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Economy
Industry sources and executives say the Middle East war has disrupted supplies of key raw materials and raised the prices of printed circuit boards used in nearly all electronic devices including smartphones, computers, and AI servers.
Sources and executives in the electronics sector said the war in the Middle East has disrupted supplies of key raw materials and raised prices of printed circuit boards (PCBs) used in virtually all electronic devices, including smartphones, computers, and artificial intelligence servers.
This disruption represents a new blow to electronics manufacturers already struggling with rising memory chip costs, and also highlights the growing impact of the Iran war, which has severely damaged supply chains and oil supplies.
Iran launched an attack on the Jubail petrochemical complex in Saudi Arabia in early April, halting production of high-purity polyphenylene ether (PPE) resin, an essential material used in the manufacture of PCB substrates.
One source said Saudi Basic Industries Corporation (SABIC), which produces about 70 percent of world supply of this compound and operates in the Jubail complex on the Gulf coast, has been unable to resume production, leading to a sharp decline in the global availability of these materials. Shipping to and from the Gulf has also been severely affected by the war.
PCB prices have been rising since late last year, driven by surging demand for AI servers.
Three industry sources told Reuters that demand had accelerated significantly since March, as manufacturers scrambled to secure raw material supplies and mitigate the impact of skyrocketing costs.
Goldman Sachs analysts noted in a recent memo that April alone saw PCB prices rise by up to 40 percent compared to March. They added that cloud computing service providers are prepared to accept further increases, as they expect demand to outpace supply in coming years.
An executive at South Korea's Daeduck Electronics, who asked not to be named due to the sensitivity of the matter, said his priority has now shifted from meeting customers to meeting suppliers, noting that wait times for chemicals such as epoxy resin have increased to 15 weeks from the previous three weeks.
One source noted that the sharp rise in PCB prices is also due to a shortage of other key materials, including fiberglass and copper foil. He added that copper foil prices have risen by up to 30 percent so far this year, with the pace of increase accelerating in March.
