Reuters reports that conflicts in the Middle East are disrupting the supply of key raw materials for the electronics industry and pushing up printed circuit board (PCB) prices. PCBs are widely used in almost all electronic devices such as smartphones, computers, and AI servers. This round of price increases has also hit electronic manufacturers that are already under pressure from high memory chip costs.
Reports pointed out that Iran attacked Saudi Arabia’s Jubail petrochemical complex in early April, causing the production of high-purity polyphenylene ether (PPE) resin to be interrupted. This material is an important basic raw material for manufacturing PCB copper clad laminates. Sources said that about 70% of the world's high-purity PPE supply comes from Saudi Basic Industries Corporation (SABIC), and its related production capacity in the Jubail Gulf Coast Park has not yet been restored, making this type of material significantly tighter globally. At the same time, the war also severely disrupted shipping in and out of the Gulf region, further amplifying supply pressure.
In fact, PCB prices have begun to rise since the second half of last year, mainly driven by the continued increase in demand for AI servers. After entering March this year, as companies stepped up efforts to lock in the supply of raw materials and tried to hedge against the risk of soaring costs, the pace of market procurement further accelerated. Goldman Sachs analysts said in a recent report that in April alone, PCB prices rose by a maximum of 40% compared with March. They also said cloud service providers were willing to accept further price increases as they expected demand to continue to outstrip supply in the coming years.
The latest report from industry research organization Prismark predicts that the global PCB industry will grow by 12.5% in 2026, reaching US$95.8 billion. Under the dual effects of demand expansion and supply constraints, enterprises have begun to transmit cost pressure to downstream.
An executive at South Korean PCB manufacturer Daedeok Electronics told Reuters that the company has begun discussions with customers about price increases. The company's customers include Samsung Electronics, SK Hynix and AMD. The executive declined to be named due to the sensitivity of the issue. He said that the current focus of work has shifted from visiting customers to visiting suppliers, because the delivery cycle of chemical materials, including epoxy resin, has been significantly extended from the previous three weeks to 15 weeks.
The report also stated that the sharp rise in PCB prices is not just due to the shortage of PPE resin. Other key materials such as glass fiber and copper foil are also in tight supply. An industry insider said that copper foil prices have risen by as much as 30% since the beginning of this year, and the increase accelerated further in March.
Shenghong Technology, a major Chinese PCB supplier and NVIDIA partner, also previously warned that conflicts in the Middle East may push up the prices of key materials such as resin and copper. The company noted that copper accounts for approximately 60% of the total raw material cost of PCB manufacturing. According to data provided by Shenghong Technology, the current price per square meter of multi-layer PCB is about 1,394 yuan, while the price per square meter of high-end models for AI servers is about 13,475 yuan.
The report believes that the supply chain shock caused by the war in the Middle East is further spreading from energy, plastics and other fields to the core links of electronic manufacturing. As the construction of AI infrastructure continues to heat up, raw material shortages and price increases are likely to continue to push up the production costs of high-tech companies in the future and intensify tensions in the global electronics industry chain.