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Jabil's Global Commodity Intelligence Archive
Global Commodity Intelligence
Q4 2023 | OCTOBER - DECEMBER
Jabil's Global Commodity Intelligence Archive
Global Commodity Intelligence
Q4 2023 | OCTOBER - DECEMBER
PCB COMMODITIES
PRINTED CIRCUIT BOARDS
DEMAND
- Q4 sees little changes to the weak demand that has been hovering over 2023. Many suppliers remain prudent and are skeptical about painting a positive perspective for the PCB market in 2024.
- Earlier this year, global PCB output for 2023 was predicted to have a single-digit percentage decline. However, as the market demand slows down, a double-digit percentage decline is now expected.
- As we approach Q4, with reality hitting hard, some suppliers are adjusting their target/forecast to align with the true market situation.
- Chinese PCB suppliers’ overcapacity situation persists with some suppliers having a slight increase in production loading due to short seasonal demand growth in certain segments.
- Although there is an overcapacity situation, due to geopolitical tension anxiety, many Chinese PCB suppliers are looking at building factories in Southeast Asia as their China+1 solution.
- In a nutshell, it is foreseen that the dynamic market situation continues to create volatility affecting the different segments’ demand and supply throughout 2024.
SUPPLY
- PCB lead time remains stable at 5-6 weeks.
- Copper clad laminate (CCL) lead time varies. With 1-2 weeks lead time for standard CCL and longer lead time for special (high-speed low loss) materials.
- Chinese PCB suppliers’ loading is about 60% on the average.
- Overall, there are no constraints on standard raw material lead time and production capacity.
- Weak market conditions continue to cast dark shadows over high inventory.
MARKET DYNAMICS
- A majority of PCB suppliers expect to close 2023 with similar or lesser revenue compared to last year.
- Maintaining enthusiasm for continued growth is being dampened by market uncertainty, inflation, slowing end-customer demand and high inventories all coming into play.
- Although there is an overcapacity situation, due to geopolitical tension anxiety, many Chinese PCB suppliers are looking at building factories in Southeast Asia as their China+1 solution.
- Thailand tops Chinese investors’ choice in promising both economic and sustainable stability. There are clear signs of an improving PCB ecosystem as more upstream material suppliers are making announcements to build factories in Thailand.
- Market Update
- Automotive
- EV car demand remains strong; however, the demand outlook is not as strong as compared to previous quarters.
- Communication
- 5G demand is weak, despite India’s growth in 5G demand. Overall, it is unstable.
- Cloud & Server
- AI servers are predicted to grow.
- Consumer
- It is believed that consumers have reached rock-bottom and are showing signs of a rebound. With the consumption of existing inventory, year-end seasonal demand might be an added push factor.
- Industrial
- Although power and renewable energy are one of the segments leading growth in previous quarters, there are signs that it is also slowing.
- Medical
- Demand remains stable with potential growth concentrating on consumer or digital healthcare products.
- Automotive
CAPEX Investments/Cut
- Most Chinese PCB suppliers’ investments have slowed down due to weakening demand and excess capacity.
- Despite the slower pace, Chinese PCB suppliers are still going ahead with their China+1 strategy plans due to push factors like end-customers’ demand, geopolitical tension anxiety, the Thailand government’s positive support towards PCB investors, presence of stable utility supply and the investments made by upstream material suppliers to complete the PCB Ecosystem.
M&A
- Victory Giant diversifies its product portfolio through the acquisition of flexible printed circuits and rigid-flex circuits manufacturer, MFS Technology (with factories in Malaysia and China).
PRICE
- USD continues to soar against RMB, making trading in USD favorable to the Chinese PCB suppliers.
- Gold is maintained at a high level with no obvious signs of tapering off.
- PCB suppliers must choose between cutting margins to keep lines running or shutting down lines altogether.
- Low or negative margin quoted prices are unsustainable. When market conditions get better, there will be a drastic price rebound.
- If weak market condition persists, negative margins put PCB suppliers at risk of becoming insolvent.
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