The PCB material and pricing situation – PCB supply outlook

June 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 revisions to the global economic outlook show that the global economy is now expected to grow 6% in 2021. The forecast made during January signaled 5.5%.

Global manufacturing PMI increased to 55.8 in April (55 in March)confirming that the global manufacturing upturn continues to gain pace as we move into Q2. Supply chain pressures remain intense as demand for new work reached its highest point in almost 11 years.

Input prices have continued to increase to rise reaching 69.6, the highest in over a decade. Average supplier lead times reached a record and the growth in backlogs reached a 17 year high.

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 Q3 and start to ease in some extent going into Q4. 

The order loading rate within almost all factories remains exceptionally high. Many factories already see 80%-100% of their capacity booked for June. For July, we are seeing approximately 40% booked. It’s estimated that such capacity pressures will last into August / September and such capacity limitations are impacting overall production lead times in the same fashion as the material lead times are.

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 a raw material, but specifically tracking the processed copper foils which have seen a 35% increase.
  • Pre-preg and copper clad laminate; they 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!