The conflict in the Middle East has delivered a fresh blow to the global electronics industry, disrupting supplies of a critical raw material used in printed circuit board manufacturing and pushing prices sharply higher across a supply chain that underpins virtually every category of electronic device, from smartphones and personal computers to the artificial intelligence servers driving some of the most significant capital investment in the technology sector today. The disruption compounds existing pressure on electronics manufacturers that were already contending with soaring memory chip costs, and it illustrates the widening economic footprint of the Iran war beyond the immediate theatre of conflict.
The trigger for the supply crisis was Iran’s strike on Saudi Arabia’s Jubail petrochemical complex in early April, which forced a halt in production of high-purity polyphenylene ether resin, a critical base material used to manufacture the laminates from which printed circuit boards are produced. SABIC, which accounts for approximately 70 percent of the world’s supply of high-purity polyphenylene ether and operates within the Jubail complex on the Gulf coast, has been unable to resume output since the strike, severely tightening global availability of the material. Shipping in and out of the Gulf has been similarly disrupted by the conflict, compounding the supply squeeze and extending delivery timelines for the chemical inputs that printed circuit board manufacturers depend on. A senior executive at Daeduck Electronics, a South Korean printed circuit board maker whose customers include Samsung Electronics, SK Hynix, and AMD, told Reuters that his priority had shifted entirely from meeting customers to chasing suppliers, with waiting times for chemical materials such as epoxy resin stretching from three weeks to 15 weeks. The shortage has also extended to other key materials including glass fibre and copper foil, with copper foil prices surging as much as 30 percent so far this year, a significant development given that copper accounts for around 60 percent of total raw material costs in printed circuit board manufacturing according to Victory Giant Technology, a major Chinese printed circuit board supplier for Nvidia.
The financial impact on printed circuit board prices has been swift and substantial. In April alone, prices surged as much as 40 percent compared to March, according to Goldman Sachs analysts, who noted in a recent research note that cloud service providers remain willing to absorb further increases given their expectation that demand will outstrip supply over the coming years. Printed circuit board prices had already been climbing since late last year, driven by the surging appetite for artificial intelligence server infrastructure, and demand has been accelerating sharply since March as manufacturers scramble to secure raw material supplies and buffer themselves against further cost increases. The global printed circuit board industry is projected to grow by 12.5 percent to reach $95.8 billion in 2026 according to a recent report from Prismark, a trajectory that makes the supply disruption all the more consequential for the companies and cloud operators racing to build out artificial intelligence infrastructure at scale. Multi-layer printed circuit boards currently cost around 1,394 yuan per square metre, with higher-end models for artificial intelligence servers priced at around 13,475 yuan, figures that are likely to climb further if the raw material shortages persist and the conflict continues to disrupt Gulf shipping lanes.
Follow the SPIN IDG WhatsApp Channel for updates across the Smart Pakistan Insights Network covering all of Pakistan’s technology ecosystem.
