by StartUs Insights, a company that keeps a database for innovation, startups and technologies, are advanced electronic materials, organic electronics, AI, Internet of Things, embedded systems, printed electronics, advanced IC packaging, miniaturization, 3D printing and immersive technologies.
Technological infrastructure buildup
There is also a semiconductor infrastructure buildup, in the US and Europe in addition to China’s ongoing project, that is contributing to a positive outlook.
The US is pursuing domestic production for its semiconductor industry and is looking to have four “Tech Hubs” and 27 sites for other specialties, including materials research, battery technology and biotechnology, according to Sourcengine.
A similar initiative in Europe is meant to improve its semiconductor market share from below 10 percent to 20 percent by 2030. The target funding that will cover R&D and manufacturing is more than $45 billion, according to Forbes.
China, meanwhile, is looking to a new infusion of about $40 billion, according to Bloomberg. It has been working on its “Made in China” program launched in 2015, with a goal of filling 70 percent of domestic demand by 2025.
Most in-demand electronic components
Industry analysts consider the following the most sought-after electronic components in 2023, a trend likely to extend in 2024.
High-performance processors: Requirement for microcontrollers, microprocessors and ASICs will continue to grow due to the increasing integration of electronics in various industries such as healthcare, automotive and home automation.
IoT components: As the Internet of Things continues to expand, there will be a significant increase in demand for sensors, microcontrollers and wireless modules.
5G technology components: The rollout of 5G technology across the globe will drive the need for more RF filters, amplifiers, antennas and baseband processors. In turn, as more equipment and devices are connected to the internet, this will jack up demand for other electronic components, including passives, discretes and PCBs.
