> Electronics Edge Bulletin – Q1 2025 – Positive Signals Ahead

The first quarter of 2025 clearly marked a turning point for the industry, with signs of a recovery taking hold despite increased geopolitical/tariff uncertainty taking hold prior to Liberation Day on April 2, 2025, and these results were echoed by the ERA membership survey. In January, survey participants noted a 1.7% year-over-year (Y/Y) sales increase in the month (the first Y/Y sales increase noted in the 20-month history of the survey) — while the turning point in January was comprised of 1.3% price contribution to the growth (and implied volume growth of 0.5%). Encouragingly, sales growth remained positive in February and March, with the March results pointing to a 2.5% Y/Y growth in the month, indicating a true recovery in the quarter and likely growth of LSD growth for the membership in aggregate for 1Q25. Additionally, we are encouraged by the sustainability of the recovery, as surveyed ERA members have reported seven straight months of Y/Y bookings increases through March, and the book-to-bill ratio turned positive in January for the first time in the history of the survey. From an end market perspective, little changed throughout the quarter, with the aerospace, IT hardware and industrial sectors noted as end markets contributing to growth.

While the results from 1Q are encouraging and we have seen minimal impacts near-term from the geopolitical/tariff uncertainty that transpired through early 2025, it has clearly impacted the 2025 outlook for the year, with the full year 2025 outlook being cut from 9.1% in January to 7.2% in February, and ultimately 3.4% exiting the quarter. While the full year outlook is discouraging, we would note that near-term, the overall sales performance remains largely unchanged, and the industry is likely facing a scenario of a larger range of outcomes for 2H25 as the industry balances the geopolitical/tariff uncertainty with clear signs of the early stages of a cyclical recovery.

Q1 2025 marked a strong and balanced start to the year, with positive signals across all key indicators—POS, OEM shipments and inventory levels.

Point-of-sale (POS) activity strengthened month over month throughout the quarter. January held steady compared to December 2024, remaining slightly above the 12-month average. February and March built on that momentum, with March 2025 reaching one of the highest POS index points in the past year. Compared to the same period in 2024, Q1 2025 showed clear improvement, particularly in February and March, indicating stronger demand and improved sell-through across the channel.

On the supply side, OEM shipments remained relatively stable throughout the quarter. The OEM index reflected a measured approach to replenishment—likely a continued effort to avoid overstocking and maintaining discipline as inventory levels normalize.

Inventory metrics showed the most notable improvement. Each month of Q1 2025 recorded a decrease in inventory index values, continuing the downward trend that began after the peak in August 2024. By March, inventory levels had dropped below POS for the first sustained period since mid-2022. This is a meaningful shift, suggesting the channel is successfully rebalancing and operating more efficiently, with inventory more closely aligned to actual demand.

Taken together, the data from Q1 2025 points to a channel that is not only stabilizing but returning to a healthier equilibrium. With POS growing, OEM supply steady and inventory tightening, the industry appears to be entering mid-2025 on solid footing.

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The new Electronics Edge e-bulletin will be published and sent out to the entire ERA email list quarterly. The entire bulletin, however, is only viewable by ERA members. It contains market information about the electronics components industry, survey results from you — our ERA members — and point-of-sale data and trends from the channel.

This information is aimed to help you plan your business and show your principals/distributors what’s happening in the industry.