Electronics industry faces stable demand and cost pressures amid tariff challenges

According to IPC’s May Sentiment of the Global Electronics Manufacturing Supply Chain Report, released on May 22, 2025, electronics manufacturers are experiencing steady demand despite rising material and labor costs and tariff uncertainties. The New Order Index increased in May, indicating sustained demand.
Material costs remain high, with most manufacturers expecting further increases. Labor cost pressures have decreased to their lowest recorded index level, though most firms still report rising labor costs. The Profit Margin Outlook Index reached a low level, reflecting expectations of increased pressure in the near term.
On tariff pressures, the share of manufacturers not pulling forward shipments due to potential tariff risks fell from 65% in February to 53% in May 2025. In Europe, this figure dropped from 76% to 38%, with 19% reporting pulling forward 26%–50% of shipments, compared to 0% in March 2025.
Shawn DuBravac, IPC chief economist and report author, stated that 68% of announced tariffs are expected to be passed on to consumers. Additionally, 52% of manufacturers include a separate line item for tariff costs on invoices, while 38% incorporate these costs into overall pricing without specifying them.
Survey data indicate that over the next six months, shipments, capacity utilization, backlogs, and orders are projected to increase, while pro...