Connector Industry Forecast 2023-2028

After a year of strong double-digit growth, no one expected the connector industry to perform as well as it did in 2022. Will the industry continue to perform at this level, or will headwinds change its course?

• How did the connector industry perform in 2022? How is the connector industry anticipated to perform in 2023? What factors contributed to the growth and decline in 2022? Will these same factors affect growth or decline in 2023?
• Which regions, market sectors and subsectors will show the greatest growth in 2023, in 2028? Which market sectors and subsectors, if any, are anticipated to contract?
• What outside factors are contributing to connector growth or decline in 2023? What factors may affect growth beyond 2023?
• In what way are currency fluctuations impacting connector sales? How did connector backlog change during the second half of 2022? How is it changing in the first half of 2023?

Bishop & Associates’ research report, the Connector Industry Forecast looks at past sales and reviews total world connector sales in 2022, providing a comprehensive analysis by region and market sector of projected connector sales for 2023 through 2028. With connector sales broken down by region, market sector and subsector, this report provides a detailed analysis in US dollars of the world connector industry.

Connector Industry Forecast 2023

Chapter 1 – 2022 – Better than Anyone Expected!

• Bookings Year-over-Year and Year-to-Date
• Billings Year-over-Year and Year-to-Date
• Industry Backlog Shrinks
• Industry Backlog
• Connector Industry Book-to-Bill
• Ending Backlog Since May 2022
• Industry Sales Performance by Region
• 2021 and 2022 Connector Sales by Region with Percent Change
• 2022 and 2023F Connector Sales by Region with Percent Change
• 2022 and 2023F Connector Sales by Market Sector with Percent Change
• Change in Market Share
• Market Share by Region 2013 through 2023F
• Market Share by Region 1994 through 2023F
• Industry Sales Performance by Month
• Industry Sales Performance by Market Sector 2019 and 2020 with Percent Change
• Change in Percent Growth 2019 versus 2020
• Industry Sales Performance by Market Sector 2020 and 2021 with Percent Change
• Change in Percent Growth 2020 versus 2021
• Industry Sales Performance by Market Sector 2021 and 2022 with Percent Change
• Change in Percent Growth 2021 versus 2022
• Industry Sales Performance by Market Sector 2022 and 2023F with Percent Change
• Change in Percent Growth 2022 versus 2023F
• Historical Sales Performance
• Connector Industry Business Cycles Growth Cycles Highlighted
• Historical Percentage Change in Connector Demand
• 2023 YTD Currency Impact on Regional Industry Growth
• Local Currency to One USD May 2022 versus May 2023
• Industry Sales Performance May 2023 USD-vs-Local Currencies

Chapter 2 – World Connector Forecast

• World Connector Market Forecast – Year-to-Year Dollar Change
• World Connector Market Forecast – Year-to-Year Percent Change
• Top Six End-Use Equipment Categories
• World End-Use Equipment Forecast - Summary
• 2022-2023F Percent Change and 2023F-2028F Five-Year CAGR
• 2023F and 2028F Market Share by Equipment Sector
• World End-Use Equipment Forecast - Detail

Chapter 3 – North American Connector Forecast

• North American Connector Market Forecast – Year-to-Year Dollar Change
• North American Connector Market Forecast – Year-to-Year Percent Change
• Top Six End-Use Equipment Categories
• North American End-Use Equipment Forecast - Summary
• 2022-2023F Percent Change and 2023F-2028F Five-Year CAGR
• 2023F and 2028F Market Share by Equipment Sector
• North American End-Use Equipment Forecast - Detail

Chapters 4 Thru 8 Provide the Same Detail Level

as Chapter 3

• Chapter 4 – European Connector Forecast
• Chapter 5 – Japanese Connector Forecast
• Chapter 6 – Chinese Connector Forecast
• Chapter 7 – Asia Pacific Connector Forecast
• Chapter 8 – ROW Connector Forecast

Connector Industry Forecast 2023

Bishop & Associates has just released the 2023 Connector Industry Forecast update. This eight-chapter report provides an in-depth, and detailed forecast of the worldwide connector industry. In addition to the detailed forecasts for each region of the world (North America, Europe, Japan, China, Asia Pacific, and ROW), an industry overview is included which provides current market trends, currency fluctuation effects, and industry sales performance, as well as an outlook narrative.

Worldwide and each regional forecast includes:

2022 – Better than Anyone Expected!

After a year of strong double-digit growth, no one expected the connector industry to perform as well as it did in 2022. Although not in the double-digit range, growth in 2022 was a solid 7.8%. Entering 2022 with a robust backlog allowed for all regions, except for Japan, and market sectors to show growth, albeit at different levels.

A year marked by challenges, changes, and opportunities, 2022 was for many a year that showed us just how resilient we could be. We climbed our way out of one of the worst health pandemics ever faced. We were faced with flooding in all parts of the world and the worst drought in over 40 years in other parts. Wildfires that burned for weeks and heatwaves, earthquakes, and hurricanes that killed thousands and caused billions of dollars in damages. Yet, after each incident we picked ourselves up, kept a positive attitude, and tended to business! Just like the way the connector industry responded after a devasting 2020.

Industry Sales Performance by Region

As indicated by the chart below, growth and decline were not equal across all regions in 2022 nor will they be in 2023. The North American region saw the greatest growth in 2022, growing 14.6%. With growth of 11.7%, the ROW region followed North America. This region includes Central and South America, Brazil, and South Africa. Asia Pacific, which includes Taiwan, South Korea, India, and Singapore as well as a list of others, followed ROW with growth of 7.1%, followed by Europe with growth of 6.5%. China, the largest region for electronic connector sales increased 6.1%. Japan, who continues to struggle to bring sales back to their high of $6.4 billion in 2012, showed the least growth in 2022, with sales declining -2.0%.

Like 2022, where the region with the greatest percentage increase in sales was the same region that exhibited the greatest increase in total dollars, in 2023, Europe will also represent the region with the greatest overall growth in sales dollars. Europe will see sales dollars increase $XXX million, followed by North America, where sales dollars will increase $XXX million, and ROW where sales dollars will increase $XX.X million. All other regions will see a decrease in sales dollars. Although not the greatest decrease in sales from a percentage standpoint, China will have the greatest decrease in sales from a US dollars point, declining $XXX million. For Japan this will be the second consecutive year of sales decline.

Please note currently we still are classifying economic information coming out of Russia as unreliable.

In addition to connector sales results varying by region in 2023, electronic connector sales will also vary remarkably by market sector. As the table below and on the following page show, in 2022, the telecom/datacom market, which encompasses a variety of equipment types including carrier network, enterprise network, wireless infrastructure, subscriber equipment (cell phones), and cable equipment saw the greatest percentage growth, at 9.4%. Naturally this growth was driven by the increase in internet activity and the continuing drive towards 5G. In 2023, although nowhere near the growth in 2022, the telecom/datacom market will once again show the greatest growth, expanding by 0.8%. In 2022, the telecom/datacom market was followed by the automotive, transportation, industrial and military/aerospace market, all growing 8.1%. It is important to note that although the percentage increase for all four market sectors is the same, because the value of each market is so different, the change in sales dollars varied tremendously. In 2023, the telecom/datacom market will be followed by the military/aerospace market, with growth of 0.6%. It has not been since 2019, that the military/aerospace market out preformed key markets like automotive and industrial, but unfortunately worldwide turmoil has put military/aerospace expenditures in the spotlight.

2023 Outlook

With industry backlog declining steadily, Bishop is forecasting 2023 sales to decline -Y.Y% to $XX,X16 million. We anticipate the greatest percentage decrease will occur in Japan, where sales will decrease -Y.Y%, followed by the Asia Pacific region where sales are anticipated to decline -X.X%. When looking at growth in US dollars, although not the greatest decline percentage wise, the smallest growth will be seen in the Chinese region, where connector sales will decrease by $XXX million. The Chinese region will be followed by the Asia Pacific region, where sales in US dollars will decline $XXX million.

Forecast Assumptions

Forecasting is always difficult, especially during challenging times. Projecting future business conditions in this environment is almost impossible. Consider the following economic headwinds, political challenges, and uncertainties.

• We have still not totally come out of a global pandemic. On May 5th, the World Health Organization (WHO) announcement that COVID-19 is no longer an international public health emergency and on May 11, 2023, in the US, President Biden declared the public health emergency and the national state of emergency for COVID-19 were over. This means the WHO and officials in the US will now transition to making recommendations for the long-term management of the pandemic, acknowledging that risks remain high and that there are uncertainties for its evolution. Unfortunately, this indicates life is not back to the way it was prior to the pandemic. There are continued outbreaks of both old and new variants of COVID, as well as greater attention being given to other diseases including Monkey Pox, VEXAS Syndrome, Khosta-2, and RSV (Respiratory Syncytial Virus). And, not just in the US, but worldwide.
• Uncertainties in the financial markets. Even though since borrowing costs have tightened, officials at 20 of the world’s largest economies have raised their interest rates an average of 3.5% points, inflation is still on the rise. This increase not only leaves consumers with less discretionary income for non-necessary items, especially things like recreational vehicles, second homes, and personal watercraft, it also dampens their ability to afford the everyday expenses like food, rent, and utilities.
• World GDPs are slowing in all economies. According to The Conference Board, “global real GDP is forecasted to grow by 2.6% in 2023, down from 3.3% in 2022. Most of the weakness is concentrated in Europe, Latin America, and the US.”
• We still have a semiconductor shortage. Even though shipments have improved, we are still experiencing shortages. Many regions have pledged to start manufacturing their own chips to avoid something like this happening in the future, but it takes time to build a factory and get it up and producing. We also still have a shortage of employees. According to a study by the German Economic Institute in 2022, “in occupations key to the chip industry, there’s a current shortage of 62,000 skilled workers.”
• We still have a global supply chain backlog, with shipping containers gridlocked, a global shortage of truck and crane operators, and rising transportation costs (fuel and maintenance) that are not expected to end, until well into 2024. This supply chain backlog is causing extended lead times and material shortages.
• Continued high petroleum prices, sparking shortages and record high prices (although down significantly from last year (2022), diesel on average is still significantly higher than it was in 2020 and 2019). Continued high raw material and labor costs, indicative of a probable increase in connector prices in 2024. Supply chain issues created from labor disputes and a shortage of materials, including many of the raw materials needed to manufacture connectors. Areas affected by these shortages in addition to connectors include construction materials, such as circuit breakers, wiring devices and wall plates, fuses, wire and cable, gas regulators and pipe, and PE fittings, line stopers and tap tees, ground rods, and automation products controls.
• An ongoing labor shortage, with studies showing that by 2030, we will be an estimated 85 million workers short globally! Continued low unemployment rates worldwide, driving a continued and prolonged shortage of workers in key areas like transportation and service industries. Through June 2023, unemployment in the US stood at 3.6%. In the Euro area through May, it was 5.9% and 5.2% in China.
• Increasing political tensions: Continued war in Ukraine, deepening friction between China and Taiwan, possible repeated confrontation between Armenia and Azerbaijan, stalled nuclear talks with Iran, political gridlock and rampant gang violence in Haiti, and China’s announcement that they have equipped on their six nuclear-powered submarines, JL-3 intercontinental ballistic missiles capable of hitting the continental US.
• Although the Department of Homeland Security (DHS) announced that the secretary of Homeland Security designated Afghanistan Temporary Protected Status (TPS) for 18 months, effective May 20, 2022, through November 20, 2023, they are still being led by the Taliban, an organization that is notorious for cruelty and aggression.
• Drop in new and existing home sales. According to the National Association of Realtors (NAR) “The Pending Home Sales Index (PHSI)* – a forward-looking indicator of home sales based on contract signings – dropped 2.7% to 76.5 in May. Year-over-year, pending transactions fell by 22.2%. An index of 100 is equal to the level of contract activity in 2001.” On the positive side, according to a joint report by the US department of Housing and Urban Development and the US Census Bureau, sales of new single-family houses in the US jumped 12.1% month-over-month to a seasonally adjusted annualized rate of 763,000 in May of 2023, the highest level since February of 2022 and 12.2% above the forecasted number.

There are also some interesting projections as to why we will see connector growth in 2024 and what that growth will be. See the markets where Bishop anticipates growth and which subsectors will drive that growth. Look at projections over the next five years. Will we continue to grow, or will some years not be as strong as others? All this and more revealed in the July 2023 Connector Industry Forecast.