Post-COVID, the consumer electronics industry has faced a challenging path, including inflation, customers' hesitancy to spend money on non-essential goods, and more. Analysts expect 2025 could bring a modest recovery to this space, with global consumer electronics sales of $977 billion. Though this is lower than previous estimates of more than $1 trillion in global sales, it nonetheless represents an improvement over recent years.

Behind major consumer electronics producers like Apple Inc. (NASDAQ: AAPL) or Samsung Electronics Co. Ltd., many companies are dedicated to fabricating and constructing various electronic components. These firms not only provide the parts for some major retail electronic products. but also build items specifically for customers in industrial, healthcare, aerospace, defense, and other markets.

With inflation and supply chain concerns alleviated for the time being, some of these behind-the-scenes electronic component makers could flourish heading into the new year.

TTM Technologies: Poised for AI Growth

A maker of printed circuit boards, radio frequency components, and a variety of other products, TTM Technologies Inc. (NASDAQ: TTMI) had a fairly strong third quarter. The company reported nearly 8% year-over-year revenue improvement and swung to a net income of $14.3 million from a net loss in the prior-year quarter. Profit margin came in at 2.3%, which the company should be able to continue to build on if revenue continues to trend upward. Cash flow from operations was 10.6% of revenue, helping to strengthen the balance sheet. One area for improvement is EPS, which fell short of analyst predictions.

TTM's up-and-coming area of focus is data center computing products, which are in high demand as a result of a broad shift toward generative AI usage across industries. It is likely this portion of the company's business will continue to grow, barring a significant regulatory shift to AI or other movement away from the technology in the coming quarters.

Analysts view TTM optimistically heading into the new year. Four analysts rate the company Buy, with zero Sell or Hold ratings. It also enjoys a consensus price target of $25.31, with 5% upside potential.

Kimball Electronics: Underwhelming Results But Reasons to Be Optimistic

Despite underwhelming results for its first quarter of fiscal 2025, which ended September 30, 2024, Kimball Electronics Inc. (NASDAQ: KE) remains an attractive prospect for analysts, who rate the firm a Moderate Buy. Kimball makes components for the automotive, medical, and industrial markets. Sales across all three of those spaces declined year-over-year for the last quarter as a result of weak end markets, leading to overall sales declines of 15%. Any disappointment from the company's earnings results seems to not have carried over to its stock performance, however, as KE shares are up about 7% in the 30 days leading to November 27.

One reason for investor optimism is that Kimball recently completed the divestiture of its automation, test, and measurement business and plans to close a manufacturing plant in Florida, both of which are likely to reduce expenses and help to streamline operations.

Benchmark Electronics: Efficiency and Preparation for Industry-wide Recovery

Benchmark Electronics Inc. (NYSE: BHE) also builds electronic components for a wide array of end markets. Its third-quarter sales of $658 million came in toward the upper end of guidance, though they represent a decline year-over-year. Driving sales was the company's semi-cap business, which includes products used in the manufacturing of semiconductors.

Benchmark is highly efficient, with four straight years of quarterly operating margin expansion and $245 million in free cash flow generated last year. This sets the firm up well for the new year and a potential recovery in the industrial and medical spaces. Industrial and medical businesses made up about 40% of Benchmark's sales in the latest quarter, so a recovery in either or both markets would contribute meaningfully to improved top-line performance.

Reasons for Caution

The companies above have drawn analyst interest for their potential for growth into the new year. However, the possibility of an uncertain geopolitical landscape and potential tariffs are two factors contributing to volatility in the electronics component space as well. Investors considering a focus on these firms should keep a close eye on developments in that area.