Electronics production in major developed countries has been experiencing either slow growth or outright declines throughout 2024.
In the United States, electronics production growth, as measured by the three-month average change (3/12 change), rose by just 0.4% in July 2024 compared to the previous year – the slowest pace since the pandemic in 2020. This marks a notable decline from the average growth rates of 6.5% in 2022 and 2.3% in 2023.
Japan has seen a similar slowdown, moving from an average 6.0% 3/12 growth in 2023 to a 2% decline by June 2024. Meanwhile, the 27 countries of the European Union (EU27) have reported decreasing electronics production since May 2023, except for a brief uptick of 3.2% in May 2024. By June 2024, EU27 production had fallen by 8%. The UK has also experienced a decline in production since September 2023, with the only exception being a 0.7% increase in February 2024. By July 2024, UK electronics production had dropped by 3.7%.
In contrast, developing countries in Asia are witnessing strong growth in their electronics industries. Taiwan and South Korea, though considered developed nations, are still seeing growth in their emerging electronics sectors. Beginning in mid-2023, these countries reversed their earlier production declines. Taiwan has led the region, with 3/12 production (measured in New Taiwan dollars) shifting from a 3.2% decline in June 2023 to a staggering 49% growth by July 2024. This boom has largely been driven by computers, with production between January and July 2024 doubling compared to the same period in 2023, mainly due to the demand for AI servers. Market research firm MIC estimates that Taiwan now produces 90% of the world’s AI servers, while TrendForce projects a 69% increase in the value of the AI server market in 2024.
Vietnam has also seen a significant turnaround. After a low of negative 10.8% in May 2023, 3/12 growth surpassed 20% in June and July 2024. Much of this growth can be attributed to Samsung’s $22billion investment in the country, with Vietnam producing around half of Samsung’s smartphones.
South Korea’s recovery has been more recent. The country experienced negative 3/12 production growth from February to April 2024 but turned positive in May 2024 with a 3.2% increase, which jumped to 23.8% by July. However, labour strikes at Samsung earlier in the year may have temporarily skewed production data, suggesting the strong growth in September could be a short-lived spike.
India is also showing healthy growth in electronics production, recording 14% 3/12 growth in July 2024. India had experienced negative growth from October 2022 through March 2024 but has rebounded as multinational companies ramp up manufacturing in the country. Apple, for instance, has begun producing its latest iPhone 16 series in India and plans to manufacture 25% of its iPhones there by 2025, up from 14% last year, further shifting production away from China. Lenovo also announced that it has begun manufacturing AI servers in India for both local consumption and export. The Indian government has projected that the country will double its electronics manufacturing capacity over the next five years.
Although China remains the dominant electronics producer in Asia, its growth has slowed as companies relocate manufacturing to other countries. China’s 3/12 production growth turned positive in April 2023, peaking at 13.8% in June 2024, before slightly declining to 12.3% in August 2024 – slower than the growth seen in other Asian nations during the same period.
Looking ahead, the trend of weak electronics production growth in the United States, Europe, and Japan is likely to persist for the foreseeable future. Asia is expected to remain the main growth engine, with political and economic pressures leading to further shifts in production from China to other countries in the region. India, with its large labour force, low costs, and significant investments from multinational electronics firms, appears to be on track for robust growth in the years to come.
