Issue link: https://iconnect007.uberflip.com/i/1544707
20 SMT007 MAGAZINE I MAY 2026 Tariffs don't create demand; they simply influ- ence timing. Sourcing shifts (including new sec- ond-sourcing activity) are accelerating to minimize tariff impacts wherever possible. Pair that with the order timing changes, exacerbated by the U.S. ad- ministration's shifting tariff enforcement timelines, and scheduling optimization looks like increased demand in the short term. Those chickens will come to roost later. There is a wave of reshoring, but it is, at most, incremental. The U.S.'s tariff policies are not trigger- ing a groundswell of transformation in the domestic supply chain. It's more of a regional balancing, but not the industrial resurgence that was announced. Rather than a historically significant super-cycle, the current U.S. market is best described as a selective upcycle, driven by AI and high reliability, amplified by tariffs and policies, and underway amid regionalization of the supply chain. Is This a Super-cycle? The bullish information suggests a super-cycle. The AI demand makes the strongest case for a super-cycle, as this buildout tracks more closely with the cloud buildout in the 2010s and the telecom buildouts in earlier years. The AI buildout will be capital-intensive and long-term, potentially sustaining growth for multiple years. The geopolitical and U.S. policy changes that began in 2025 upended the supply chain equilib- rium, altering not only U.S. supply chains but also rerouting those of other countries worldwide and affecting trade agreements. These changes can fuel a global super-cycle. That said, larger U.S. companies are indeed building new facilities. This sort of investment suggests the current cycle is not a short-term bump. The bearish counterargument is equally com- pelling. While AI is leading the spike, one strong sector does not make for a strong industry. The U.S. tariffs have triggered behavior that distorts the demand signals—the pull-forward ordering, for ex- ample. This is inventory hedging driven by policy, not growth. Additionally, much of the reshoring is actually supplier switching, which downplays any reshoring statistics we might see. For this to become a true super-cycle, the follow- ing will need to happen: • Shipment rise, not just bookings • Growth broadens to additional segments • Durable sourcing changes need to emerge from the current tariff uncertainty behavior • Reshoring must include assembly as well as component re-sourcing • The workforce bottleneck eases • CHIPS Act investment must spill over into the rest of the manufacturing ecosystem • Margins must improve enough to pay for capacity expansion Most importantly, to trigger a super-cycle, all this needs to happen simultaneously. With strong arguments on both sides, the obvi- ous conclusion is that, while we may be seeing a super-cycle in AI, defense-related, and semicon- ductor equipment, this is not a broad U.S. EMS super-cycle. Looking at what's required of a broad super-cycle, much more needs to happen. SMT007 References 1. 2025 Reshoring Survey Report, Reshoring Initiative. 2025. 2. Regional Competitiveness Fact Sheet (CHIPS and Science Act), U.S. Department of Commerce. 2025. 3. "Fourth Quarter and Fiscal Year 2025 Results," Jabil Inc., 2025. 4. "North American EMS Shipments Up 0.2% in March; Bookings Surge," I-Connect007, April 25, 2025. 5. "North American EMS Industry Shipments Up 0.2 Percent in April," I-Connect007, May 28, 2025.