Iran war disrupts the circuit board supply chain, raises costs for tech firms
Middle East conflict impacts global PCB supply and pricing
(Corrects April 27 story to delete first bullet point and paragraphs 3-4, which incorrectly said that Iran's attack on Jubail complex halted SABIC's production of PPE resin)
By Che Pan, Liam Mo and Hyunjoo Jin
Supply chain disruptions and rising costs
BEIJING/SEOUL, April 27 (Reuters) - The conflict in the Middle East has disrupted supplies of crucial raw materials and pushed up prices of the printed circuit boards (PCB) used in almost all electronic devices, from smartphones and computers to AI servers, industry sources and executives said.
The disruption is a fresh blow to electronics manufacturers which are already grappling with soaring memory chip costs and highlights the broadening impact of the Iran war that has wreaked havoc on supply chains, plastics, and oil supplies.
Increasing demand and price surges
PCB prices have been climbing since late last year, driven by a growing appetite for AI servers. Demand has been accelerating sharply since March as manufacturers scramble to secure raw material supplies and soften the impact of skyrocketing costs, three industry sources told Reuters.
In April alone, PCB prices surged as much as 40% from March, Goldman Sachs analysts said in a recent note. Cloud service providers are willing to accept further increases as they expect demand will outstrip supplies over the coming years, they added.
Industry projections and market outlook
The global PCB industry is projected to increase by 12.5% to reach $95.8 billion in 2026, according to a recent report from Prismark.
Key materials shortages and manufacturer responses
Daeduck Electronics, a South Korean PCB maker whose customers include Samsung Electronics, SK Hynix and AMD, has begun discussions with customers over price increases, a senior executive at the company told Reuters.
The executive, who declined to be named due to sensitivity of the subject, said his priority has now changed from meeting customers to suppliers, as the waiting time for chemical materials such as epoxy resin have stretched to 15 weeks from three weeks previously.
Shortages of glass fiber and copper foil
The sharp rise in PCB prices was also driven by a shortage of other key materials, including glass fiber and copper foil, according to one source. Copper foil prices have surged as much as 30% so far this year, with the rally gaining momentum in March, the source added.
Copper’s role in PCB manufacturing costs
Copper accounts for around 60% of total raw material costs in PCB manufacturing, according to Victory Giant Technology, a major Chinese PCB supplier for Nvidia. The Chinese firm warned earlier this month that the Middle East conflict could push up prices for key materials including resin and copper.
Cost implications for advanced PCBs
Multi-layer PCBs can cost around 1,394 yuan ($204) per square metre, with higher-end models for AI servers costing around 13,475 yuan, according to Victory Giant.
(Reporting by Che Pan, Liam Mo, and Hyunjoo jin, additional reporting by Wen-Yee Lee; Editing by Miyoung Kim and Lincoln Feast)
