Electronics Newsletter, May 2024

Electronics Digital Circuit Board Image

Following several years of significant volatility, the M&A landscape across the electronics industry is showing signs of stabilisation and grounds for optimism throughout 2024.

2022 and 2023 saw the electronics industry attempting to navigate a route through an unprecedented series of challenges and issues, bouncing back from the supply chain turmoil and instability that had plagued the industry since early 2020.

A confluence of factors came together during 2021 to negatively impact global supply chains. Soaring demand levels, stress on logistics and transportation networks, raw material shortages and an increasingly incendiary geo-political landscape all combined to place significant amounts of strain on the availability of critical components across the manufacturing sector. Perhaps most notably, semi-conductor chips.

At its nadir, such was the severity of semi-conductor component shortages, FAB’s capacity stretched to breaking point and product manufacturers explored novel and/or radical methods of sourcing these valuable units.

Some businesses even resorted to purchasing finished products from other manufacturers for the sole purpose of stripping them down to access the precious semi-conductor parts within. Only those manufacturers and distributors with the most robust supply chains were able to profit from the situation.

During 2023, the electronics supply chain industry scrambled to regain a surer footing, with the inevitable dampening of consumer sentiment alongside wider macro-economic challenges driving a softening in demand, consequently improving the availability of many critical components across the sector.

However, whilst the blockages that have hampered global supply chains in recent years showed some signs of unwinding in 2023, escalation of ongoing conflicts and increasing tensions across several geographies that are fundamental to trade stability continue to create uncertainty in supply chains.

With 2024 bringing additional challenges for businesses reliant on the global movement of goods, there is no time for complacency with companies looking to capitalise on any breathing room to prepare as best possible. Shoring up supply chains remains a key area of focus, with larger companies continuing to streamline operations and in many instances are looking at near-shoring manufacturing operations to negate the impact of ongoing geo-political issues, with M&A often an attractive route to doing so (both through divestments and acquisitions).

Click here to download your copy of Arrowpoint Advisory's Electronics Newsletter, May 2024.

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