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Jabil's Global Commodity Intelligence Archive
Global Commodity Intelligence
Q3 2024 | JULY - SEPTEMBER
Jabil's Global Commodity Intelligence Archive
Global Commodity Intelligence
Q3 2024 | JULY - SEPTEMBER
PCB COMMODITIES
PRINTED CIRCUIT BOARDS
MARKET OVERVIEW
- The PCB (Printed Circuit Board) market is expected to grow by about 4.5% in 2024, following a slump in the electronics industry throughout 2023. This growth is driven by sectors like servers, storage, and electric vehicles, particularly due to the increasing demand for AI servers and high-end storage solutions.
- Inventory control and normalization efforts have begun to show results, with customers gradually releasing orders and demand starting to recover. This resulted in increased PCB demand in Q1 2024 compared to last year. However, the growth momentum slowed down in Q2 2024.
- Despite these positive signs, the overall market remains soft due to sluggish economic conditions, regional protectionism, geopolitical conflicts, border clashes, and high inflation. PCB suppliers focusing on rapidly growing sectors operate at higher capacity levels, while those catering to slower growth sectors face challenges filling their capacity.
SUPPLY
- PCB lead times remain consistent, typically ranging from five to eight weeks, with some suppliers quoting an additional one to two weeks due to longer raw material lead times.
- China-based PCB suppliers are operating at around 75% production loading, an increase from the previous quarter.
- Lead times for Copper Cladded Laminate (CCL) have increased, with standard FR-4 materials experiencing a two-week increase and special materials like high-speed and high-frequency requiring approximately four weeks.
- The factors driving the CCL lead time increases are explained below
- CCL vendor consolidated production to reduce operational costs.
- Overseas copper foil supply to China is decreasing due to geopolitical conflicts.
- Short supply of high-end Glass fiber due to AI server and high-end storage ramp-up.
- PCB shops have increased material safety stock to minimize the impact of the CCL price hike and extended material lead time.
- Customers are pulling in PCB demand to reduce the impact of potential material price increases.
- New PCB manufacturing capacity in Southeast Asian countries, particularly Thailand, is gradually coming online, with the majority expected to be operational by 2025. More than 30 PCB manufacturers, CCL makers, PCB manufacturing equipment suppliers, and other related suppliers are participating in this investment boom.
- The Thailand Board of Investment has enhanced support for foreign investment in the PCB manufacturing sector, covering the entire supply chain.
MARKET DYNAMICS
- In 2024, the PCB (Printed Circuit Board) market is expected to see modest demand growth, particularly driven by sectors such as AI servers, high-end storage solutions, and electric vehicles.
- Despite the relatively muted market demand, material prices are rising. PCB shops are finding it challenging to negotiate cost reductions with suppliers and are beginning to pass these increased costs on to their customers.
- Geopolitical tensions and supply chain dynamics are prompting PCB manufacturers to reconsider or slow down their expansion plans in China. Instead, they redirect their investments outside China, influenced by customer demands for Out of China or China+1 solutions.
- Thailand has become a significant destination for PCB manufacturing investment and expansion. Its favorable business environment and infrastructure make it an attractive option for companies seeking to diversify their manufacturing operations.
- Market Update
- Automotive: The growth trend is sustained, but the rate of EV growth is slowing down. ADAS drives demand.
- Communication: Demand is declining, except for the potential for increased 5G in India.
- Cloud & Server: Forecasted to accelerate significantly, driven by AI server & high-end storage ramp-up.
- Consumer: Still weak. Expect a slight recovery in the second half of 2024 primarily due to seasonality.
- Industrial: Sluggish demand; however, energy storage is still one of the main growth drivers.
- Medical: Stable, with good business development opportunities in the consumer healthcare sector due to its digitalization.
PRICE
- The strong USD against RMB continues to benefit Chinese PCB suppliers trading in USD, giving them a competitive edge.
- The price of copper, a key raw material of Copper Cladded Laminate (CCL), has steadily increased over the past year, surpassing USD 10,000/ton.
- Other raw materials, such as glass fiber and gold, used in PCB surface finishes, have also seen significant price hikes, leading to increased costs for the supply base.
- Most CCL material vendors have issued price adjustment notices to PCB shops since April, impacting May pricing levels. The price increase ranges from 5% to 10%, and another wave of increases is expected soon.
- PCB suppliers are attempting to absorb the material price increases, but those offering "below market" pricing are now increasing prices to end customers.
- Despite the relatively soft market, PCB suppliers are becoming less inclined to provide cost reductions.
- Forecasts indicate potential PCB price increases across various market sectors soon, especially if market conditions improve or if copper and other material price increases persist.
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