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.

 

[Visible Noise]

The EU Tech Industry consists of fining American tech companies

 

[mechtech]

The second graph shows 2022 and 2023 were outliers.

Ya looks like going back to pre-covid norms

 

[Vayra86]

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.

This. But like so many things that take consensus between a few dozen nations, the road to get there is paved with good intentions and yet still people trip over every individual rock used to build it.

When you DO get there though, you've got something real.

The EU Tech Industry consists of fining American tech companies

And the small detail that its been providing nearly 100% of the DUV and 100% of the EUV machinery out there today, plus many key underlying technologies to even start making those machines.

Not to mention the fact these fines were probably justified, too, and even beneficial to Americans in the overall perception of how products and monopolists should be treated.

Its mind blowing how the EU is not using those facts to far greater effect.

 

[TechBuyingHavoc]

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.

Germany has several systemic issues that are plaguing the nation (and have been for at least a decade). Incoming essay in the spoilers.

Spoiler: German Long-Term Problems

First of all, energy is sky-high expensive. Part of that is the Russian invasion of Ukraine cutting off Russian energy exports (both by Russia and the EU). Ukrainian exports are constrained by bottlenecks in pipelines and general industrial damage from Russian attacks. Germany compounded this problem by shutting down their nuclear reactors a decade ago after the Fukushima nuclear disaster. Energy prices are not as bad today as they were in 2023 before LNG terminals were constructed in Europe and the USA started exporting vast amounts of LNG to Europe but they are much higher than prices in 2018. Higher energy costs reduces the competitiveness of German companies.

Second, Germany depends on a strong export-dependent economy and that is dying quickly due to global factors. China is rapidly becoming a more hostile actor in geopolitics, the US and Europe are responding to this change and recalibrating, which then provokes a Chinese response and so on and so on it goes. The issue is that Germany used to export a huge amount of high-value goods to China so this trade route shutting down or shrinking creates huge overproduction problems for German companies.

Third, specific markets that Germany dominated in like luxury vehicles are quickly being outcompeted and outpriced by foreign competitors, especially China. This is different from point #2 because it is not just a issue of less exports to certain countries but that even the German domestic market is being crushed by foreign companies. The competition happens to be in the particular areas that Germany is heavily dependent on in terms of jobs and R&D.

Fourth, two decades of underinvestment are finally coming home to roost in Germany. The roads are not as good as they used to be, the ports are outdated, even the trains are running more out of schedule than they used. Public transport is degrading, the healthcare system is degrading, even the traditionally slow German public agencies are getting even slower under a morass of bureaucracy. This is not a result of European statism (other European states are doing a much better administrative job) but rather a specific German problem of more mandates and requirements but less funding. Germany can’t spend the big bucks to get out of this problem (or the energy problem or any of its problems) because politically it is restricted by the “debt brake” which prevents the government from spending more than a small fraction of GDP on fiscal stimulus.

Fifth and last of all, there is no political consensus in Germany. The AfD is a rising pro-Nazi party that is isolated by the other parties (for good reasons), the ruling Social Democratic Party (SPD) are discredited by all the problems listed above as well as being abandoned by the working class after embracing welfare reform in the early 2010s, the Greens (counterculture environment-focused leftists) and the Free Democrats Party (FDP, basically German libertarians and businesspeople) are at loggerheads ideologically and also in the SPD coalition, the Christian Democratic Union (CDU) is expected to win the election but won’t have a majority without either the Greens or the AfD, the Left Party (they consider themselves to be true leftists, not compromised centrists like the SPD or half-hearted Greens), and finally you have the BSW party which is former leftists and AfD members who are supporting a single politician (Sarah Wagenknecht, the SW in the party name stands for her initials).

Yeah, Germany is facing a clusterf**k of problems.

 

[koaschten]

@TechBuyingHavoc

Spoiler

1) shutting down the nuclear power plants did not increase the gross market price per kWh, also germany exported alot of electricity to france due to their aging nuclear power plants being not able to deliver power due to unplanned maintenance and/or cooling water temperature limitations, and that was generated mostly via gas turbines. Which increased the merit order pricing overall.
4) yes we really should have invested more in infrastructure, this is mostly a CDU related issue. We could, on the short term, solve some of the electricity price problems by introducing at least a north and south price zone. Because when the power lines are not capable to move the wind generated electricity to the south and austria e.g. buying cheap electricity on the intraday market all germans literally pay for the redispatch that happens due to wind turbines being shut down in the north and gas powered turbines started up in the south.... to deliver "green" electricity to austria. wtf.
5) and yes we are f*cked, but not as much as the USA

Something actually interesting I heard on the "geladen" podcast last sunday, is the "node based pricing" which basically is what ... texas does already? which calculates the actual cost based on generation and power lines at every point in the grid and bills the user accordingly.

 

[TechBuyingHavoc]

@TechBuyingHavoc

Spoiler

1) shutting down the nuclear power plants did not increase the gross market price per kWh, also germany exported alot of electricity to france due to their aging nuclear power plants being not able to deliver power due to unplanned maintenance and/or cooling water temperature limitations, and that was generated mostly via gas turbines. Which increased the merit order pricing overall.
4) yes we really should have invested more in infrastructure, this is mostly a CDU related issue. We could, on the short term, solve some of the electricity price problems by introducing at least a north and south price zone. Because when the power lines are not capable to move the wind generated electricity to the south and austria e.g. buying cheap electricity on the intraday market all germans literally pay for the redispatch that happens due to wind turbines being shut down in the north and gas powered turbines started up in the south.... to deliver "green" electricity to austria. wtf.
5) and yes we are f*cked, but not as much as the USA

Something actually interesting I heard on the "geladen" podcast last sunday, is the "node based pricing" which basically is what ... texas does already? which calculates the actual cost based on generation and power lines at every point in the grid and bills the user accordingly.

I want to be clear, I am not blaming anyone in Germany in particular in the past, low energy prices and high exports on a few favored industries and having all your security needs fulfilled by other nations is an addictive sugar high that can drug any country into a stupor.

What I am blaming is all of Germany's current malaise towards their issues, I still don't see any serious urgency or an action plan that acknowledges how bad the problems really are and how hard the solutions will be. A lot of wishful thinking in ALL the parties, the debt brake is still under debate to be repealed, there is no consensus on this even still. Check the Economist, they have written several insightful articles on the problems the Germans are facing and the lack of progress is the only thing that remains constant from article to article. Maybe the election will fix things but I think the rot goes deeper than just the electoral coalition in power at the moment.

Yes, the US is f**ked, no doubts about it. Different can of worms for a different article/thread.

 

[koaschten]

Yeah no harm taken. Just wanted to add some more context. Election end of the month is the next big thing and then we need to really get a working political landscape that does some heavy lifting. And the „immigrants out“ policies are definitely not the solution.

 

[Vayra86]

As your neighbour (NL) I'm really hoping people are still sensible enough over there - more sensible than us at least. I think both our countries are gasping for a leader with vision and charisma. We've not had one for as long as I can remember. Rutte in NATO is only just now fighting the good fight... after over a decade of sanitizing our Defense department lmao. Talk about hypocrisy...

And on German tech and car industry... I've been driving an ID3 for just over 4 years now and I'm test driving other cars for a new lease contract atm... literally every car I step into (except the Volvo EX30... what the actual F is that?! And more importantly, why would you ever drive it... its like you step into an Iphone lacking all the things you kinda do want, even the speed gauge and entire dashboard is moved to the center screen ) is more advanced in every way and has better option packages and technological advancements since the last time I looked and compared to even newer ID models from VW. The infotainment is an utter fail... the updates make it progressively worse. And then you step into a Hyundai Kona and you can get an extended range version (520 KM WLTP) at just under 40K, which is below the entry price of the cheapest (!) ID4. And it ain't a small difference, you need to pay at least 3K EUR more for the VW alternative and then you've got the bottom of the barrel, which results in meh seating,150KM less range (!!!) and if the ID3 is any guide, you even just get front speakers, nothing for the rear. Its like... what?! 45K worth of car and then its bare bones?

Yeah I wonder why they don't sell...

 

[TechBuyingHavoc]

As your neighbour (NL) I'm really hoping people are still sensible enough over there - more sensible than us at least. I think both our countries are gasping for a leader with vision and charisma. We've not had one for as long as I can remember. Rutte in NATO is only just now fighting the good fight... after over a decade of sanitizing our Defense department lmao. Talk about hypocrisy...

And on German tech and car industry... I've been driving an ID3 for just over 4 years now and I'm test driving other cars for a new lease contract atm... literally every car I step into (except the Volvo EX30... what the actual F is that?! And more importantly, why would you ever drive it... its like you step into an Iphone lacking all the things you kinda do want, even the speed gauge and entire dashboard is moved to the center screen ) is more advanced in every way and has better option packages and technological advancements since the last time I looked and compared to even newer ID models from VW. The infotainment is an utter fail... the updates make it progressively worse. And then you step into a Hyundai Kona and you can get an extended range version (520 KM WLTP) at just under 40K, which is below the entry price of the cheapest (!) ID4. And it ain't a small difference, you need to pay at least 3K EUR more for the VW alternative and then you've got the bottom of the barrel, which results in meh seating,150KM less range (!!!) and if the ID3 is any guide, you even just get front speakers, nothing for the rear. Its like... what?! 45K worth of car and then its bare bones?

Yeah I wonder why they don't sell...

I took a serious hard look at VW's ID.3 back in 2019 as an EV alternative to Tesla. First of all, horrible naming scheme, why are you using a mix of letters and numbers, this is not a government classification scheme but consumer products. I don't see Apple calling its iPhone 14 as APPIP14, so why is VW doing this? Just plain stupid.

Second, the ID.3 was almost outdated back in 2019 when it released despite being part of a new EV platform from VW. It certainly is outdated now, compared to Hyundai/Kia EVs. Worse charging times, outdated infotainment from day 1, low range, high prices, barebones exterior styling. And the platform needs a full technology and design refresh, not just the facelift the ID.3 got a few years ago. VW Anhui already is planning to abandon the MEB platform and go with Xpeng technology, so it is not like VW is ignorant of how old MEB feels.

Lethargy, that is the word I would use for all of the European problems I see. Lethargy in defense, lethargy in tech and AI, lethargy in industrialization or rather deindustrialization.