Market Analysis

Sharp decline in European electronics manufacturing

A new report by IPC reveals Europe’s growing dependency on other regions for electronics manufacturing in critical and strategic sectors, including aerospace and defence.

Despite the adoption of the European Chips Act, the ‘Securing EU’s Electronics Ecosystem’ report finds that the EU’s market share in critical electronics components beyond chips – such as printed circuit boards (PCBs), electronic manufacturing services (EMS), and advanced packaging – will decline to 15% by 2035.

The PCB industry segment has faced significant erosion over the last two decades. Revitalising and growing electronics manufacturing beyond chips is essential for building a secure and robust European electronics ecosystem. A ‘silicon to systems’ approach is necessary to support ongoing EU technological leadership and meet strategic goals.

“An innovative and resilient European electronics manufacturing industry is vital to ensuring the region’s access to defence and aerospace systems, medical technologies, and communications infrastructure. The growing strategic dependencies highlighted in the report are alarming as they undermine Europe’s ability to achieve key strategic priorities from a strengthening of the defence industrial base to the green and digital transitions,” says Sanjay Huprikar, President of Europe and South Asia Operations, IPC.

The report assesses how reliant Europe is on non-EU manufacturing across eight strategic sectors including aerospace/defence, automation, mobility, healthcare, and renewable energy. Highlights of the report include:

  • Across the key sectors, EU electronics production is expected to lag behind global trends and decline from 16.5% global market share today to 15% by 2035
  • Those numbers become starker when looking at subsectors of the European electronics manufacturing industry, such as PCB production (1.7% global market share by 2035), advanced packaging (1.4%) and IC substrate production (0.7%) respectively
  • Europe’s share of electronics manufacturing has fallen significantly in the last two decades despite demand for electronics soaring
  • Global PCB production has more than doubled since 2000 with European demand today at an estimated EUR 7.87 billion
  • Despite soaring demand for PCBs, European PCB production is projected to satisfy only 11% of European demand for PCBs (down from 17.5% today)

The study’s findings echo growing calls for strategic investments and comprehensive policies to enhance the EU’s competitiveness, including the 17th and 18th April European Council conclusions stating that Europe “needs to reduce its strategic dependencies in sensitive sectors – energy, critical raw materials, semiconductors, health, digital, food, and critical technologies – and in other sectors such as chemicals, biotechnology, and space.”

In response to the study, the European electronics manufacturing industry is advocating for an ‘Electronics Manufacturing Strategy’ under the 2024-2029 European Commission mandate to help the EU better withstand global disruptions and maintain a competitive edge. An industry ‘Call-to-Action’ shared today includes support from leading European electronics manufacturers and trade associations, raising awareness for this pressing issue.

“Any new industrial policy supporting competitiveness needs to embrace electronics manufacturing as a key enabler for innovation and resiliency in strategically important sectors, like aerospace and defence. A dedicated strategy, including EU targets for electronics manufacturing, will help Europe compete with global competitors,” said Alison James, IPC Senior Director, European government relations.

IPC is hosting a meeting with representatives of the European Commission and industry experts to review the study and call-to-action. This event will provide a forum for discussion of the situation and the need for a more ambitious and focused strategy to revitalise European manufacturing.

View the full Securing Europe’s Electronics Ecosystem report.