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Jabil's Global Commodity Intelligence Archive
Q4 2024 | OCTOBER - DECEMBER
Jabil's Global Commodity Intelligence Archive
Q4 2024 | OCTOBER - DECEMBER
PCB COMMODITIES
PRINTED CIRCUIT BOARDS
MARKET OVERVIEW
ECONOMIC INSTABILITY
Inflation continues to impact developed economies, and while there was a notable surge in demand for AI server products in the first half of 2024, most other sectors, including the electric vehicle (EV) market, are experiencing slower demand. Expectations for the latter half of the year remain subdued compared to the first half.
PCB SALES UNDERPERFORMING
Most PCB suppliers achieved approximately 50% of their annual targets within the first six months. However, due to economic uncertainties, many are cautious about the second half, with some considering adjustments to their sales targets. Suppliers catering to the AI server market are an exception, operating at full capacity.
OUT OF CHINA (OOC) DEMAND
The shift towards an Out of China (OOC) supply chain strategy is gaining momentum, primarily targeting sectors such as semi-cap and security products due to geopolitical risks. This strategy also expands into sectors such as cloud computing, transportation, and Healthcare. However, adopting OOC PCB solutions entails higher costs, and demand for these alternatives is still limited due to their expense.
SUPPLY
OVERALL PCB LEAD TIME
Lead times for PCBs have remained consistent with Q2 2024, generally ranging from 5 to 8 weeks, depending on the PCB's complexity. However, some suppliers are experiencing extended lead times due to increased orders from the automotive sector.
COPPER CLAD LAMINATE (CCL) LEAD TIME
Copper Clad Laminate (CCL) supply has seen an improvement; the lead time for standard FR-4 material has normalized to 1-2 weeks. For high-frequency, low-loss materials used in AI servers, the lead times are longer than usual.
MANUFACTURING CAPACITY IN CHINA
PCB suppliers in China are currently operating at approximately 75% capacity, which has led to better-than-usual manufacturing lead times. Some suppliers can offer flexible lead times as short as 4 weeks.
CAPACITY INVESTMENT OUT OF CHINA
Investment trends show a decline in PCB and CCL capacity expansions within mainland China, while investment in Southeast Asia, particularly Thailand, is rising with new capacities expected to be operational by the end of 2025.
SUPPLY CONTINUITY
As the market downturn continues, monitoring the financial health of suppliers is crucial to ensure uninterrupted supply.
MARKET DYNAMICS
OVERALL MARKET SENTIMENT
The market itself remains relatively subdued, with the EV sector slowing down due to increasing market saturation in China. Despite this, there is seasonal demand for mobility and ongoing strong demand for AI-related products, including AI servers and computers.
PCB INDUSTRY OUTLOOK
Despite the growth in the AI server market, the overall PCB industry remains flat. Many PCB suppliers have achieved only half of their annual sales targets and are less optimistic about the second half of the year, which is typically more robust. Some suppliers are considering revising their sales targets downward later in the year.
RAW MATERIAL PRICING
Raw material prices are stabilizing. Copper Clad Laminate (CCL) suppliers are maintaining their prices without any reduction. Some PCB suppliers are attempting to pass these cost increases onto their customers.
SUPPLY CHAIN SHIFTS
The PCB industry's supply chain relocation out of China to Southeast Asia is accelerating. New capacities are primarily being developed in Southeast Asia, aligning with the Out of China (OOC) strategy. Some suppliers have already started trial runs in the second half of 2024, and additional capacity is expected to become available in 2025.
GEOPOLITICAL AND COMPETITIVE DYNAMICS
Amid geopolitical tensions, more Chinese PCB suppliers are setting up operations outside China, enhancing competition in Southeast Asia. Local PCB suppliers are also adjusting their strategies to compete effectively during this transition period.
MARKET UPDATE:
- Automotive: The automotive sector is generally flat, with growth in Advanced Driver Assistance Systems (ADAS) balancing the slowing demand for electric vehicles (EVs).
- Communication: Demand in the communication sector is on the decline.
- Cloud & Server: There is a substantial surge in demand for AI servers, which is also driving the demand for related peripherals, such as AI computers.
- Consumer: Inventory levels have depleted, leading to a seasonal uptick in mobility products. However, demand in other consumer areas remains soft, indicating a cautious market approach.
- Industrial: The industrial sector, including energy storage, is experiencing a downturn. This decline reflects broader economic challenges affecting industrial demand and investment.
- Medical: The medical market is stable, supported mainly by increasing demand for consumer and digital healthcare products.
PRICE
STABLE CCL PRICES
While copper prices have slightly decreased, they remain high compared to last year. Copper Clad Laminate (CCL) prices have stabilized following increases observed in Q2.
HIGH RAW MATERIAL COSTS
The cost of epoxy resin, a crucial component for CCL, continues to be elevated. This trend also applies to PCB surface finishing materials like gold and tin, contributing to sustained high raw material costs.
POTENTIAL PCB PRICE INCREASES
PCB suppliers, which have been grappling with high material costs for several months, are signaling potential price increases. This adjustment is expected to affect customers with low-margin revenues and key accounts.
DYNAMIC PCB PRICING OUTLOOK
PCB pricing is expected to remain dynamic in the near future. Suppliers experiencing negative margins have begun to pass on cost pressures to customers. Despite the rise in raw material costs, market demand will play a critical role in pricing strategies during this period. Suppliers are still prepared to offer cost reductions to secure new business opportunities and increase market share.
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