Driving Growth in APAC: The Electronics Distribution Sector

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The Asia-Pacific region (APAC), a vast expanse spanning East Asia, Southeast Asia and Oceania, is a powerhouse of economic growth. Countries like China, Hong Kong, Japan and Vietnam make up one of the world’s fastest-developing economic centers. This dynamic region is also a hub for electronics manufacturing and a growing pool of distributors that represent myriad different companies that have set up operations there.

After experiencing rapid expansion in 2023, the APAC region was on track to be the fastest growing region of the world economy in 2024, underpinned by resilient domestic demand in East Asia and India, according to S&P Global Market Intelligence. “Some improvement in East Asian exports will also support economic expansion,” Rajiv Biswas writes, “helped by a recovery in electronics exports and continued strong growth in exports of new electric vehicles (EVs) from key Asian auto manufacturing hubs.”

Continued Resilient Expansion

Biswas expects to see continued resilient expansion in the APAC region, with robust domestic demand in Asian emerging economies like mainland China, India, Indonesia, Philippines and Vietnam. Several factors support this positive outlook, including APAC industrial economies’ global competitiveness in the electronics manufacturing supply chain. 

“Electronics production is an important part of the manufacturing export sector for many Asian economies, including South Korea, mainland China, Japan, Malaysia, Singapore, Philippines, Taiwan, Thailand and Vietnam,” Biswas adds. “India is also rapidly building up its electronics manufacturing sector. Furthermore, the electronics supply chain is highly integrated across different economies in East Asia.”

Tracking Semiconductor Trends

In their recent APAC Semiconductor Industry Trends report, Deloitte and the Global Semiconductor Alliance (GSA), were also bullish on a market rebound for the global semiconductor market this year. More specifically, the global semiconductor market is on track to grow by 13.1% in 2024 thanks to demand recovery from downstream demand and continued growth in demand for generative artificial intelligence (AI) products and power discrete devices.  

These positive trends translate into new opportunities for APAC’s electronics distribution segment, which could also face a mix of new and continuing headwinds as the year winds down. The conflict in the Red Sea region is of real concern for companies using that route for shipping. According to global executive search firm Stanton Chase, APAC’s industrial sector has been hit “especially hard” by these disruptions. 

“Port closures, naval blockades, and the threat of further military action have choked off key trade arteries. This has led to shipping delays, soaring freight rates, and shortages of raw materials and components,” the company states, noting that roughly 11% of global trade passes through the waters of the Red Sea.

Tech Spend is on the Rise

Looking ahead, Forrester says technology spend is set to grow by 6.4% in the APAC region, reaching $710 billion this year. This growth is fueled by sustained demand across various sectors including software, services, communications equipment, tech outsourcing, hardware maintenance and computer equipment, the research firm reports. This demand may translate into more opportunities for electronics manufacturers and the APAC distributors that support them. 

“While challenges such as regulatory environments, global economic conditions, and talent shortages present hurdles, the overarching trajectory is one of opportunity and resilience,” Forrester adds. “As the [APAC] region continues to chart its course in the tech world, the emphasis on sustainable and innovative practices appears key to navigating the future of technology spending in APAC.”