Iran War Disrupts the Circuit Board Supply Chain, Raises Costs for Tech Firms

  • The conflict in the Middle East has disrupted supplies of crucial raw materials and pushed up prices of the printed circuit boards (PCB) used in almost all electronic devices, from smartphones and computers to AI servers, ​industry sources and executives said.
  • The disruption is a fresh blow to electronics manufacturers which are already ​grappling with soaring memory chip costs and highlights the broadening impact of the Iran war that ⁠has wreaked havoc on supply chains, plastics, and oil supplies.
  • The Institute of International Finance (IIF) said the data showed investors were willing to return quickly to ​emerging markets but warned this did not amount to a full return to pre-crisis optimism ​that spurred record inflows at the start of the year. PCB prices have been climbing since late last year, driven ​by a growing appetite for AI servers. Demand has been accelerating sharply since March as manufacturers scramble to secure ​raw material supplies and soften the impact of skyrocketing costs.
  • In April alone, PCB prices surged as much as 40% from March, Goldman Sachs analysts said in a recent note. Cloud service providers are willing to accept further increases ​as they expect demand will outstrip supplies over the coming years, they added. The global PCB industry is projected ​to increase by 12.5% to reach $95.8 billion in 2026.
  • The sharp rise in PCB prices was also driven by a shortage of other key materials, including glass fibre and copper foil, according to one source. Copper ​foil prices have surged as much as 30% so far this year, with ​the rally gaining ⁠momentum in March, the source added.
  • Copper accounts for around 60% of total raw material costs in PCB manufacturing, according to Victory Giant Technology, a major Chinese PCB supplier for Nvidia. The Chinese firm warned earlier this month that the Middle ⁠East conflict ​could push up prices for key materials, including resin and copper. Multi-layer ​PCBs can cost around 1,394 yuan ($204) per square metre, with higher-end models for AI servers costing around 13,475 yuan, according to Victory Giant.

(Source: Reuters)