Issue link: https://iconnect007.uberflip.com/i/1544707
MAY 2026 I SMT007 MAGAZINE 19 The Bull Argument Survey data from the Reshoring Initiative 1 suggests that U.S. tariff policies are not only significantly affecting reshoring, but supply chain risk, logistics costs (currently spiking since February 2026), and the value of physical proximity to OEM engineering teams are also influencing reshoring. The take- away is that reshoring was already underway and, perhaps, tariff policies simply reinforced the trend. On the other hand, the CHIPS Act can be credited with 17 semiconductor fabs and multiple advanced packaging facilities announced in the U.S., reaf- firming that investment policies can create manu- facturing tailwinds. 2 It's very clear that AI-related infrastructure build- out is reshaping demand in multiple ways. This matters to EMS providers because it is not cycli- cal consumer demand, but long-duration, capital- intensive construction. Jabil, 3 Flex, and Sanmina have all pointed to data center, AI, and cloud infrastructure as major market drivers. The Bear Perspective Other sources argue that the "go-go" growth story may not be as robust. For example, sales and ship- ments reports from the Global Electronics Associa- tion note a 12.7% sales spike in March, 4 followed by a drop almost as large (-10%) in April. 5 Market economists tagged this as pull-forward demand, not sustained growth. This belief is backed by flat shipments in April and year-to-date. So, why the pull-forward behavior? The Association cited tariff-related uncertainty as a primary cause. In fact, it indicates that, while orders are up, shipments remain essentially flat. When it comes to assigning credit for the growth, reshoring is often a beneficiary. But the Reshoring Initiative has some data that tempers this enthu- siasm. For example, just one in three reshoring opportunities includes both assembly and sourc- ing; two out of three are only shifts in component sourcing. When the hype suggests active reshor- ing, simply shifting sourcing does not create signifi- cant new jobs. Furthermore, the reported growth is scattered. Company-level data spreads the growth trend as follows: • Strong: AI, semiconductor capital equipment, aerospace and defense • Flat: Industrial, some medical • Weak/volatile: Automotive, renewables, telecom In other words, this is not a rising tide, but a river with some strong currents here and there, bor- dered by eddies and stagnant spots. How you see the market depends upon how that river behaves in your section of it. Finally, it's worth remembering that financial reports from global U.S. companies do not neces- sarily reflect U.S. domestic growth. Given that the large EMS firms typically are multinational, the growth they report does not necessarily happen within the U.S. borders. This can blur the overall U.S. outlook. What's Really Happening? Merging these two perspectives provides a good take on the current market. We've confirmed that the growth is real, especially in defense, semicon- ductor capital equipment, and AI. EMS companies well entrenched in these sectors are seeing strong demand, while other application segments are turning in flat or volatile numbers, especially when factoring in tariff effects. Furthermore, EMS compa- nies with entirely U.S. domestic footprints may not have the same growth as more diversified multina- tional companies. " In other words, this is not a rising tide, but a river with some strong currents here and there, bordered by eddies and stagnant spots."