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Reasons and Solutions to PCB Lead Times and Price Increases
August 25, 2021 | Stanley L. Bentley, ICAPE GroupEstimated reading time: 2 minutes
If there is anyone left in the electronics community who has not been impacted by the chaos in PCB pricing and lead times, they must live in an alternate universe. I have been in the industry for 50 years. In that time, there have been many periods of shortages and price variations. None of those periods compares to the situation today. Seldom does a day pass without someone requesting a conference call to discuss the price increase. Everyone asks the same question: “What is the root cause?”
I have spent quite a bit of time the past few months researching PCB costing, and I have concluded there is no single root cause. I wish to add a disclaimer: During my investigation, I did not solicit the opinion of anyone with a title of politician, economist, or professor. Sorry, folks. I went directly to the street, soliciting the opinions of people who actually live in this universe.
The first thing I wish to do is dispel the conspiracy theory that has been making the rounds. That theory is that the root cause of cost increases was that a certain Asian government believed that a new U.S. administration would remove the tariffs on electronics. Asia saw no reason for all the prices to fall since the United States had (seemingly) absorbed the tariff increases. Therefore, Asia wanted to create a general price increase that benefited all parts of the local supply chain by starting with the raw material. Whew! It is easy to see why this narrative has persevered. The reality is that the costing surge is a complex mix of economic events and not a single Machiavellian scheme. This conspiracy theory is the stuff of Tom Clancy novels, but not applicable to the present situation. (Sorry, Tom.)
A small digression is needed to examine the costing structure of a PCB. There are many different models circulating around and every PCB fabricator has their own version from which they derive their pricing. I would propose to distill all these down to a simple chart that is a composite of the most accurate of the models.
I summarize the PCB costing into these three categories:
- Raw materials, 47%
- Technology processing, 43%
- Yield, 10%
Of these three categories, the laminate (FR-4 for those who insist on a generic label) is approximately 36%. Therefore, laminate is the number one cost driver in a PCB.
The category of raw materials (47%) consists of many different elements, including laminate, copper, films, coatings, etc. Each of these elements are part of a different commodity chain. The laminate is the most unusual because it crosses two commodities: metal and oil. Therefore, it has a complex cost model. An increase in copper demand impacts laminate. A change in global costing for oil impacts laminate.
To read this entire article, which appeared in the August 2021 issue of PCB007 Magazine, click here.
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