Positive trends and dynamics of electronics development in Russia

On behalf of the organizing committee of largest electronics exhibition in Russia, ExpoElectronica, we extend our congratulations to managers and specialists in the electronic industry on Electronic Industry Worker Day

We would also like to wish continued growth and prosperity to all the enterprises of the industry, and the achievement and exceeding of all set goals. The exhibition continues to work actively in your interests and presents the latest industry trends on its platform.

The current situation in Russia is conducive to an increase in the share of Russian electronic components and software in industrial and consumer electronics. The industry is actively pursuing this objective, a fact that has been acknowledged at the government level.

There is a growing level of interaction between manufacturers and consumers of the Russian electronic component base (hereinafter referred to as the ECB), particularly in key areas. This is a positive trend that will contribute to the further development of the Russian microelectronics and high-tech industry in general. To achieve this, it is essential to continue eliminating organisational, communication and information barriers.

In anticipation of the X International Forum Microelectronics 2024, ITE Group and its partner, the industrial marketing agency Treismarket, conducted a survey of exhibitors and visitors of ExpoElectronica.

The objective of the survey was to ascertain the primary challenges and impediments to the increased utilisation of domestic electronic components (ECB OP), and to gain insights from experts on optimal avenues for advancement in this domain. The survey was conducted among representatives of the market, including manufacturers and distributors of electronic components, domestic ECB producers, and electronics manufacturers. A total of 301 respondents were interviewed, enabling us to obtain precise data with a margin of error of +/-5% (with a confidence level of 95%).

"We see a high demand for market research and analytics in the electronics industry, and industry exhibitions such as ExpoElectronica provide a unique opportunity to quickly track industry trends," emphasised Anton Bolshakov, CEO of industrial marketing agency TraceMarket.

The results of the survey were presented and discussed by experts at the Microelectronics Forum as part of the roundtable discussion, "Achievements of domestic microelectronics under sanctions. What will we have in time for ExpoElectronica 2025?"

We present a summary of the survey results and industry trend analysis for 2024.

Rimma Mangusheva, ExpoElectronica exhibition director

1. Companies' participation in exhibitions and their preferences:

Regular attendance at trade fairs: 50% of respondents regularly attend trade fairs, and another 44% do so once a year. Participation in trade fairs is considered an important way to increase company visibility and gain market intelligence.
Presence at trade fairs: 47 % of companies participate in trade fairs with their own stands, with the main initiative coming from company management (59 %). Marketing and sales departments also play an important role in decision-making.

2. Benefits of exhibiting at trade shows:

Key opportunities: The main benefits of exhibiting at trade shows include bringing new products to market (60%), attracting new customers (56%), establishing partnerships (50%) and gaining industry insights (40%). Companies see trade shows as a platform to launch new products, gather feedback and increase brand awareness.
Networking opportunities: Exhibitions help in forming strategic partnerships, including collaboration with distributors, investors and design centres.

3. Areas of Growth for Russian components and electronics:

Quality and delivery times: with improved product quality and shorter delivery times, there is a good chance of faster substitution of foreign counterparts with domestically produced products.
Focus on the development of electronic engineering: the development of key technologies and materials will ensure significant growth in the production of domestic ECBs.
Industry support: an important role in the successful development of import substitution and technological sovereignty is played by creating a positive image of domestic products among market players, technology partners and consumers.

4. Future growth and investment:

Demand for domestic products: many companies partially (54%) or completely (2%) replace imported equipment with domestic analogues. At the same time (44%) of companies are not yet ready for a full transition.
Support from ECB manufacturers: Respondents suggested several steps to increase the use of Russian components, including improving quality, reducing cost, and making technical documentation and support available.

5. Raising awareness and comparing characteristics:

Mastering Russian components: Companies showed interest in technical consultations (55%) and masterclasses (30%), indicating their desire to improve their skills and knowledge in the use of Russian components.
Comparison of characteristics: The overwhelming majority of respondents (87%) expressed interest in demonstrations, comparing Russian products with imported counterparts, indicating a clear market need for transparency and feature comparison.

Analysis based on 2024 industry trends:

Re-focus towards Russian technologies: Russian electronics is focused on import substitution and technological independence, seeking to develop domestic production. The study confirms the growing demand for domestic technologies.
Growing demand for trade shows: The survey highlights the role of trade shows as a platform for presenting new products, establishing partnerships and analysing competitors. In 2024, events like ExpoElectronica are crucial for companies seeking to realise the goals of national technological sovereignty.
Competence development: Interest in masterclasses and technical consultancy indicates companies' desire to improve their skills in working with domestic technologies. This trend demonstrates a shift towards more independent product development as part of reducing dependence on foreign components.
Prioritise quality and supply chain: Developing product quality, increasing production volume and supply chain reliability are priorities for the Russian market. Companies offering innovative alternatives to imported technologies have a significant market share.
Partnerships for growth: In the face of geopolitical and logistical constraints, companies are seeking to strengthen both domestic and international partnerships. Trade fairs are important venues for forming collaborations that can help solve production problems and stimulate innovation.

Industry Trends 2024

Dynamic changes: In 2023, the volume of the Russian market for radio-electronic products reached RUB 2.63 trillion, increasing 1.6 times compared to 2020. By the end of 2024, the output is forecast to reach RUB 2.80 trillion.

Taxes and insurance contributions: The special profit tax rate for developers of electronics and the reduced insurance contribution rate of 7.6% are extended for 3 years. Microelectronics manufacturers from the specialised register of the Ministry of Industry and Trade now enjoy a preferential profit tax rate of 3% for the federal budget and 0% for the regional budget. In 2023, this allowed Russian companies to save RUB 70bn.

Import substitution: The Russian electronics industry has been changing under the influence of import substitution since 2022, focusing on the development of high-garde technologies and creating its own products. At the same time it strives to avoid isolation and maintain international partnerships.

Demand for Electronics Development: The demand for electronics development and manufacturing is growing at a rapid pace. Contract development companies as well as ODM companies have recorded a significant revenue growth of up to 2.5 times in 2023. Electronics contract manufacturing (EMS) also grew by 42% in 2023.

Personnel: The growing electronics industry creates a steady demand for qualified personnel. Projects to create "Advanced Engineering Schools" and "Youth Laboratories" in the field of radio electronics, which already number 60, will continue to receive state support. It is planned to create another 50 such projects. Financing of these projects over the next three years will amount to 40 billion RUB.

Support for microelectronics: Over RUB 430bn has been allocated from the budget over 4 years to support the microelectronics industry in the Russian Federation.

Changes in exports: Russian companies are striving to develop export directions, which is facilitated by the active growth of IT in Russia and the availability of their own solutions comparable to global analogues and capable of competing in the global market.

We will continue discussing the current trends of the industry within the business programme of ExpoElectronica and ExpoCifra, which will be held on 15-17 April 2025 in Moscow, Crocus Expo.

"Our industry is comprised of dedicated professionals, and through our collective efforts, we cultivate a favorable image of Russian high technologies not only domestically but also on the global stage. Events like ExpoElectronica play a pivotal role in this regard, offering invaluable insights into market trends, consumer demands, and expectations," states Rimma Mangusheva, ExpoElectronica exhibition director.

Participating in trade shows enables companies to leverage current market trends, form strategic alliances and establish a robust foundation for success in an evolving sector.