Connector Industry Forecast for 2024

A year ago, pandemic-era supply chain disruptions and demand imbalances continued to weigh on the connector industry. As we move into 2024, these factors have improved, but new technology trends and other uncertainties are changing the landscape. Here's what to expect in the coming months.

Entering the new year, the connector industry is facing a series of challenges and opportunities. Global conflicts have put pressure on supply chains in terms of access to materials and open shipping lanes. Labor shortages continue to impact the manufacturing industry, especially in North America and Europe. However, demand is strong in many markets. The implementation of 5G and sustainable energy infrastructure is creating new opportunities. Investing in chip manufacturing will soon bring the new facility into operation. The continuous development of new technologies is driving innovation in the field of interconnects, and in turn, these new connector products are achieving greater success in electronic design.

2024 impact

Top 5 Trends in Connectors

SWaP

It is the top priority of connector design and specification in every industry. Product design has achieved amazing size reductions and performance leaps in high-speed interconnects, thanks to the outstanding contributions of component designers. The widespread use of portable, connected devices is transforming every product category, while also gradually changing the way we live. In addition to small devices, large products such as automobiles, spacecraft, and airplanes are also benefiting from this trend towards miniaturization. Smaller, lighter components not only help reduce payload, but also make it possible to move farther and faster.

Customization

While the long development time and high cost of custom components have led to the emergence of a thousand standardized, excellent, and versatile COTS components, new processes such as digital modeling, 3D printing, and rapid prototyping have enabled designers to obtain perfect, unique design parts in a fast manner and with a less expensive burden.

Advanced packaging enables designers to push the limits of Moore's Law and replace traditional integrated circuit designs with new strategies that integrate chips, electrical, and mechanical components into a single packaged device. Multi-chip modules, system-in-package (SIP), 3D ICs, and other creative packaging designs are delivering tremendous performance gains.

Materials

Materials science is addressing market-specific needs and industry-wide challenges, including weight reduction, ruggedization, and durability; biocompatibility and sterilization requirements, as well as the need for safer products for the environment and human health.

artificial intelligence

With the advent of generative AI models, AI technology has made a splash in 2023. In 2024, the technology will be applied to component design to optimize performance, improve efficiency, test systems and designs, and explore new forms. At the same time, the extreme demand for the high-speed performance required to facilitate these features will put more pressure on the connector industry to create more powerful new products.

To 2024

Forecasts are mixed

Forecasting is always difficult, especially in times of financial and geopolitical uncertainty. In this environment, it is almost impossible to predict future business conditions. The post-pandemic economic market remains unstable, GDP growth is slowing in all economies around the world, and labor shortages remain. While increased ocean and trucking capacity has led to significant improvements in global supply chain issues, we still face some hurdles caused by labor shortages and global conflicts. Even so, the global economy appears to be performing better than most economists expected in 2023, setting the stage for strong economic growth in 2024. Bishop & Associates expects positive growth in connectors in 2024. Low-to-mid-single-digit growth is the historical norm in the connector industry, and demand has historically rebounded after a year of decline.

Report Survey

The outlook for Asian companies is pessimistic. Global connector sales were largely flat in 2023, although the surge in activity at the end of the year could signal an improvement in 2024. Bookings were up 8.5% in November 2023, with a book-to-bill ratio of 1.00 in November and 0.98 year-to-date, with an industry backlog of 13.4 weeks. The market leading this growth was the transportation industry, which grew 17.2% year-on-year; Automobiles followed with 14.6% and industry at 8.5%. Orders grew year-over-year in four of the six regions, with China seeing the fastest growth. Even so, all regions continue to show negative year-to-date results.

Bishop's Connector Industry Predictions 2023-2028 report provides an in-depth look at the performance of the connector industry, going back to the entire pandemic recovery period, including a full report for 2022, an initial assessment for 2023, and detailed forecasts for 2024 to 2028. There's a lot to learn about the electronics industry by looking at connector sales by market, region, and product type.

Observations show

• Europe ranked fourth out of six regions in terms of percentage growth in 2022 but first in 2023 with a projected growth rate of 2.5%.

• Sales of electronic connectors vary depending on the market sector. In 2022, the telecom/datacom market saw the largest percentage of growth at 9.4%, driven by increased internet activity and a continued push for 5G. In 2023, the telecom/datacom market will once again show the largest growth, although nowhere near the growth seen in 2022, with an increase of 0.8%.

• In 2023, the telecom datacom market will be followed by the military aerospace market with an increase of 0.6%. Since 2019, the military/aerospace market has yet to move out of key markets such as automotive and industrial, but unfortunately, global turmoil has brought military/aerospace spending into the spotlight.

• In 2013, North America and Europe accounted for 42.7% of total sales, while the Asian market (Japan, China, and Asia-Pacific) accounted for 51.7% of global connector sales. In fiscal 2023, North America and Europe are expected to account for 45% of global connector sales, up 2.3 percentage points from 2013, while the Asian market is expected to account for 50.1%, down 1.6 percentage points.

Connector outlook for 2024

The new year is full of endless possibilities, and the future is still to be revealed. What we can be sure of, however, is that electronics will continue to play a pivotal role in driving the world's development process. The importance of interconnect technology as an emerging force cannot be overstated.

As technology continues to advance, interconnection will provide critical support for a wide range of innovative applications and become an indispensable cornerstone of the digital age. Whether it's the proliferation of smart devices, the expansion of the Internet of Things, or the advancement of artificial intelligence, connectivity will play a vital role in this. We have reason to believe that in the new year, electronics and connected technology will continue to go hand in hand to write a wonderful chapter in the future.