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The Iran war has disrupted supplies of critical raw materials used in printed circuit boards (PCBs) and driven up the prices of components found in virtually every electronic device, from smartphones and computers to AI servers.
An Iranian strike on Saudi Arabia's Jubail petrochemical complex on the country's Gulf coast in early April knocked out approximately 70% of the world's supply of a key component, the high-purity polyphenylene ether (PPE) resin, industry sources and executives told Reuters on Monday. The PPE resin is a critical base material used in the manufacturing of PCB laminates.
"Saudi Basic Industries Corporation (SABIC), which operates at the complex and accounts for approximately 70% of the world's high-purity PPE supply, has been unable to resume output, severely tightening availability worldwide," according to a source.
Shipping in and out of the Gulf has also been severely disrupted by the war.
PCB prices had already been climbing since late last year, driven by growing demand for AI servers. But the war accelerated the trend sharply from March as manufacturers rushed to secure raw material supplies.
In April alone, PCB prices surged by as much as 40% from March, according to Goldman Sachs analysts in a recent report.
"Cloud service providers are willing to accept further increases as they expect demand will outstrip supply in the coming years," the analysts added.
The global PCB industry is projected to grow 12.5% to reach $95.8 billion in 2026, according to a report from Prismark.
Daeduck Electronics, a South Korean PCB maker whose customers include Samsung Electronics, SK Hynix and AMD, has begun discussions with customers over price increases, a senior executive told Reuters.
The executive, who declined to be named due to the sensitivity of the subject, said his priority had shifted from meeting customers to meeting suppliers, as waiting times for chemical materials such as epoxy resin stretched to 15 weeks from three weeks previously.
The sharp rise in PCB prices was also driven by shortages of other key materials, including glass fiber and copper foil, according to a source. Copper foil prices surged as much as 30% this year, with the rally gaining momentum in March.
Copper accounts for approximately 60% of total raw material costs in PCB manufacturing, according to Victory Giant Technology, a major Chinese PCB supplier for Nvidia.
The firm warned earlier this month that the Middle East conflict could push up prices for key materials, including resin and copper.
Multilayer PCBs cost around 1,394 yuan ($204) per square meter, with higher-end models for AI servers costing around 13,475 yuan, according to Victory Giant.
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