At the eighth annual seminar of the electronics industry, “IPC DAY EMS 2023: Where have all the orders gone?” experts acknowledged that the double-digit growth period in the electronics industry is coming to an end, and the situation is normalising. The seminar addressed global issues and prospects in the field, both in Europe and worldwide.
Arno Kolk, the Managing Director of the Estonian Electronics Industries Association, provided an overview of the challenges facing the local electronics industry. He stated that the Estonian electronics industry is the largest in the Baltics and has demonstrated resilience and growth despite crises in recent years, including the COVID-19 pandemic, the chip crisis, and the war in Ukraine. The year 2022 witnessed record revenue growth in the sector. “Partly, this is due to the price increase resulting from the component crisis, but the demand was also very high last year. In some months of 2023, we have seen a decline compared to the very high base of the previous year, but overall, the sector’s results for this year are good. Our ability to foresee and make predictions has decreased to a few months, making precise forecasts for the next year challenging,” Kolk noted.
He emphasized that the results of the electronics industry largely depend on the performance of other sectors in target markets, as 93% of the local electronics industry’s production is exported. “For example, the decline in the Nordic construction sector affects some of our electronics manufacturers producing smart home solutions. However, demand remains high, for example, in the automotive and defense industries,” Kolk explained.
The Estonian electronics industry has been minimally affected by the war in Ukraine, as exports to Russia accounted for only 3-4%. “Compared to other industries, the electronics industry consumes less electricity, making it less affected by the increase in energy prices,” said Kolk.
“Estonia has a world-class electronics industry and extensive expertise throughout the value chain. Our companies can offer not only electronics manufacturing services but also product development, prototyping, and after-sales services,” Mr. Kolk highlighted. Estonia hosts 24 Electronics Manufacturing Services (EMS) companies, making it the largest electronics manufacturing center in the Baltics.
Shortage of engineers becomes acute
According to Mr. Kolk, one of the sector’s challenges is the shortage of engineers and other electronics specialists, which may begin to hinder the industry’s development in the future. In the last four years, the Estonian Electronics Industries Association has carried out marketing campaigns to attract more young people to study electronics.
Nadežda Dementjeva, the CEO of Inission Tallinn, emphasized the shortage of engineers in her presentation. The company, exporting its products to European, Asian, and U.S. markets, has increased its sales volume and revenue by more than twice in the last two years and made large investments to grow production capacity. “We have over 400 active products in production, and all our engineers have been fully occupied with them. If we want to grow, our challenge is the shortage of engineering resources,” MS. Dementjeva noted.
Order decline linked to earlier sales
Dieter G. Weiss, an expert from the German company in4ma analyzing the electronics manufacturing sector, sought answers in his presentation as to why the volume of orders has decreased in the European EMS sector. According to Mr. Weiss, the component crisis created a situation where companies purchased large inventories just in case, which now need to be sold. In responding to what is behind the current decrease in orders, he stated that much of the sales have already been made in advance. In the context of high interest rates, he predicts an average annual growth of 6.9% for the European EMS and Original Design Manufacturing (ODM) sector for 2030. Since electronics manufacturing is more profitable in Central and Eastern European countries than in Western Europe, he recommends companies look into this region.
Among other speakers, Dr. Mareike Haaß provided an overview of the situation in the European Electronics Manufacturing Services (EMS) sector, and Simon Majer, Vice President of Raymond James investment bank, introduced investors’ perspectives on financing electronics manufacturing. Dr. Peter Tranitz, Senior Director of Technological Solutions at IPC, spoke about steps to achieve a resilient Silicon-to-Systems ecosystem in Europe. The seminar also covered presentations on the digitalization of the electronics industry, and success stories were shared by Note AB and Inission AB. The day concluded with a panel of top executives from the EMS sector discussing industry developments and PCB manufacturing in Europe, with participants from Note AB, CMS Electronics, Eurocircuits, Vector Blue Hub, Orbit One Group, SG Automotive, Jotel OÜ, and Zollner Elektronik AG.
The seminar was attended by representatives from the electronics industry across Europe, with more than 200 participants from 23 countries. The seminar was supported by the IPC, the City of Tallinn, ASMPT, Incap, Inission, Arrow, Avnet and EMS Scout.
