EMS@C-LEVEL

EMS & The Economist (November 2025) - Shutdown Shockwaves And Smarter Supply Chains

• Philip Spagnoli Stoten

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In this episode of EMS & The Economist with Global Electronics Association Shawn DuBravac, we start with the longest U.S. government shutdown on record and how it choked off official data when leaders needed it most. With unemployment figures stale and signals flashing mixed, we turned to industry metrics: book‑to‑bill ratios that look balanced, backlogs that finally eased, and a defense sector still pulling hard, especially in Europe.

From there, we dive into the AI surge. Yes, the investment is huge, but today’s spend doesn’t rhyme with the dot‑com era. Hyperscalers like Meta, Google, and Amazon are deploying earnings rather than piling on fragile debt, building capacity they know they’ll use over a longer horizon. Even if there’s some overbuild, the bigger near‑term constraint isn’t hype—it’s electricity. Power availability, interconnect queues, and grid readiness now shape the slope of data center growth and the electronics demand tied to it.

Tariffs never left the stage, so companies stopped waiting for clean answers. We share how manufacturers are hedging with flexible footprints: in‑sourcing select lines, shifting from China to the U.S. or Mexico, and using USMCA to blunt steel and aluminum tariffs. We also unpack the legal uncertainty around AIPA and what rapid refunds could mean—a de facto stimulus that could unleash purchases and CapEx, or sit idle if policy risk stays high. Across the supply chain, smarter BOM visibility and analytics help teams decide what to absorb, what to pass through, and when to move.

Looking ahead, we set expectations for Productronica and CES. AI touches everything from enterprise infrastructure to wearables, robotics momentum is building, and autonomy has crossed from possible to feasible—especially as a service. Waymo's millions of miles point to real utilization, even if personal AV ownership remains a longer‑term play, with regulation and weather still setting the pace. If you care about where electronics goes next, keep your eye on AI‑enabled demand, power constraints, and the quiet agility moves inside supply chains.

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EMS@C-Level is sponsored by global inspection leaders Koh Young (https://www.kohyoung.com) and Creative Electron (https://creativeelectron.com)

You can see video versions of all of the EMS@C-Level pods on our YouTube playlist.

Philip Stoten, Host & Podcaster:

Hello, I'm Philip Stoken. Welcome to EMS and the Economist. I am joined by Sean De Bravac, who is the chief economist for the Global Electronics Association. Sean, I'm gonna start with the elephant in the room. 42 days of government shutdown. Where are we and what impact is it having on the wider economy, but perhaps more so on um on the electronic manufacturing industry?

Shawn DuBravac, Chief Economist, Global Electronics Association:

Yeah, obviously we're looking at the longest shutdown that we've ever had in uh in US history. We are probably uh at the time of this recording, hopefully just hours away from things uh getting back to to normal and and we should probably say normal in quotes. Um seeing the government open reopen. It'll probably take some time for you know some of the some of the things that have been shuttered to to really get back to to full steam. Uh it has been a uh challenge when it comes to data. It's probably the worst time for the government to be closed was was right now. The last, for example, um unemployment report that we we have is from August. And by all indications, the labor market has deteriorated in the last two months. So uh I think there will be a lot of eyes on the the uh flow of government data as that starts to reopen.

Philip Stoten, Host & Podcaster:

A bit of a lack of hard numbers on some of that stuff. The great thing about the Global Electronics Association is they never close. So your data has still been coming out every month. How has the um how's the book to bill looking and how's the sentiment looking, particularly there in the US?

Shawn DuBravac, Chief Economist, Global Electronics Association:

Yeah, sentiment actually is looking pretty, I would say pretty solid for an environment that is pretty uncertain. Uh it does look like we have worked through a lot of the backlogs and things feel to be in a pretty good balance, uh, I would say, between bookings and and shipments. But um, you know, anything could uh could change that. Certainly, deterioration could change that. Um it does look like some things have maybe been uh a little bit um lumpy, perhaps in anticipation of the government closing. There was a little bit of a pull forward, perhaps, uh that that would took place in uh in some of the electronics in the U.S. But uh by and large, the uh you know the sentiment looks pretty good. We'll be publishing the the next sentiment report here in the coming days, and it it's looking pretty consistent with what we have seen in recent months.

Philip Stoten, Host & Podcaster:

Uh and particular sectors, the defense industry still still seems to be strong. It's particularly strong in Europe. Uh, is that ongoing in the US at the moment?

Shawn DuBravac, Chief Economist, Global Electronics Association:

Yeah, I I think so. I think one of the challenges for the electronics industry, but also one of the challenges for the economy, is that at the aggregate level, things look pretty good. But then when you look at the foundation, it is very narrow. And you see this across a number of different facets of the economy. If you look at investment, it's all being driven by AI and data centers. When you look at uh other segments of the economy, they tend to be being driven by a small segment of the population. Consumer spending looks pretty good, holiday spending looks pretty solid, but it's really being driven by a small number of households, a small percentage of households, those households in the in the higher income bracket. And so wherever you look, you see aggregate levels that look pretty good, but you see a much more nuanced story when you look at the underlying data.

Philip Stoten, Host & Podcaster:

We just saw SoftBank sell four billion dollars worth of uh NVIDIA shares, which turns out to be 0.1% of the of the company value. But I'm I'm hearing more and more in the news cycle about concerns about AI being overhyped and you know the investment being just on a level that um has not been seen before, you know, back to the days of the railroads. Is there concern about that? Is there concern about overhype? Is there concern that we're building a bubble that at some point has to burst?

Shawn DuBravac, Chief Economist, Global Electronics Association:

There's definitely concern that we're in the midst of an AI bubble, and by all definitions, we are seeing a tremendous amount of investment flow in. I do think it looks a lot different than past technology bubbles. If you go back to uh you know, to when we were putting in fiber in the ground and we saw overcapacity and overbuild there, a lot of that fiber was was still dark. We were putting it in the ground, but it would take years and even decades for us to fully take advantage of that fiber. And obviously, today we benefit tremendously from all of that overbuild and overcapacity. It feels a little different with AI, partly because uh a lot of the investment is coming from companies that have strong underlying cash flows. You think of all the hyperscalers, the Metas and Googles and Amazons of the world, they all have very strong cash flows that can support this type of investment. So for the most part, it isn't speculative investment. It isn't companies that are uh taking on a lot of debt that they're not going to be able to service. There, there's a lot of um of I would say earnings behind the investment. I also think that the the companies recognize that this is a long-term investment. I don't expect the AI investment to slow down anytime soon, certainly not within the next 12 to 18 months when you just look at the the commitments that have been made. Uh, but they recognize that even if there is a little bit of overbuild in the short term, it will be to their advantage in the long term to have some of this capacity online. I I think the the you know the real uh restriction here on growth isn't necessarily the investment from the hyperscalers, but it's the availability of electricity to and energy to power these data centers and and to power this build out.

Philip Stoten, Host & Podcaster:

When we talked earlier in the year, we were constantly talking about tariffs. People seem to have just got used to the fact that there's this noise in their life and it's tariffs, and they have to deal with it, they have to be ready for it. Um, and they're trying to build as much agility in their business to deal with it. The one trend I did hear a little bit about recently, particularly in the US, and this was from uh CAPEC Capital Equipment Company, was that they were selling machines to OEMs that they've decided because of tariffs to uh re-in-house their manufacturing. So to reduce their dependence on outsourcing because their outsourcing was coming from overseas rather than move to a US manufacturer they decided to in-source. Are you seeing that as a trend within um Global Electronics Association? Is that something you're hearing about?

Shawn DuBravac, Chief Economist, Global Electronics Association:

We're seeing that trend and and also we're seeing companies look at a myriad of approaches that they can take to address the uncertainty. Some of that, as you noted, was was bringing some of that manufacturing in-house. I think everything is on the table. Looking at different partners, looking at different countries, looking at you know different regions. Uh, I may even hear from some companies where they brought some things from China back to the U.S., but then as the steel and aluminum tariffs uh were put in place, they moved some manufacturing that was in the U.S. to Mexico because there they could avoid some of the aluminum and steel tariffs and still bring it into the U.S. under USMCA, so avoiding the tariffs altogether. So there's a lot of movement taking place. I do agree that companies are uh have settled into dealing with some degree of uncertainty and some degree of volatility. The the big issue on the table right now is if the AIPA tariffs are even going to be considered lawful or not. Uh and so what comes out of that, I think, will have a big impact on uh not only the electronics industry, but the broader economy. So, for example, if they are ruled illegal, are there refunds that need to be made? How quickly are those made? Uh, if we see uh large amount of refunds made in a in quick order, then that looks a lot like a fiscal stimulus plan. All of a sudden, all of these companies have more money that they could invest in. And so whether they sit on that investment because of uncertainty or whether they redeploy that capital elsewhere remains to be seen. But we could see a lot of growth come out of something like that. We could see you know purchases pick up and other things like that take place. So that's all on the table, and and we'll be hearing more about that in in the months ahead. At the same time, you do see the administration moving towards other types of tariffs, 232 and 301 and and other type of um of tariffs that they can put in place, sectorial tariffs that have a little bit more of a process to them. There's a little bit more visibility into the the timing and what might be impacted. And so I I I to your point, it doesn't mean that we're going to move completely away from tariffs, but um that they'll always be dealing with them, they'll all be always be uh a piece of it. Uh, I do think companies have done a tremendous amount to mitigate the impact of the tariffs. You see it at every level of the supply chain, retailers have absorbed some of the tariffs so that they aren't passing the full impact on to their consumers. In some instances, they're trying to figure out which products are most tariff sensitive and most price sensitive. And so they're passing it on where they can, when they can. In the in the middle of the supply chain, you're seeing companies figure out how much do they absorb, how much do they pass on. Uh at the same time, you do see costs coming down elsewhere, transportation costs and uh and warehousing costs and some other costs like that. I think are are uh are sl, you know, the growth in those costs are slowing. And so the the whole supply chain is coming together to mitigate the impact of tariffs.

Philip Stoten, Host & Podcaster:

I think it still will be on the agenda in 2026. And I think people are mindful, but they have strategies, they have much better data sets around their their bill of materials and around their supply chain, they've got better systems in place to respond as quickly as they can. So I think that's that's a good thing. We're coming towards the end of the year, and we're coming towards the kind of um, I think of them as the scene setting events during the year. We've got Productronica next week, which is very much a weather vane for the CapEx guys in the industry. And then of course we've got CES at the start of the year. What are your expectations for CES? A lot of talk about AI, I imagine.

Shawn DuBravac, Chief Economist, Global Electronics Association:

A lot of talk about AI. I think the sentiment headed into next year from a tech cycle is still pretty positive. I think there is a lot of optimism in uh uh several different sectors. You know, you noted defense, and you're seeing defense in places like Europe pick up for the first time in in really decades. Uh US still feels strong. Other parts of the world that we don't always focus on are investing in those areas. So that continues to push forward. AI, as you mentioned, I think benefits lots of different areas of tech, not just uh you know enterprise tech, but also elements of consumer tech are are picking up as people look at where we could deploy uh AI and in what type of wearable format might we want AI. I think there's a lot of optimism around robotics. We're still very early on. And when you see some of the early demos of humanoid robots, we're we're probably still some period away from those becoming uh something that every household has. But we we have moved, I think, quite far that we're even contemplating that these are household ready, that they have a price point that could be uh accessible to some households. Like there's a lot happening in in the humanoid space, and I think that's an area to watch over the next you know 36 months or or or five years. Uh, I think we can make some some fast progress there. Uh and so there are different areas of tech that I think are are well positioned for really good growth over the next you know five to eight years.

Philip Stoten, Host & Podcaster:

Within the CES, we've we've seen a huge push to the automotive side. It feels like that isn't kind of perhaps top of top of agenda. You know, I think it was 10 years ago we were at CES and we were promised um self-driving cars and we're still not really there. It feels like AI has kind of pushed the automotive sector perhaps down to second. What are you what are your thoughts?

Shawn DuBravac, Chief Economist, Global Electronics Association:

I think that's true. I think AI permeates every category. I think that when you look at automotive, you do see many of the big autonomous manufacturers and and service providers at CS. You see Waymo, you see Zooks, they have deployed in the U.S. Obviously, Waymo has has very strong, uh relatively strong presence in the U.S. Uh if you look at just California, they've probably done uh you know data through the second quarter suggests that they've they've driven 30 million miles, they've transported 10 million passengers. So it's still small relative to the total, but I I do think an important thing has happened. We've shifted from this being a possible technology to this being a feasible technology. There is a level of maturity that we see today in self-driving and autonomous vehicles. Now, we're not all going to go out and own them ourselves tomorrow, or probably not in the next five or ten years, realistically. But as a service provider platform, I do think we're there. And and those will continue to deploy out as long as the local jurisdictions allow it, as long as the regulation at the city and state level allow it, and as long as the the uh weather can uh you know can handle it as well. I think that will continue to be a little bit of a challenge. But even if you look at uh at Waymo's most recent uh iteration, you know, they're putting windshield wipers on the sensors and they're doing other things to try to handle inclement weather. They've uh deployed in Miami and places like that that deal with heavy rain. And so they're they are slowly starting to move north in the country where the where the weather is more severe. We see autonomous truck driving taking place in the US and and in China. So I do think we will make very big moves in autonomous driving in in the coming years, even if consumers aren't necessarily owning their own autonomous driver.

Philip Stoten, Host & Podcaster:

Well, I look forward to um CES. Hopefully, see you there, hopefully um chat a bit about what the ingredient trends are at that show and how they're going to impact our industry. But in the meantime, Sean, thanks so much for your time.

Shawn DuBravac, Chief Economist, Global Electronics Association:

Great to be with you, Phil.