Component News January 20, 2020
Global Electronics Industry: The Most Influential Factors in 2020

Global Electronics Industry: The Most Influential Factors in 2020

2018 was unquestionably the most volatile year in recent memory for the global electronics industry.  2019 has been a year for corrections, and the market has clearly begun to stabilize.  Market watchers are hoping for the industry to sustain itself, and the expectation is that we will see a return to normalcy in 2020.  However, there are indications that challenging times may persist, and the abrupt fluctuation that occurs in this industry year by year has left us all to wonder how 2020 will play out.

To make an accurate prediction, there are a few influential factors that must be considered.  One of the most critical influencers in the market forecast is the US-China trade relationship.  Recently, China has agreed to buy an additional $200 billion of US goods and services over the next two years.  In exchange, the US has agreed to reduce tariffs on $120 billion in Chinese products from 15% to 7.5%.  This deal will result in a dramatic surge in US manufacturing and exports and could lead China to cut back on import from other countries.  However, trade relationships are very fluid, and changes could result in price hikes and supply constraints.

The growing demand for technological advancements has always had a large impact on the global electronics market, and that will unquestionably continue through 2020.  While the implementation of 5G wireless technology in 2020 is uncertain, its potential impact makes it unignorable.  The increased connectivity and intelligence that it promises could be a saving grace to security in the supply chain, however; this would only occur after millions of 5G towers have been constructed.  Due to its significantly shorter range, 5G networks will be built on small cell site technology with antennas as close as 500 feet apart.  The amount of components required to position a base stations in direct line of sight of each other is astronomical.

Did you know that a single 5G enabled cell phone uses an average of 1000 MLCCs?  This is 30% more than its 4G predecessor.  Huawei, a Chinese telecommunications equipment company, is forecasting to ship 100 million handsets.  5G compatible devices would take a massive toll on the availability of MLCCs and many other components.  While 5G networks would open many opportunities for advancements in technology, the opportunity cost involved in its implementation would cause shortages beyond anything we’ve ever experienced.  While there are many other factors to be considered when developing a forecast, these factors alone have detrimental capabilities.

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