German Tech Supply Chain Sees Massive 35% Market Contraction, Semiconductors Drop 41%

[Nomad76]

The fourth quarter of 2024 also remained well below the same quarter of the previous year, with a decline of more than 35%. At EUR 704 million, the turnover of FBDi's reporting members was the lowest since the end of 2020. For the whole of 2024, reporting members thus lost 36% of their previous year's turnover, reaching EUR 3464 million.

The biggest losses were suffered by semiconductors, which lost 41% of the previous year's turnover over the year as a whole, ending up at EUR 2192 million. The trend was slightly more positive for IP&E, which achieved a total volume of 1120 million euros for the year as a whole, a decline of only 25%. Especially Electromechanics (-15.8% y-o-y and BtB 1.04) and Power Supplies (-20.0% y-o-y and BtB 1.04) stand out positively.



The only ray of hope is the increase in incoming orders, which rose by 24% year-on-year to EUR 639 million in the fourth quarter of 2024 and, at 0.91, still resulted in the highest book-to-bill ratio in 2024 - but unfortunately from a much too low base. As a result, the book-to-bill chart looks more positive than it is, as the negative development of billings makes the result look more positive. Nevertheless, the trend raises hopes for the second half of 2025.

FBDi Managing Director Andreas Falke: "The global market is clearly dividing into blocs in the electronic components industry. Unfortunately, Europe is weakening and continues to lose global market share to the US and China. The exploding AI market there is not reflected in Europe. The December WSTS forecast for 2024 predicts growth of +39% (!) for the US electronics market, +18% for Asia Pac and -7% for Europe.

Europe needs to strategically reposition itself to avoid being left behind. Our capabilities are undisputed, but our advantage is not relevant in the new growth areas. We must embrace innovation more enthusiastically, otherwise the future will continue to overtake us.

Innovation is being stifled by regulation (from GDPR to CBAM and LKSG) and reporting requirements. In addition to the spirit of research, discoverers and start-ups need freedom and tolerance for error to develop new things. This is another reason why FBDi is part of the alliance of associations for the reduction of bureaucracy. Let's give new impetus to sustainable innovation in the key user markets. From our point of view, as we have already stated in previous statements, we have recognised the all-electric society as the best possible basis for Europe to become independent and competitive, and we are calling for a corresponding focus on infrastructure development and education."

The FBDi and its managing director Andreas Falke are cautious about the outlook for 2025: "The trend in bookings, albeit at a low level, gives rise to positive expectations for the second half of the year, but the overall economic situation and the rise in protectionism are not helping economic growth. Overall, we expect a stabilisation at the level of 2024."

View at TechPowerUp Main Site | Source

 

[user556]

The second graph shows 2022 and 2023 were outliers.

 

[Assimilator]

Innovation is being stifled by regulation (from GDPR to CBAM and LKSG) and reporting requirements.

Ah, the good old "we can't compete without breaking laws, so instead of spending money fixing our archaic business practices to make us competitive, we spend it on lobbying to change those laws so that we don't have to be better". Classic capitalist mentality, especially prevalent in Germany which is very much stuck in the past WRT how business is done - most notable in how their massive automobile industry has failed to switch to EVs and is consequently facing oblivion from Chinese imports, despite tariffs.

 

[Daven]

The second graph shows 2022 and 2023 were outliers.

The classic definition of outlier is three times the standard deviation. While those years seem to be abnormalities, I'm not sure they were outliers but I'm too lazy to do the math.

 

[Philaphlous]

Standard financial commentary for individual companies would definitely highlight CY23 & 24. As far as I'm aware, Germany has alot of socioeconomic things to deal with/work through in the upcoming years. From a western perspective, it seems like they're not necessarily aligned politically for success... at least in the near term... But again, outsider looking in via news with a narrative so who knows...

 

[L0stS0ul]

he question is about the causes and whether it can be easily deduced. These can be issues such as the entire functioning of the economy and interconnected mechanisms, sectors of the economy of Germany, EU, demand for goods manufactured in Germany, for German export.

However, this cannot be assessed in isolation from the initial decline that affected many industries and then the huge sweat at the end of the pandemic, COVID. Which, as everyone probably knows, was exaggerated. And it is rather surprising or funny that many industries and companies reported... or rather were surprised that after the pandemic and people being locked in their homes, certain things "returned to normal".
Traffic on streaming services, time in front of TV and computer screens has decreased. Demand for laptops, computers or webcams, time spent in video chat, video conferencing applications.

The question is whether and in what to invest in Europe in recent years. AI today in the sense of stock market valuation is one thing - real use is another. AI in phones as removing characters from photos, AI for drug research or in the military. So far, Nvidia and TSMC earn the most money, but how much do companies like OpenAI actually earn on AI?

Europe or the EU is not one entity, but an organisation of several dozen countries that have a common market but still functioning separately, and each economy is diametrically different from each other. Maybe with the announced tariffs that Trump wants to introduce, the EU must or should respond in a similar way. Nvidia is dependent on TSMC, and TSMC itself indirectly on companies like ASML.
However, it is difficult to shift the vision of development and funds so easily within the entire EU. Especially since, for years, similarly to the US, companies have probably been moved to Asia,and many of them have been bought by... corporations from the US and China.
China has among others Huawei, the US has Apple, EU as a organisation allowed sale of Nokia years ago. But Biden and Trump blocked sale of key companies

 

[Assimilator]

he question is about the causes and whether it can be easily deduced. These can be issues such as the entire functioning of the economy and interconnected mechanisms, sectors of the economy of Germany, EU, demand for goods manufactured in Germany, for German export.

However, this cannot be assessed in isolation from the initial decline that affected many industries and then the huge sweat at the end of the pandemic, COVID. Which, as everyone probably knows, was exaggerated. And it is rather surprising or funny that many industries and companies reported... or rather were surprised that after the pandemic and people being locked in their homes, certain things "returned to normal".
Traffic on streaming services, time in front of TV and computer screens has decreased. Demand for laptops, computers or webcams, time spent in video chat, video conferencing applications.

The question is whether and in what to invest in Europe in recent years. AI today in the sense of stock market valuation is one thing - real use is another. AI in phones as removing characters from photos, AI for drug research or in the military. So far, Nvidia and TSMC earn the most money, but how much do companies like OpenAI actually earn on AI?

Europe or the EU is not one entity, but an organisation of several dozen countries that have a common market but still functioning separately, and each economy is diametrically different from each other. Maybe with the announced tariffs that Trump wants to introduce, the EU must or should respond in a similar way. Nvidia is dependent on TSMC, and TSMC itself indirectly on companies like ASML.
However, it is difficult to shift the vision of development and funds so easily within the entire EU. Especially since, for years, similarly to the US, companies have probably been moved to Asia,and many of them have been bought by... corporations from the US and China.
China has among others Huawei, the US has Apple, EU as a organisation allowed sale of Nokia years ago. But Biden and Trump blocked sale of key companies

Answer is simple, EU needs to stop hoping that the big semiconductor manufacturers will deign to grace us with their presence if we buttf**k our labour laws to suit their exploitative practices, and start building its own semiconductor industry from scratch. I'm certain that if the latter happens, the incumbents will collectively fight each other to be the first to knock on the EU's door and offer their expertise, in dread of losing out on such a massive market. I'm honestly more surprised that ASML hasn't been used as more of a stick in TSMC's case, and now that Trump is having his tariff tantrum I rather suspect that stick will be applied.

 

[koaschten]

The classic definition of outlier is three times the standard deviation. While those years seem to be abnormalities, I'm not sure they were outliers but I'm too lazy to do the math.

I did the math using https://www.calculatorsoup.com/calculators/statistics/standard-deviation-calculator.php

... so the Standard Deviation is 795, the mean is 3632.
yes, it is not 3x SD, but 5366-(2*795)=3776 which is pretty close to the mean at 2x SD quite an obvious abnormality from the mean but may not qualify as being an outlier by the stastistical definition. And yes, the year 2020 was also an abnormality... for obvious reason. And only 1 SD of the mean.

You are welcome.