Courtesy: Avnet
What are the biggest risks and/or opportunities facing stakeholders across the high-tech supply chain in 2025?
Ask an AI chatbot like ChatGPT, and you will get a list of very sensible responses: potential component shortages, digital transformation, geopolitics, sustainability and cyber risk. You’d be hard-pressed to find a tech executive who would argue the validity of any of these results. But you also won’t likely find one that isn’t already thinking about and planning for these issues.
To tip the competitive scales, creative leaders must look beyond the well-documented challenges to the deeper issues that people aren’t thinking or talking about–or at least not enough. This is where, in my opinion, lived experience trumps AI every time. Large language models may have access to all the same articles, videos and social media posts that my team and I read, but they are no match for the context and depth of insight we gain from countless hours of conversation every day with some of the most forward-thinking leaders in the tech sector and beyond.
So, with that in mind, here are a few 2025 supply chain insights from team Avnet that you won’t get from a genAI chatbot.
1 – Regionalization and the ‘trough of disillusionment’
Prepare for a potential narrative shift on supply chain regionalization in 2025. Since 2022, pressures to improve the high-tech supply chain’s resilience and responsiveness through regional diversification have stimulated a flood of government incentive programs and aggressive corporate capex investments across the U.S., Europe and southeast Asia. Considering this strategic trend within the context of Gartner’s classic Hype Cycle model, it’s fair to say that this historic supply chain restructuring has rapidly pushed expectations among industry leaders and policymakers alike to peak inflated status.
From here, our concern is that as the reality of what it takes to transform the decades-in-the-making offshore, low-cost-country sourcing behemoth sets in, a slide down toward the dreaded “trough of disillusionment” will be inevitable. This could lead to a costly and premature strategic pivot unless supply chain leaders set practical expectations in the C-suite.
Until these multi-year infrastructure expansion projects are completed and new capacity ramps up, many enterprises can expect their supply chain operations to get more complicated and potentially more costly. But if we stay the course, regionalization should present what the Council on Foreign Relations termed the “Goldilocks middle” where governments are positioned to protect national security concerns and boost supply chain resilience while enabling companies to thrive. With a bit of patience and a lot of strategic supply chain execution, the coveted plateau of productivity will follow.
2 – Power struggles: energy-access risk on the rise
Tech supply chain stakeholders still feeling the aftereffects of the global semiconductor shortage may be confronted by a very different kind of allocation in the coming year: power rationing. While reliable access to energy supply has been largely taken for granted in most mature economies, that could change as already strained and aging grid infrastructure is bombarded with skyrocketing new demand from a variety of sources including power-hungry AI data centers, EV/hybrid vehicle charging requirements, and new semiconductor fabs and related manufacturing infrastructure buildouts. By 2026, regular electricity rationing could become commonplace for at least half of the G20 member nations, according to Gartner.
While statistics paint an alarming picture of impending energy demands exceeding supply across North America, Europe and Asia [see infobox], Gartner research finds that only 28 percent of business leaders believe that electricity rationing will be a significant issue in the next three years. Underestimating this risk could prove very costly. For example, downtime costs for automotive manufacturers could be as high as $50,000 per minute or $3 million per hour, while even a short power interruption could damage AI “training runs,” laying waste to months of work and tens of millions of dollars in investment.
To mitigate these risks, we have heard that some tech companies are investing in dedicated backup power sources for their factories, while both Amazon and Microsoft have announced investments in securing nuclear power capacity to ensure the “firm” (uninterrupted) output required for their massive data centers. It’s encouraging to see these companies taking proactive measures, but the efforts may have limited benefit if key trading partners lack similar contingencies.
As the demand for energy-intensive innovation continues to surge, addressing this challenge must become a priority for stakeholders across the global technology supply chain.
3 – A false sense of (physical supply chain) security
When reports of the lethal infiltration of a communications device supply chain in the Middle East hit the news earlier this year, it was a stark reminder that the supply chain threat landscape is evolving and becoming more precarious by the day. Organized crime networks and nation-state actors are increasingly targeting physical supply chains with attacks ranging from cargo theft to sophisticated device tampering.
For example, in the first half of 2024 cargo theft skyrocketed 49 percent, according to Overhaul’s United States & Canada Cargo Theft Report. Not surprisingly, the most sought-after target for thieves was electronics, representing 23 percent of all thefts. Meanwhile, EMEA’s Transported Asset Protection Association (TAPA) reported that the number of cargo thefts increased by almost 700 percent in 2023, and in 2024, an average of 140 cargo thefts per day have been documented.
Lapses in physical security during manufacturing, assembly and even transport also expose technology devices to tampering and the insertion of malicious hardware or firmware, compromising systems and granting attackers “unprecedented access and control,” a recent HP Wolf Security survey revealed. HP reported that in the U.S. 29 percent of survey respondents said their enterprises had already been impacted by nation-state threat actors targeting physical PC, laptop or printer supply chains and 63 percent believe the next major nation-state attack will involve breaching hardware supply chains to insert malware.
All told, breaches in physical security have caused companies worldwide to lose an estimated $1 trillion in annual revenue, according to the 2023 World Security Report. For supply chain leaders, this underscores the importance of proactive risk management strategies to safeguard both physical and digital assets.
Conclusion
In 2025, high-tech supply chain stakeholders are sure to face an increasingly complex competitive landscape, from navigating the challenges of regionalization’s growing pains to anticipating potential energy rationing and bolstering physical security against new threats. Leaders who proactively address these and other lesser-known supply chain dynamics will be better equipped to drive resilience, security and growth.
With rising complexity and heightened disruption risk, strategic and optimized supply chain execution is more critical than ever. Avnet is dedicated to advancing supply chain excellence by investing in cutting-edge digital tools and processes, along with comprehensive training and education to equip our team with the expertise and resources necessary to support our customers’ business objectives.
