Crisis in Printed Circuit Board Supply: Karuna Karan

Authored by Karuna Karan, President, Prodigy Electronics

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CCL are made up of a combination that includes Copper foil, Glass fiber and Resin. The break up of the raw material costs as percentage of CCL, would be 30 to 50 per cent towards copper foil, 24-40 per cent towards Glass Fiber, and 25 to 30 per cent towards Resin

Karuna Karan, President, Prodigy Electronics

We are now facing crisis in the supply chain of Printed Circuit Boards. The same is impacting the price and lead-time. To understand better the root cause, sharing the information we have compiled for your reference and study. Will keep you updated as we get more information. The primary raw material for Printed Circuit Boards is the Copper Clad laminates (CCL).

CCL are made up of a combination that includes Copper foil, Glass fiber and Resin. The break up of the raw material costs as percentage of CCL, would be 30 to 50 per cent towards copper foil, 24-40 per cent towards Glass Fiber, and 25 to 30 per cent towards Resin.

Copper

In 2020 copper output from the mines have had a year-on-year drop. This drop has mainly existed due to Covid related issues. The global annual copper demand was around 28 million tonnes in 2020. It is expected to grow to 38 million tonnes annually by 2030.

Bloomberg reports, a leading metals trader has predicted that Copper could surge above a record, and reach $12,000 a ton, in 18 months due to new demand from green initiatives. On the longer horizon, declining rate of copper deposit discovery poses a long-term threat to copper supply.

Copper Foil

The demand for copper foils has increased in the vertical of e-vehicles battery production. Copper coil factories have repurposed their production to maximize SQM output for light weight foils 1oz/35micron & less used for lithium battery production. There is a complete breakdown in supply for heavy copper foils 2oz / 70 micron and above. The current Coil foil capacity utilization is at 99 per cent for CCL and PCB.

With the forecast growth for battery demand, long lead-times, and high investments costs to increase copper foil manufacturing capacity, this situation is unlikely to ease given the policy statements and green agendas of most governments for the coming five to 10 years.

Glass fiber & resin

There is a high demand for epoxy resins for green energy applications (wind turbine blades). The high growth in consumer and green energy applications is also pushing up glass yarn and glass fabric prices and limiting availability. Glass fabric manufacturers tend to follow the demand for those materials which have lower quality demands and command higher market prices, than those demanded by the PCB industry.

Two major explosions at epoxy resin plants Guodu Chemical Resin Plant followed by explosion at Suzhou Xingya plant, interrupted the supply of resin. Additionally, fire at LG Chemical Yeosu plant in South Korea, has interrupted the production of ethylene and propylene. The glass cloth supply are primary controlled by Nitto Boseki and a few other chemical manufacturers in Japan.

In July 2020, the Nitto Boseki’s plant was damaged by fire leading a surge in prices into 2021, and then PCB manufacturers bid higher to secure priority allocation of the product supply. Due to the explosion, local authorities have increased the safety audits at epoxy resin manufacturers and other raw material suppliers. As a result of these increased audits, material production has decreased and worsened the supply situation.

Due to the atmospheric emission reduction requirements, some epoxy resin companies cannot operate at full capacity resulting into shortages and significant (60 per cent) price hikes for CCL manufacturers. CCL manufacturers expect that this trend will cause laminate shortages, particularly for rigid materials.

Suppliers and new investments

China based copper foil suppliers have been more aggressive on price increase, with Guangdong Chaohua Technology increasing price by 30 per cent in March. Taiwan based copper foil suppliers including Co-Tech and Nan Ya plastics are under pressure to increase prices.

Due to on-going crisis, it is reported that laminate vendors ITEQ and Shengyi have stopped supply of laminate for 2 layer PCB. Kingboard, Elite Material, Iteq, Taiwan Union Technology and Ventec International increased prices for some specific product items before the Lunar New Year holidays. Further increases are expected later in 1H21.

A bright light is that two of the largest Copper Foil manufacturers Co-Tech and Nan Ya have released plans to build new plants. Co-Tech’s investment of $145M is estimated to bring in additional annual capacity of 10,800 tons by 2Q23. Co-Tech copper foils are used for high frequency/speed servers board including for Intel and AMD. Nan Ya’s is bringing in additional new capacity of 18,000 tons of copper foil at its Southern Taiwan plan. The new production line will be for delivery for lithium-ion battery and automotive PCB market.

Author info – This article first appeared on Linkedin wall of Mr Karuna Karan. He is based in Hong Kong and heads Prodigy Electronics. The company supplies PCBs on a global level.

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