Market Watch
IPC: 90% of US Electronics Manufacturers ‘Troubled’ by Higher Tariffs
EDITED BY CHELSEY DRYSDALE
BANNOCKBURN, ILAlmost 90% of US electronics manufacturers are troubled by the higher tariffs imposed by the US and China on each other’s imports, and some are investing less in the US and hiring fewer workers as a result, according to new IPC survey results.

On average, companies report tariff increases on 31% of the total dollar value of the products they import. Twenty-five percent of companies report over half of the dollar value of the products they import are facing higher tariffs.

IPC queried its US members between Sept. 25 and Oct. 2.

Some 69% of companies report lower profit margins as a result of increased tariffs, with a ripple effect of negative consequences: 21% report they are reducing investment in the US, and 13% say they are cutting back on hiring and/or reducing headcount.

More than a third of companies report they cannot increase their prices to cover the cost of higher import tariffs because of various factors.

Fifty-one percent of responding companies report they are now sourcing from countries other than China as a result of increased tariffs on Chinese imports.

Empty Storage
Trends in the U.S. electronics equipment market (shipments only).
 
%CHANGE
 
July
Aug.
Sept.
YTD%
Computers and electronics products
-0.3
-0.3
-0.4
4.2
Computers
-1.2
-2.0
-6.9
-22.4
Storage devices
2.7
-0.3
-11.3
18.7
Other peripheral equipment
-5.5
4.6
3.4
6.1
Nondefense communications equipment
0.6
0.0
0.7
11.7
Defense communications equipment
-14.9
-3.0
0.8
-0.2
A/V equipment
0.6
-8.0
-4.8
33.1
Components1
-1.0
2.2
-2.2
4.2
Nondefense search & navigation equipment
0.4
-0.1
-5.5
2.9
Defense search & navigation equipment
1.1
-0.7
0.3
3.0
Medical, measurement and control
0.5
-1.0
0.0
0.6
rRevised. *Preliminary. 1Includes semiconductors. Seasonally adjusted. Source: U.S. Department of Commerce Census Bureau, Nov. 4, 2019
Metals Index
LME Tin Line Graph
LME Lead Line Graph
LME Copper Line Graph
COMEX Silver Line Graph
Hot Takes
  • Taiwan’s manufacturing production index fell 0.65% year-over-year and 3.53% sequentially to 111.1 in September. (Taiwan Ministry of Economic Affairs)
  • Household refrigeration and laundry appliances are on track to ship 326 million units worldwide in 2019 and 330 million in 2020, with smart appliances on track to double to 33 million units in 2020. (Futuresource Consulting)
  • Notebook shipments in 2019 are estimated to increase 1.6%, then slip significantly due to the 15% US tariff on Chinese-made notebooks. (DigiTimes)
  • Video conferencing hardware shipments increased 50% last year, reaching 1.4 million units, with a projected CAGR of 27% through 2022. (Futuresource Consulting)
  • The power device market grew 13.9% in 2018 and is expected to grow this year as well. (Yole Développement)
  • Japan PCB shipments were down 1% year-over-year in value and 3.1% in volumes in August. (JPCA)
US MANUFACTURING INDICES
 
JUNE
JULY
AUG.
SEPT.
OCT.
PMI
51.7
51.2
49.1
47.8
48.3
New orders
50.0
50.8
47.2
47.3
49.1
Production
54.1
50.8
49.5
47.3
46.2
Inventories
49.1
49.5
49.9
46.9
48.9
Customer inventories
44.6
45.7
44.9
45.5
47.8
Backlogs
47.2
43.1
46.3
45.1
44.1
Sources: Institute for Supply Management, Nov. 1, 2019
Key Components
 
MAY
JUNE
JULY
AUG.
SEPT.
Semiconductor equipment billings1
-23.6%
-18.4%
-14.6%
-10.5%r
-6.0%p
Semiconductors2
-14.8%
-16.5%
-15.5%r
-15.4%r
-14.6%p
PCBs3 (North America)
0.99
1.00
1.00
1.02
1.04
Computers/electronic products4
5.39
5.46
5.46
5.48r
5.52p
Sources: 1SEMI, 2SIA (3-month moving average growth), 3IPC, 4Census Bureau, ppreliminary, rrevised