PCB supply outlook October 2021
Commodity prices generally stabilized in Q3, albeit at a high level. PCB raw material prices remained high, with increases observed post summer. Recent price pressure mainly reflects supply-demand mismatches resulting from post pandemic growth coupled with remaining material availability issues.
China manufacturing contracted in August, with both supply and demand weakening as did export orders. Inflation is expected to return its pre-pandemic levels in many countries during 2022.
The current electricity shortages are affecting manufacturers across virtually all mainland China, with up to 44% of China’s industrial activity affected and many factories introducing mandatory worker vacations to counter the stops in production. This situation affects PCB factories, resulting in extended lead times.
In its latest forecast, released at the end of July, the IMF maintained its global GDP growth forecast at 6.0% for 2021 and 4.9% for 2022, global trade volumes are expected to increase by 9.7% for 2021 and soften a little during 2022. Latest update 2021-10-05 www.ncabgroup.com
Global Manufacturing PMI sat at 54.1 in August and remained the same for September. Supply chain disruptions and material shortages have been subdues the global manufacturing upturn. Output did rise for the first time in five months, however supply constraints have seen both factory gate and input prices at a fast pace than previous months. Export orders continued to grow, however the rate of growth was the same as August’s seven months low.
Over the past 6 months, supplier lead times have extended to the longer reported in Markit’s survey history.
What are the effects on availability and lead times?
Increasing PCB demand and foil shortages are keeping material lead times high and supply shortages continue. Both pre-pregs and Copper Clad Laminates are in short supply. This status is expected to run through Q4.
The supply chain remains tight in places. With end demand softening a little as the electronics industry rate of expansion with regards to output has slowed to its lowest in ten months. However, it does continue to rise, with evidence suggesting that component shortages has seen efforts doubled as customers look to secure items wherever possible and there look to build and invoice whatever is possible.
Power limitations have not yet impacted material production so whilst the growth in demand has slowed this has allowed some capacity to come back into the supply chain – we are not in clear waters, yet, but we see signs of some improved lead times and reductions in quota buying. The challenges we have seen on the not-so-standard materials including heavier copper foils (such as > 2 oz) and specialist materials remain.
NCAB staff remain on site in all our main PCB factories to safe guard the prioritization we have with regards to available material for NCAB orders. Yet, coupled with the electricity shortages and resulting stops in production we still see some prolonged delivery times for some orders and potential challenges in achieving our desired delivery dates.
What are the effects on pricing?
Over the past months, PCB factory pricing has stabilized in general. However, the pricing pressures do remain when we look at the increases that are still impacting raw materials used (resin and chemistry as two examples). Latest update 2021-10-05 www.ncabgroup.com
In light of this and also including the current power limitations, there are noises within the industry that the material suppliers and also PCB factories may have to look at price rises should these pricing pressures continue to increase.
With end-customer demand having slowed a little (still in expansion territory), it is hoped that there will not be such large scale increases as seen previously – it may be that we see this affect some projects with some product types / constructions subject to slight adjustment. Assuming that no significant imbalance with regards to supply and demand occurs.
What actions are NCAB taking?
Through our unrivalled Factory Management organization, NCAB is in a unique position. Whilst we cannot eliminate the supply/demand challenges or prevent power outages impacting lead times, being on site in our main factories continues to make 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, supported through:
- Weekly agreements on priority lead times – taking into account potential electricity driven stops.
- Constant updates on local electricity limitations / planned production stops.
- Factory management on site prioritizing material allocations for NCAB orders.
- Daily follow up on open orders / WIP.
- Monitoring material stock levels weekly and comparing against NCAB order loading.
- Monitoring factory capacity loading rates against capacity reserved for NCAB orders.
- Tracking market / material.
If you have questions regarding this, don’t hesitate to contact us: