IoT & Embedded Technology Blog

Will the US Government Shutdown Impact the Embedded Computing Market?

The answer is yes and depending on the length of the disruption, the impact will be significant. Decisions on new US aerospace and defense projects will be on hold but the effects of these delays will be minimal as these decisions only impact embedded computer supplier revenues 3 or more years in the future.

What will be significant are the numerous small impacts over multiple markets which will tend to move embedded computer supplier revenues that would have been recorded in 4Q/2013 to 1Q/2014. Delays in inspecting and approving products at or for OEMs in medical, aerospace, and defense markets will ripple back through the supply chain and therefore will impact embedded board and systems suppliers first and then processor and memory suppliers. If the inspection delays hit the US ports, the consumer electronics market will be the next to suffer and that will represent a much bigger impact that will eventually hit industrial markets.

The shutdown of the National Institute of Standards and Technology (NIST) will also be problematic. This will be particularly true if US based OEMs and semiconductor manufacturing or test facilities already or soon need their master standards to be calibrated by NIST. The effect will be minimal at first until the given facility has a critical mass of instruments and test equipment on the manufacturing line that have to be calibrated.

If the shutdown quagmire extends into the debt ceiling deadline on October 17, the impact will be far greater as revenues will be lost as opposed to delayed. In defense markets, it has been stated that ‘flat is the new normal’ but, if the US continues on the path it is following, flat may be the fortunate exception and that logic may well apply to many markets not just defense.