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24 SMT007 MAGAZINE I JANUARY 2026 bullwhip effect—fueled by the post-pandemic chip crisis—has continued to reverberate across orders, creating inventory distortions that many EMS lead- ers hoped had already washed through the system. The D-A-CH (Germany, Austria, Switzerland) region mirrored the wider European narrative. Revenues softened, headcounts slipped, and seg- ment-level volatility sharpened across both Ger- many and Switzerland, leaving Switzerland and possibly Austria as the only, but still modest, bright spots. Ederer noted that the EU declines were espe- cially painful because they followed the remark- able upswing of 2021–2023, when major EMS firms were flush with demand and expanding aggressively. In fact, as several productronica pre- senters noted, the companies that benefited most during the surge were also those hit hardest when volumes contracted. AI Infrastructure Redefines Manufacturing Demands Yet, focusing solely on the market downturn obscures deeper structural forces reshaping Europe's manufacturing footprint. The first major shift is the extraordinary concentration of new electronics value around AI and data infrastructure. For EMS and PCB manufacturers, the AI hardware cycle is not simply an opportunity. It is a structural realignment of processes and materials. System- level packaging is evolving at breakneck speed, with module sizes expanding into 120-mm and 150-mm classes. New material demands—such as ultra-low-profile copper foils, lower-DK laminates, and tighter tolerances on large BGA planarity—are already challenging European supply bases that are already under strain. If this feels familiar, it is because we have been here before: Technology has always redefined manufacturing. However, this shift is somewhat dif- ferent. It is faster, more capital-intensive, and hap- pening at a moment when many European compa- nies are less prepared to respond. Defense Electronics Emerges as a Strategic Anchor The second major force reshaping the market is defense. While nearly every major segment con- tracted in 2024, the consumer segment fell a stag- gering 25.5%, industrial dropped 9.7%, automotive contracted 8.2%, communications slipped 8.7%, and medical declined 5.9%. Defense electron- ics expanded by 10%, making it the only category besides computer/data-technology to grow mean- ingfully. In the PCB sector, the trend was even more pro-