Market of technologies, equipment and materials for electronics production

The Russian electronics market has undergone significant changes over the past two and a half to three years

Despite the challenges posed by sanctions, the domestic electronics industry has demonstrated resilience and continues to evolve. In this article, we will examine the key trends and prospects shaping the Russian market for technologies, equipment, and materials used in electronics production.

The past two and a half years have been a period of significant activity and change for the domestic market of technologies, equipment and materials for electronics manufacturing. The government and its participants faced a global and complex task: to build cooperation with new partners and launch their own developments in a short period of time without allowing the market to sag significantly. Overall, they have demonstrated an ability to cope with this challenge.

One of the key developments in the industry has been a shift away from the distribution of imported products towards in-house production. This is reflected in industry data, including figures from the Association of Electronics Designers and Manufacturers, which show a significant increase (up by 50%+) in the cost of electronics manufacturing equipment used for tasks such as component installation on boards, assembly and testing.

In response to the challenges posed by the constrained supply of equipment and materials for electronics manufacturing and the rising costs associated with these processes, a number of prominent companies have taken the initiative to establish their own contract assembly operations. This segment is experiencing significant growth, with ARPE estimates indicating a volume of RUB 35bn in 2023, representing a 42% increase from 2022. In terms of specific segments, production of computers and electronic devices in the Russian Federation increased by almost 33% in the first quarter of 2024 compared to the same period in 2023. However, according to ARPE data, contract assembly prices have increased by approximately 40% over the past year. This is why the largest market players are actively investing in developments. There has been a significant increase in demand for such services over the past two years, resulting in contract developers' revenue doubling by the end of 2023.

It is notable that the rising cost of equipment and contract manufacturing has not yet had an impact on mass consumers. The reality is that complex and expensive equipment is used primarily in sectors where a high level of localisation is necessary, such as the military-industrial complex, aerospace, aviation, and other similar industries. Furthermore, the cost of equipment and technologies is distributed over time, enabling a more cost-effective final product.

The government provides active support to the electronics manufacturing sector, offering backing to technologies, equipment and materials. To illustrate, in September 2024 the Russian Ministry of Industry and Trade earmarked RUB 800 million for the development of new equipment. RUB 300 million was allocated for the development of equipment for the production of silicon wafers used in the production of microprocessors and other components, while RUB 500 million was set aside for the development of equipment for the production of microelectronics.

Furthermore, during the summer of 2024, the agency initiated the development of specialised testing facilities for equipment and materials destined for use in chip production. The project will be undertaken in collaboration with leading market players, including Minatech, Basis, Semitek and NIITM.

Import substitution was a key factor in the launch of several processes and the establishment of technological sovereignty. It is therefore essential to identify a powerful driver of development to drive forward subsequent stages of growth. The current geopolitical situation has created new opportunities for market participants. The restructuring of global markets (including electronics) may eventually lead to international cooperation replacing the import substitution strategy. For example, combining the efforts of domestic engineers and developers with manufacturers from China and India will enable the rapid introduction of new products to the market that meet customer demand and address current technological and engineering challenges.

It is clear that the level of state support will have a significant impact on the industry. Despite the Ministry of Economic Development's stated intention to review the strategy for state support for business, this will not affect the electronics industry, which is of vital importance for ensuring technological sovereignty. In addition, we can anticipate the introduction of new support measures, including special mortgage programmes for young specialists employed in the industry.

The dynamic development of the domestic electronics market opens up new opportunities for its participants. The growing demand for components and technologies for the production of various electronic products requires the establishment of partnerships. And an excellent solution to this difficult task is participation in leading industry events, such as ExpoElectronica. During the period of this exhibition has become the largest event in the field of electronics in terms of the number of participants. It presents the entire chain of production of electronic products, which makes the exhibition a valuable business platform for both manufacturers and consumers of such products.

ExpoElectronica is a pivotal event in the industry, as evidenced by the considerable interest from both manufacturers and suppliers, as well as consumers. In particular, 760 domestic and foreign companies exhibited at the event in 2024, while 22,473 domestic and foreign specialists visited. It is worth noting that one of the most popular sections among visitors was the one dedicated to equipment and materials for the production of electronic components, which attracted 7,699 guests (43.5%).