The PCB material and pricing situation – PCB supply outlook

April 2021

Commodity prices have continued to increase, with JP Morgan speculating that we are witnessing the start of a new super-cycle, driven by a post-pandemic recovery, combined with massive fiscal stimulus, re-starting of many global economies and a weaker USD. Copper, rice, iron ore and precious metals have seen 20% to 30% increases, with copper increasing around 20% this year on the back of increasing demand and reduced supply.

IMF data shows that the global economy will show a 5.5% growth with global trade volumes increasing 8%.

Global PMI 53.9 in February (53.6 in January) signaling continued economic recovery and the sustained rise in demand for materials and global manufacturing shows input prices reaching 61.6 – the highest in almost 12 years.

Crude oil pricing increased price increased, since December, from $46 to $68/barrel. The outlook for 2021 is one of optimistic growth with the global electronics industry expected to grow by approximately 6% compared to 2020.

What are the effects on availability and lead times?

We are seeing extended lead times and more uncertainty in committed delivery dates/volumes as well as short shipments for incoming material to PCB factories. Both pre-pregs and Copper Clad Laminates are in short supply.

Late last year three sub suppliers for the laminate supply chain had production disruptions, two of those are now up and running and the third one is expected to be operational at the end of April. This means that there remains a supply/demand imbalance within the supply chain and this is contributing toward reduced output.

Many PCB factories have seen an incredibly busy first quarter as they operate at close to full capacity, or beyond. This has caused production challenges, so combined with instances of longer material lead times and reduced incoming deliveries, as they do not get deliveries as planned, is placing pressure on the ability to deliver as expected.

NCAB has staff on site in all our main PCB factories to safe guard the prioritization we have with regards to available material for NCAB orders. Yet, as a result of these material supply issues, we do envisage a period with a heightened risk of prolonged delivery times for some orders and potential challenges in achieving our desired delivery dates.

Whilst this situation is affecting all types of PCBs we do see a higher impact on PCBs that require > 2oz (70µm) base copper foils and also with the not-so-standard or specialist materials.

What are the effects on pricing?

NCAB are monitoring underlying factors that are impacting the cost of PCB production. These include:

  • Copper as raw material but specifically tracking the processed copper foils which have seen a 35% increase.
  • Pre-preg and copper clad laminate; the key base materials used in the construction of the printed circuit board and year to date these have increased, on average, 40% and 45% respectively.
  • Epoxy resin supply as this is a key raw material for base material and drops in output are impacting supply and driving quota selling.
  • Oil as transportation in the form of fuel surcharge.

What actions are NCAB taking?

Through our unrivalled Factory Management organization, NCAB is in a unique position. Whilst we cannot eliminate the impact shortage of supply vs demand may have on lead times, being on site in our main factories makes a great difference. We are able to ensure NCAB orders get priority on available material, and we have also increased our production allocation.

Our Factory Management Team presence also keeps us close to the available information and are able to provide timely updates on changes. As a NCAB Customer you have feet on the ground in production, making sure you get the best possible outcome.

  • Weekly agreements on priority lead times for production of NCAB orders.
  • Factory management on site, checking physical material stocks & prioritizing material allocations for NCAB orders.
  • Monitoring material stock levels weekly and defining % of orders that can be supported based upon stock levels.
  • Monitoring factory total capacity loading rates against capacity reserved for NCAB orders.
  • Tracking market data and negotiating price increases.

If you have questions regarding this, don’t hesitate to contact us!