The conflict in the Middle East has disrupted the supply of critical raw materials, leading to significant price increases for printed circuit boards (PCBs) used in all electronic devices. This disruption hits tech manufacturers already facing soaring memory chip costs.
An attack on Saudi Arabia's Jubail petrochemical complex halted production of high-purity polyphenylene ether (PPE) resin, a key component for PCBs. SABIC, a major PPE supplier, has been unable to resume output, tightening global availability. Shipping in the Gulf has also been severely impacted.
PCB prices have risen sharply, with Goldman Sachs reporting a 40% surge in April alone. This is driven by growing demand for AI servers and manufacturers scrambling to secure supplies. Cloud providers are accepting these increases, anticipating future demand to outstrip supply.
South Korean PCB maker Daeduck Electronics is negotiating price hikes with customers, citing extended waiting times for essential chemical materials. Shortages of other key materials like glass fiber and copper foil are also contributing to the price surge. Copper foil prices have increased 30% this year.
Victory Giant Technology, a major Chinese PCB supplier, warned that the Middle East conflict could further escalate prices for materials like resin and copper, which constitute a significant portion of PCB manufacturing costs.