There will be Sunshine end of the year again

The half year survey for the European EMS industry is finally ready. We are sorry that it took that long this time, but some of the numbers that were reported to us where so bad, that we couldn’t believe it. Consequently, we contacted several companies to ask whether those numbers were true. All answers received were: Yes, it is really that bad.

The first half 2024 was a disaster in Europe with revenues declining the worst in Germany and Switzerland. In Europe it was ~12.7% minus. The outlook for the 2.H.2024 is not much better and the full year will mostlikely end with 10.6% minus. Those numbers represent about 25% of the European EMS industry. Inventory levels in Europe have further reduced by 1.7 billion Euro and could finally fall below 20% of annual revenues by end of year.

You know that we have a very strong opinion about the reasons for this dramatic collapse of the European EMS industry. The EMS industry manufactured the products, which would have normally had to be manufactured this year already in 2022 and 1.H.2023. The growth rates in that period were artificially inflated by the panicking of a whole market. We see similar developments with the publications of half year results of global players, which have some operations in Europe). This is not a result of a general slowdown of the world economy, it is focussed on electronics. It requires intensive discussions, how we can prevent the development of such a hoax in future.

More and more companies are now reducing weekly working times (some even to three days a week) as the business is down. Everybody is working on efficiency programs, saving energy and reducing waste. More important is the ongoing customer dialogue to prevent, that your customers are now running their product inventories down to safety levels rather than starting to order in accordance with normal planned consumption by the end market and keeping stock levels at a normal level. Running it down to minimum safety level would only cause another small wave at the beginning of next year.

In addition, it will become necessary that you are getting involved more in the logistic planning of your customers, because without them overreacting on a false rumour of a chip crisis, they would have never overloaded their finished goods stores.

The report, 46 charts, PDF can be ordered for 490,-Euro at [email protected]

We hope to see you in Gdansk/Poland on September 25, 2024, at the IPC Day EMS.