Issue link: https://iconnect007.uberflip.com/i/1542458
JANUARY 2026 I SMT007 MAGAZINE 25 nounced, with defense-oriented PCB demand surging 22% across Europe. Aerospace and defense (AS&D) demand is rapidly becoming a central pillar of growth. Driven by geopolitical instability, reshoring priorities, and the recogni- tion that mission-critical electronics can no longer be left to offshore vulnerabilities, this is a strong indicator for growth in the domestic supply base. Yet Europe's policy frameworks remain misaligned with this new reality. A point made in the presentation was the pro- found structural disadvantage imposed by EU tar- iff rules. European PCB manufacturers pay up to a 6.5% import duty on raw materials sourced from Asia, while fully assembled PCBs imported from China enter duty-free. Seeing a similar situa- tion play out in the U.S., which has driven all man- ner of international trade agreements and global trade rebalancing, raises the question of what EU nations will be willing to do to better address the inherent inequity. With Europe producing less than 2% of the world's PCBs, the sector's strategic vul- nerability is no longer hypothetical; it is opera- tional. Several presenters warned bluntly that some European defense systems today rely on PCBs manufactured in the Far East. By contrast, the United States uses NDAA and DFARS frameworks to govern sourcing for defense electronics, a model many argue Europe must adopt to maintain technological sovereignty. Consolidation and Transatlantic Expansion Accelerate If defense is becoming the growth engine, consoli- dation is becoming the survival strategy. Between 2021 and 2025, the European EMS and PCB sec- tors recorded 255 M&A transactions. France has been a hotbed of acquisitions, driven by Alli- ance Electronics, ICAPE, Groupe Synov, and Agôn Group, while the Nordics saw extensive activity from Hanza, Inission, Note, and Scanfil. Germany and Switzerland also saw significant transaction volume—both expansions and insolvencies— reflecting structural shifts within historically stable national markets. Solka presented an analysis that these were not simply opportunistic deals, but strategic responses to the capital intensity of AI-era technology tran- sitions, the need for geographic diversification, and the pressure from OEMs seeking fewer, more capable, more financially resilient partners. Another trend quietly accelerating is the relo- cation of European EMS capacity to the United States. Whether driven by tariff protection, CHIPS- Act incentives, or proximity to American defense and industrial customers, European firms are establishing U.S. manufacturing footprints at a historic rate. Limtronik recently installed an SMT line in the U.S., Cicor acquired a former Valtronic site, and several mid-tier EMS groups are actively scouting American acquisitions.