From shifting tariffs to evolving supply chain strategies and the accelerating demand for AI components, the first half of the year has been anything but predictable.
As we move beyond the halfway point of 2025, it is clear that the electronics manufacturing industry continues to navigate a landscape defined by innovation and shifting global dynamics.
Now is a good time to stop and reflect. What has happened in the electronic manufacturing sector in the past six months, and what might lie ahead?
At Component Sense, we anticipated that 2025 would bring continued turbulence. Recent global developments have confirmed this. We spoke with our leadership team for their perspective on the year so far and their predictions for the months to come:
Tariff Pressures & Buyer Reactions: A Sales Perspective
“It has been an exciting year so far, with external factors certainly keeping us on our toes.”
While challenges have been real, Component Sense has also secured significant opportunities—most notably, a large consignment deal with a major OEM. This influx of component stock on hand means we can offer same-day shipping and respond quickly to customer shortages, helping mitigate future tariff impacts.
Tariffs, as pointed out by Sales Director Rose, have dramatically influenced buyer behaviour.
"In Q1, our sales team noticed many buyers' hesitation and inaction. But by Q2, we saw the opposite: companies acted fast to mitigate cost risks and safeguard their supply chains.”
This mirrors a wider industry trend. According to recent reports, Q1 saw a drop of –6% in UK and export orders compared to a decrease of –2% in Q2.
Source: Make UK Manufacturing Outlook Survey
Rose adds that AI-related components will continue to drive demand, and likely, future shortages. Diversifying suppliers has become a priority for companies seeking resilience in an unpredictable market.
AI-Driven Demand & Adaptation in Real Time: A Tech View
Chief Technology Officer Grant Rutherford offers a broader technological perspective. While the electronics sector has weathered previous storms, 2025’s challenges are unique.
“This year has seen an unprecedented level of uncertainty —both in the wider economy and specifically within the electronics market.”
Grant explains that the early-year tariff announcements from the USA shook confidence among both buyers and sellers, prompting many companies to adopt a more reserved, short-sighted approach to forecasting and long-term planning.
However, by Q3, the mood has shifted. Manufacturers now recognise that volatility is the new norm.
“Businesses are acting more decisively and adapting to change in real-time, rather than waiting for absolute clarity to make decisions.”
AI Infrastructure Market Size (USD Billion)
The electronics industry, however, is not a monolithic entity. According to Precedence Research, the global AI infrastructure market reported an astonishing market value of $47.23 billion in 2024 and is projected to reach $499.33 billion by 2034. Grant highlights the role of AI as a market disruptor.
“There is a market increase in the production and requirement for high-performance chips essential to AI infrastructure, consequently reshaping component demand across the board.”
This echoes wider industry trends. As AI adoption accelerates, certain components are experiencing unprecedented demand, while others remain stagnant, further complicating supply chain strategies.
Market Timing: Looking at the Bigger Picture
“Holding onto excess inventory is holding companies back.”
Founder and CEO Kenny McGee brings the conversation back to fundamentals: inventory management and mindset. He points to a persistent issue: manufacturers sitting on excess, slow-moving stock purchased at market peak. In some cases, this amounts to 20% of annual revenue tied up in dead inventory. Companies are understandably hesitant to sell below book value, but in the current saturated market, this often means missing opportunities.
“Buyers have an abundance of purchasing options. They expect competitive pricing. Waiting for another peak risks components ageing into obsolescence.”
Kenny shares a personal insight from earlier this year when he was in China during the latest round of tariff announcements.
“Surprisingly, the reaction there was muted. China’s domestic market is impenetrable, and there is a strong belief that they will continue to prevail.”
This is in contrast with the heightened concern across Europe and the UK, where fear and uncertainty have led to hesitation and defensive strategies. Kenny warns that tariffs fuel fear, and fear stifles innovation and creativity in companies, something businesses cannot afford in the rapidly evolving AI era.
Looking ahead, Kenny emphasises that AI will continue reshaping roles, processes, and supply chains. For Component Sense, the focus is clear: acquiring new partnerships, redistributing excess and obsolete (E&) inventory, and preparing for market normalisation, not another speculative peak.
“Another peak in the component market with short supply and high demand would only come from a significant adverse world event like a large-scale war. Let’s hope for peace and a settled market.”
Key Trends in 2025 So Far
Success in Today's Market
If there is one theme that is threaded through every insight in this blog, it is this: the companies that will thrive in 2025 are those that adapt quickly and think strategically.
Supply chain instability, unpredictable tariffs, and AI-driven demand spikes are all beyond human control, but how one responds is where resilience is built. That is why agility and inventory redistribution are no longer optional strategies but essential tools for survival and growth.
Taking Kenny’s point: OEMs that hold onto old or overpriced inventory risk much more than a small financial write-down. They risk losing flexibility, warehouse space, and relevance. In a market where buyer expectations are driven by price and availability, ageing components become liabilities.
Meanwhile, redistributing surplus stock achieves two vital outcomes:
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It injects liquidity back into the business, which is capital you can reinvest into sourcing in-demand components or funding R&D.
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It reduces electronic waste by preventing unnecessary manufacturing, aligning with the rising ESG standards and consumer sustainability expectations.
At Component Sense, we help electronics manufacturers and OEMs turn excess stock into strategic value. We can help you:
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Free up warehouse space
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Recoup costs from E&O stock
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Strengthen your ESG and circular economy goals