Tech industry: crawling along with considerable downside risks

19/05/2025

The economic slump in the Swiss tech industry continues, with sales falling by 3.0% in the first quarter of 2025 compared with the same period of 2024. New orders stagnated at the previous year’s level. The main indicators are signalling that the weak business performance is set to continue in the coming months, and there are also considerable downside risks. Should the US tariffs come into effect at the threatened level, they would hit the tech industry hard. The government urgently needs to act: the free trade agreement with the Mercosur countries must be concluded as soon as possible. The maximum period for short-time work compensation must also be increased to 24 months. And ancillary wage costs must not be raised in order to expand social benefits, such as for daycare centres or the AHV.

Sales in the Swiss tech industry (mechanical and electrical engineering industries and related technology sectors) decreased by 3.0% in the first quarter of 2025 compared with the same quarter of 2024. This means that sales have already fallen compared to the respective prior-year period for the eighth time in a row. Capacity utilization within companies also continued to decline and came to 81.1%. This puts it substantially below the long-term average of 86.0%. In the first quarter of 2025, new orders remained at the same level as the first quarter of 2024 (-0.3%).

Mixed export developments

Swiss tech industry goods exports saw a slight year-on-year rise of 0.7% in the first quarter of 2025 to CHF 17 billion. Export developments varied greatly depending on the market region. Exports to the USA rose sharply (+5.3%) before the Trump administration’s tariff decisions, while exports to the EU also saw a moderate increase (+0.8%). On the other hand, there was a clear decline in goods exports to Asia (-6.6%). The performance of the main product groups was also mixed. Exports increased in both precision instruments (+4.5%) and the electrical engineering/electronics segment (+1.4%). In contrast, exports fell in mechanical engineering (-2.9%) and metals (-1.6%).

Key question: what is the USA doing?

The Swiss technology industry continues to crawl along. According to the key indicators, this is not set to change over the next few months – and another slump cannot be ruled out. The figures for the Purchasing Managers Index (PMI) for manufacturing, for example, remain below the growth threshold almost everywhere in the world. The expectations of Swissmem’s member companies are correspondingly cautious, with just 24% expecting to see rising orders from abroad in the next 12 months. Conversely, the share of companies anticipating falling orders has risen by 7 percentage points to 32% since the end of 2024. The remaining 44% of companies expect the order level to remain the same. The only significant momentum can be expected to come from India, whereas expectations of US business have well and truly collapsed. From Swissmem Director Stefan Brupbacher’s perspective: “The figures for the first quarter are disappointing. And they don’t even include the effects of the additional US tariffs of 10% and the threat of 31%. The huge geopolitical uncertainties are continuing and further reducing demand for goods from the Swiss tech industry. There are considerable downside risks.”

Everyone is currently looking towards Washington – and Bern. “We are hoping that Swiss diplomacy will succeed in preventing or at least substantially reducing the threatened tariffs during the ongoing negotiations with the US. Otherwise, we in the Swiss tech industry will have to expect a fall in new orders, as well as more short-time working and redundancies”, adds Stefan Brupbacher.

Conclude the free trade agreement with Mercosur now!

In economically challenging times, politicians need to take measures to support companies. A main priority for the Swiss technology industry is to be able to access global markets with a minimum of barriers. President of Swissmem Martin Hirzel urges: “In view of the increase in protectionism, Switzerland absolutely has to conclude additional free trade agreements and improve its existing ones. The spotlight is currently on the agreement with the Mercosur countries, which we need to complete now.” This is even more important as the EU has just recently concluded a similar agreement. “If Switzerland cannot immediately follow suit, it will be at a huge disadvantage compared with its competitors from the EU”, adds Hirzel.

The economic slowdown in the Swiss tech industry has already lasted two years, so it is just as vital to increase the maximum period for short-time work compensation to 24 months. “Many companies already had to introduce short-time working months ago. This extension is necessary as it is still impossible to predict when we will see signs of a recovery. It will provide the companies affected with planning certainty and prevent redundancies”, Martin Hirzel explains. Ultimately, the government must recognize the seriousness of the situation: There is no scope for a further expansion of daycare centres and the AHV, which would place a huge additional burden on companies and employees through ancillary wage costs.