Middle East Conflict Disrupts Raw Material Supply, Driving Up PCB Prices

Industry executives warn of soaring costs for resins, copper, and glass fiber, impacting everything from smartphones to AI servers.

The ongoing conflict in the Middle East is severely disrupting the supply of key raw materials, driving up the prices of printed circuit boards (PCBs) used in nearly all electronic devices — from smartphones and computers to advanced AI servers, according to industry executives and insiders.

This new disruption adds further pressure on electronics manufacturers already grappling with soaring memory chip costs. It also highlights the widening impact of the conflict, which has already disrupted global supply chains, plastics, and oil supplies.

In early April, an attack on a petrochemical complex in Jubail, Saudi Arabia, halted the production of high-purity Polyphenylene Ether (PPE) resin — a critical base material for manufacturing PCB laminates. According to a source, Saudi Basic Industries Corporation (SABIC), which supplies approximately 70% of the world’s high-purity PPE, operates the Jubail facility. Production has yet to resume, causing a severe global supply shortage of the material.

The conflict has also significantly disrupted shipping routes in the Gulf region. PCB prices had already been climbing since late last year, driven by growing demand for AI servers. Three industry insiders say that demand has accelerated sharply since March, as manufacturers scramble to secure raw material supplies and mitigate cost surges.

In a recent report, Goldman Sachs analysts noted that PCB prices jumped 40% in April alone compared to March. They added that cloud service providers are accepting further price increases, anticipating that demand will outpace supply for the foreseeable future.

According to a recent report by Prismark, the global PCB industry is expected to grow by 12.5% to reach $95.8 billion by 2026.

An executive at Daeduck Electronics — a South Korean PCB manufacturer whose clients include Samsung Electronics, SK Hynix, and AMD — told Reuters that the company has begun discussing price increases with customers. Speaking on condition of anonymity due to the sensitivity of the matter, the executive said his focus has now shifted from meeting clients to communicating with suppliers, as lead times for chemical materials like epoxy resin have extended from 3 weeks to as long as 15 weeks.

The sharp rise in PCB prices is also due to shortages of other key materials, including fiberglass and copper foil. According to one source, copper foil prices have surged as much as 30% this year, with the acceleration picking up in March.

Copper accounts for approximately 60% of the total raw material cost of PCB manufacturing, according to Shenzhen Hongxin Electronics Technology, a major Chinese PCB supplier to Nvidia. The Chinese company warned earlier this month that the Middle East conflict could drive up prices for key materials, including resin and copper.

According to Shenzhen Hongxin, a standard multi-layer PCB now costs approximately 1,394 yuan per square meter, while high-end models used for AI servers cost around 13,475 yuan per square meter.

Bicheng is a leading provider of custom PCB solutions. We closely monitor global supply chain trends to help our customers navigate market challenges and deliver high-quality, reliable boards for every application. Visit our website to learn more about our custom PCB services and current lead times.

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