At Kitron, we stay ahead of trends in the electronics component market, providing our customers with timely updates and insights to support confident, forward-looking decisions.
This article presents an overview of the component market, reviewing trends and risks we believe should be top of mind in customers' strategic planning.
Semiconductor Market Outlook
After a decline of approximately 9% in 2023, the industry is now back with a growth of 19% last year and an anticipated growth of 11% in 2025. This is primarily fueled by massive investments in generative AI and data centres and steady demand from the EV and 5G sectors.
The primary growth engines are the Logic and Memory segments, both of which are forecasted to deliver robust double-digit increases. We’re also seeing positive contributions from Sensors and Analog components. While their growth is more moderate, they remain essential to the broader ecosystem, especially in automotive, industrial automation, and IoT applications.
However, it’s important to note that not all segments are experiencing the same level of success. Some product categories, such as Discrete Semiconductors, Optoelectronics, and Micro ICs, are projected to decline slightly, with low single-digit contractions.
From a regional perspective, the Americas and Asia Pacific are expected to lead the charge, with growth rates of 18% and close to 10%, respectively. These regions continue to benefit from strong investment, innovation, and demand across multiple verticals.
In contrast, Europe and Japan are forecasted to show more moderate growth, reflecting a slower pace of recovery and ongoing structural challenges.
PCB Market: Strong Signs of Recovery
In 2024, global PCB production rose by 5.8% compared to the previous year. For 2025, we’re projecting further growth of around 6.5%. The recovery is happening across all regions and all technologies.
The real standout, however, is high-tech PCB demand, primarily in aerospace and defense, AI servers, and high-speed networking. These segments saw a staggering 45% growth in 2024, and we expect another 30% or more in 2025.
In contrast, the low-tech PCB market is struggling with oversupply and fierce competition, which is limiting its growth potential.
While growth is expected in every region, not all segments will recover equally. If you, like many defense customers, are demanding European-based manufacturing of PCBS, then you need to pay extra attention and place long horizontal orders, as the European capacity is much more constrained than the global one.
The manufacturing landscape is shifting. China is still the dominant player, but a mix of geopolitical tension, rising labor costs, and supply chain lessons from COVID are pushing companies to diversify.
We’re seeing increased investment into Southeast Asia, particularly Vietnam, Malaysia, and especially Thailand, which has become a top destination for new PCB manufacturing projects.
Supply Chains Between Risk and Recovery
The global supply environment continues to show signs of stabilization. Lead times across most component categories have normalised, and there's a growing emphasis on building resilient, localised, and diversified supply networks, largely driven by ongoing geopolitical uncertainties.
But there’s an important point to keep in mind: if the market picks up speed and there isn’t enough production capacity ready, lead times could shoot up again very quickly.
At the same time, tariffs and export restrictions are still causing challenges for supply chains, making the future less predictable and more challenging to manage.
Geopolitical Risks
In response to US-China tensions, companies are actively diversifying their supply chains. Over one-third of multinational corporations have already moved or are planning to shift operations to Southeast Asia, including Vietnam, Thailand, India and Malaysia, as a hedge against geopolitical risk.
These shifts are not without cost. Tariffs ranging from 10% to 25% are reshaping supply routes, driving up production costs, and introducing pricing volatility. Memory, analog components, and microcontrollers are especially affected.
The industry is entering a new era of regional supply hubs, moving away from China-centric sourcing. This transition will influence how the industry manages capacity, costs, and competitiveness in the long run. Taiwan’s role remains crucial, as it produces most of the world’s advanced semiconductors, making any tariff changes there especially impactful.
At Kitron, we are taking steps to stay ahead of these challenges. Our new Malaysia site is fully operational, with a strong non-China PCB supply chain already in place and expansion into mechanics underway. Meanwhile, our Product Data Service (PDS) team is ready to support customers with country-of-origin mapping, alternative sourcing, and rare earth risk analysis.
Outlook and Recommendations
This year, we have seen more stability and shorter lead times overall, but we are also starting to see some signs that we might get lead time jumps going forward.
It’s important to understand that we cannot judge the component market based on how the European economy is developing. Europe accounts for an extremely small portion of the global semiconductor market.
Our recommendation for how to best position yourself going forward is to:
- Extend your order visibility and firm commitments for key components.
- If you are in the defence industry, the order horizon should be much longer to secure deliveries. Then, we recommend you frame orders covering years rather than months, as this will allocate capacity throughout the entire supply chain, which normally has many more restrictions and less flexibility than non-defence supply.
- Actively redesign products to utilise more available components, including newer alternatives for shortage parts.
- Consider placing non-cancelable/non-returnable (NCNR) orders for especially constrained parts. Even though they limit flexibility, NCNR orders are often the only way to secure a supply of the most attractive and hard-to-get components.
- We recommend that customers communicate their demand at least 12 months in advance. While orders may be placed for a 6-month period, forecasts should cover a minimum of 12 months. We encourage extending the order horizon even further for mature designs to ensure supply stability.
- Backlog should be placed in line with the real demand.
- For standard parts, approve more than one vendor.
- For new designs, avoid using mature parts.
- And last but not least – do everything you can to approve alternative parts.
We encourage you to leverage Kitron’s services in this area. This will enable us to work together to prepare for and navigate challenges such as lead time fluctuations, allocations, NCNRs, price adjustments, trade tensions, tariffs, and other global supply chain disruptions.
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