The Impact of War in Iran on the PCB Supply Chain
While the war in Iran is creating an unprecedented energy crisis globally, it’s also directly affecting the technology sector, particularly in the realm of printed circuit boards (PCBs). Integral to virtually every electronic device, PCBs have seen a staggering price hike of up to 40% in just the past month. This surge is primarily a fallout from an attack on a crucial manufacturing facility, jeopardizing the global supply of these essential components.
Recent Attacks and Their Aftermath
In early April, Iranian forces targeted the Jubail petrochemical complex in Saudi Arabia, which is operated by SABIC (Saudi Basic Industries Corporation). This plant produces around 70% of the world’s high-purity polyphenylene ether (PPE) resin, a fundamental material for the production of PCB laminates. Since this attack, SABIC has been unable to resume its manufacturing operations, raising alarms on a global scale.
Disruptive Maritime Activities
The ramifications of the conflict extend beyond the attack on the Jubail facility. Disruption in maritime traffic in the Persian Gulf, a vital route connecting Middle Eastern chemical producers to Asian electronics manufacturers, is exacerbating the situation. Furthermore, the rising costs of raw materials, particularly copper—which constitutes about 60% of PCB manufacturing costs—are adding fuel to the fire. The price of sheet copper has surged by up to 30% since the beginning of the year.
Production and Supply Chain Challenges
Manufacturers like Daeduck Electronics, a prominent South Korean PCB supplier for companies like Samsung and AMD, have started discussions to pass along rising material costs to their customers. The lead time for materials such as epoxy resin has dramatically increased, jumping from three weeks to as long as fifteen weeks.
A Stressed Market Before the Crisis
Even before the conflict escalated, PCB prices were climbing due to the surge in demand for AI servers. As manufacturers scramble to secure supplies amidst these uncertainties, the demand has intensified significantly since March. Major cloud service providers are willing to absorb these additional costs, anticipating continued demand outpacing supply in the coming years.
Broad Effects on the Technology Supply Chain
PCBs are not the only components facing disruptions in the current climate. Major Japanese manufacturers of photoresist—a critical chemical in chip production—are notifying clients like Samsung and SK Hynix about potential shortages, largely due to their reliance on Middle Eastern raw materials. Additionally, the price of helium, essential for semiconductor manufacturing, has nearly doubled following attacks on facilities in Qatar.
Implications for Consumers
The upward trajectory in PCB costs will inevitably ripple through to consumers, affecting the prices of a wide range of electronic products. Given that PCBs are integral to almost any electronic device, corporations are poised to pass these increased costs down to end-users. The timing could not be worse, as the market is also grappling with a RAM and storage crisis, further escalating price pressures.
As we navigate this multifaceted crisis, the long-term repercussions on the technology industry and consumer prices remain to be fully understood. It is critical for stakeholders to adapt and respond swiftly to these developments to mitigate the impacts.
Cover image | Random Thinking