Is the electronics sector still waiting for the economy to recover?

The COVID -19 pandemic bought major setbacks in every sector. There was a reduction in sales, risks to employees, failure of backup policies, and changes in trends and consumer behavior. Such was the impact that sectors going a boost fell down to crash, as pandemic affected its consumers.

The electronics sector also faced a downfall when the consumer market fell. Some items faced no demand, but some like laptops, Wi-Fi, and smartphones saw a rise with the increase in the culture of Work from Home (WFH). We will look into the reasons and the chances of the industry bouncing back if any.

Why did Electronics face a setback?

If one reads and studies the market of electronics during the pandemic, the major problem faced was in the manufacturing of the goods and services. The supply chain of industrial as well as the consumer market is majorly located in China. With the pandemic originating in China, the manufacturing units of computers and components were shut down. Following this, there was a shortage of supply which actually hit the consumer market.

On the other hand, Work from Home initiated an increase in the demand for consumer electronics like smartphones, laptops, accessories, and other handy products. But it isn't that similar for all segments. While the personal and office equipment still had some stability, the home appliances, industrial electronics, strategic devices, and communication and broadcasting equipment weren't that lucky. They basically had no function since the operations were shut down due to the pandemic.

The changed behavior of consumers regarding their spending habits has also cost electronics a lot since now, people have been quite cautious with their earnings, saving up for the unprecedented times.

The market segment of the global electronics sector reduced from 1,478 million dollars to 1,265 million dollars in 2020, causing a major sales reduction and loss to manufacturers and retailers. Economic growth was down and the accompanying industries’ growth also affected the electronics industry. For example, the fall of the travel industry reduced the demand for many industry and service-oriented goods causing a fall in demand. The interdependence on various sectors aggravated the problem too much.

A Positive Hope in the Dusk

However, this will not be a permanent situation. The reversal of the damage has started with the reduction in COVID-19 cases and the introduction of vaccines to counter the disease. With all these, the economy is seeing healing and can expect a bounce back. According to Nikhil Mathur, managing director for APAC India, the electronics sector can see a recovery phase in 2022. Since the industry still had sales in its bag, recovery won't be that difficult. The positive news is the shift of various companies from offices to home culture, which means they need various appliances to sustain and create the system at home. Moreover, the infrastructural development will be a catalyst for this bounce back. Economic growth is expected to be 6.4 percent this year.

With schemes like SPECS (or Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors) and PIL (Production Linked Incentive), we can expect to see India as a global hub for the electronics sector. The initiatives to promote the digital economy can also prove to be a help for the increase. The projection goes so far that the Government is driving forcers to turn the industry into the value of US$400 Billion.

The above projections are for industrial growth which can be facilitated by promoting a digital economy, investments, schemes, and employment opportunities. The electronics sector has a lot of potential and can prove to be a billion-dollar industry in upcoming years. Any confusions regarding further understanding on Electronics Engineering feel free to connect with us at dreamssignment.com.