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In this interview with Ventec’s Mark Goodwin, he discusses the rising inflation hitting the electronics industry at the same moment as shortages of copper and other raw materials. He believes that, while the PCB industry has endured cycles like this before, this one feels different.
Nolan Johnson: We’re seeing indicators that we can expect a cycle of inflation in our industry and the wider economy in general.
Mark Goodwin: I think it’s wider than our industry.
Dan Feinberg: And I think it’s more than expecting. I think we’re in it.
Goodwin: Absolutely correct.
Johnson: For people who have been in the industry fewer than 20 years, they’ve never seen a cycle like this in electronics.
Goodwin: Those who were here in 2000 have seen it. This comes around every now and then in our industry. I think this one’s slightly different, though. The last one was driven purely by an uptick in demand. This one is an uptick in demand, but the demand uptick is going to get worse. Just look at 5G. We have a lot of 5G infrastructure-type things going on now with the rollout. There will be more devices being built, and they will all need PCBs as well. This is not going away anytime soon. At the same time, I worry about copper foil because, while we have the whole decarbonization of global economies and a move toward e-vehicles and green energy, we need to store that energy in batteries.
I’ve seen some frightening figures on the disparity between the requirement for copper for all of these things and the availability of copper. We already know that copper foil production is pretty much in balance with supply and demand. But the demand is going to go up far faster in the next three to five years than the capacity, and there are some real constraints on capacity. There are only really one or two companies in the world that make the plating drums for copper foil, and the lead time for these drums is 18 months to two years. I’m sure they’ve got a lot of orders already from the guys that are building capacity for ultra-thin foils for batteries. And the foil guys want to make battery foil. It’s five microns, it’s nine microns. It doesn’t have treatment on the back. It’s easy for them, and the [battery] guys are prepared to pay for it.
Feinberg: I’ve been in this industry since the late ‘50s and I’ve been through probably three or four of these cycles. But this one may be just a little different. This time I’m seeing a confluence of factors that are hitting us all at the same time.
Johnson: What are these factors?
Goodwin: In our business, the demand for PCBs is growing. The layer count in PCBs is going up, thus the need for more copper. Other industries are demanding copper, but they’re also demanding glass fabric. Wind turbines use glass fabric, and there’s a lot of investment and government policy driving in that direction. There’s also post-pandemic logistics, which is still horrible, but I think it’s the least of the worries. Prices for shipping goods from Asia to Europe are three to four times what they were pre-pandemic, and Asia to the U.S. is four times more.
Happy Holden: Don’t forget electric vehicles, which need 4-ounce to 12-ounce copper.
Goodwin: There’s something like four times the amount of copper required in an electric vehicle compared to an internal combustion engine vehicle. This is just electronics, but there’s demand outside of electronics for all these commodities as well. Today, I got some things over my desk with regard to the price of wood, and you think, “What’s wood got to do with printed circuit boards?” But wood is used in drilling printed circuit boards as a drill backup material. Wood prices have increased dramatically because the crop yield is low due to issues around global warming. I don’t know whether that’s true, but that’s the message.
To read this entire interview, which appeared in the July 2021 issue of PCB007 Magazine, click here.