The ongoing Iran war with USA and Israel in the Middle East has dealt a major blow not only to global oil supplies but also to the supply chain of printed circuit boards (PCB)—widely regarded as the backbone of global technology products. From smartphones and computers to artificial intelligence servers, all depend on these circuit boards, whose prices have surged by nearly 40 percent within just one month. The alarming development was reported on Monday (27 April) by Reuters.
Why the crisis?
Following an Iranian attack on Saudi Arabia’s Jubail petrochemical complex earlier this month, production of a key raw material used in PCB manufacturing—high-purity PPE resin—has been halted. SABIC, which supplies around 70 percent of the world’s PPE resin, operates its production facility in Jubail. Due to the war, shipping routes in the Persian Gulf have been disrupted, making this essential raw material increasingly scarce in the global market.
Key drivers of price increase:
- Raw material shortage: Alongside resin, the price of copper foil has also increased by 30 percent this year. Nearly 60 percent of PCB manufacturing costs are associated with copper.
- AI server demand: Since late last year, demand for high-performance PCBs for AI servers has been rising sharply. This surge, combined with supply constraints, has further driven up prices.
- Supply delays: South Korean PCB manufacturer Daeduck Electronics has reported that procurement of chemical materials, which previously took three weeks, now requires up to 15 weeks.
Companies affected:
Daeduck supplies circuit boards to major technology giants such as Samsung Electronics, SK Hynix, and AMD. In addition, Chinese PCB supplier Victory Giant Technology, which serves Nvidia, has warned that rising resin and copper prices may leave manufacturers with no option but to increase end-user device prices.
Currently, the price of standard multilayer PCBs stands at $204 per square meter, while high-end models used in AI servers have surged beyond $1,975. According to market research firm Prismark, the global PCB industry is projected to reach $95.8 billion by 2026. However, the instability in the Middle East is now posing a significant challenge to that forecast.
DBTech/BMT/OR
