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The electronics components industry is ending the year on a down note, according to the ECIA’s November Electronic Components Sales Trend (ECST) survey. The December outlook for most component categories reached the lowest level since the period between December 2023 to February 2024, according to ECIA Chief Analyst Dale Ford. All are below the 100-point index threshold between growth and contraction.

The actual December results and a January forecast are currently in the works, the association added, noting the supply chain expresses optimism for Q1 2025.

“Looking over the past year the ECST survey results show the second half was a very challenging sales environment for electronic components channel participants,” Ford said in a statement.

The electronic components supply chain has been struggling during 2024 with excess inventory in the channel and at OEMs/EMS providers. Demand for major consumer items, such as smartphones and laptops, has been soft.

“Trends in [calendar Q3 2024] were relatively in line with seasonally overall, although mixed by segment,” according to Edgewater Research. “OEMs appear to be trending the wrong way with inventory days/dollars now at all-time highs. Our research suggests OEM inventory headwinds include soft PC demand, rising component costs, and some product mismatches, particularly due to GPU/Blackwell delays in server.”

Edgewater expects component price deflation, particularly in memory, and intentional inventory burn will provide some relief in C1Q25, but soft PC/mobile end demand in C1H25 may limit progress ahead of an expected demand improvement into C2H25.

In anticipation of new U.S. tariffs in 2025, businesses have been front-loading imports to avoid the tariff charges for at least a few months. This may add to the inventory overload in the supply chain, but expectations for U.S. manufacturing expansion in 2025 could soften the impact. Consensus in the electronics supply chain, however, is that the tariffs will add cost to end-products and disrupt global trade relationships.

“With the U.S. semiconductor industry already dependent on international collaboration, this policy risks stifling innovation and undermining our technological leadership. A targeted approach addressing specific trade imbalances would be far more effective than broad, indiscriminate tariffs,” David Loftus, president and CEO of the ECIA , wrote to EPSNews.

Still, highly encouraging news comes from the Q4 ECST survey and the Q1 2025 outlook, ECIA reported. The Q1 outlook calls for expectations of sales growth to jump by 15 percent to 27 percent between Q4 and Q1 while expectations for declining sales fall by 8 percent to 15 percent. The overall average Q1 projection for all categories shows 46 percent of participants expecting sales growth while those seeing a decline drops to only 7 percent. Those reporting neutral expectations come in at 47 percent.

The U.S. manufacturing industry, likewise, is looking to next year. Following a prolonged period of contraction, the U.S. manufacturing sector is projected to expand in 2025 as economic improvement continues, according to the Institute for Supply Management’s December 2024 Supply Chain Planning Forecast. Revenues are expected to increase in 17 of 18 manufacturing industries – including computers and high-tech — tracked by the ISM.

ECIA respondents reporting expectations of declining sales in Q1 only see sales falling by -1 percent to -3 percent. By contrast, 15 percent of participants report expectations for +3 percent to +5 percent growth and 4 percent of participants project over +5 percent growth.

In the long term, ECIA shares in the optimism for the future as the continued introduction and market adoption of exciting innovative technologies should motivate both corporate and consumer demand for next-generation products over the long term.