AI boom causes shortages of printed circuit boards – electronics could become more expensive
The expansion of AI data centers is straining the next critical supply chain. Manufacturers are reporting rising costs and longer lead times for printed circuit boards. This could also drive up the prices of PCs, laptops, and other electronic devices.
Printed circuit boards (PCBs) are in almost every electronic device. They carry processors, memory chips, and other components, connecting them via fine copper traces. Without these boards, manufacturers cannot complete their devices.
AI data centers consume production capacity
The main reason for the increasing supply shortages of PCBs is the global expansion of AI data centers. Once again. The high-performance servers required for this use particularly complex PCBs. According to the German manufacturer Würth Elektronik, such boards have three to five times as many layers as conventional boards. Consequently, the demand for high-quality materials is rising.
Manufacturers of base materials are increasingly focusing their production on the more lucrative applications for AI servers. As a result, they can supply fewer raw materials for conventional PCBs. Other electronics manufacturers have to wait longer for deliveries or pay higher prices. Copper-clad laminates, glass fabrics, copper foils, and special resins are particularly affected.
The Association for Electronics Design and Manufacturing (FED) has been warning of declining inventories and longer delivery times since July. Some material manufacturers are now allocating their available quantities based on the previous year's orders. Companies that need more on short notice can therefore only procure additional quantities to a limited extent.
The South Korean PCB manufacturer Daeduck Electronics shows how much the situation can escalate. The company reported to Reuters in April that delivery times for chemical materials such as epoxy resin had increased from three to 15 weeks. The war in Iran is also straining supply chains. Rising energy prices and shortages of chemical precursors are making production more expensive.
The effects are already visible in costs. According to information from the PCB provider Leiton, spot prices for standard FR-4 laminates from China have roughly tripled within a year. FR-4 consists of glass fiber fabric and epoxy resin and serves as the base material for many PCBs.
The provider emphasizes that standard FR-4 is still available. However, manufacturers are increasingly distributing their materials based on priority. PCB factories that pay for their orders in advance are given preference. Certain material thicknesses and special layers for multi-layer boards are particularly difficult to procure.
Source: Vishnu Mohanan / Unsplash
Europe's dependence exacerbates the problems
European electronics manufacturers face another difficulty: Europe is heavily dependent on Asian manufacturers for PCBs. According to the industry association ZVEI, only two percent of the world's PCBs are now produced in Europe. Around the turn of the millennium, this share was still around 20 percent. The majority of production now takes place in Asia, primarily in China.
This dependence potentially affects numerous industries. In addition to PC and notebook manufacturers, the automotive industry, mechanical engineering, and manufacturers of household appliances also require large quantities of PCBs.
For consumers, the shortages could mean higher prices and later product launches. As early as August, there were reports that Asus, MSI, and Gigabyte intend to increase their motherboard prices due to rising PCB costs. Another industry report from September mostly mentions price increases of around three percent for certain models. The information is based on data from Chinese distribution channels. Official confirmations from the manufacturers are still pending.
A quick easing of the situation is not in sight. Würth Elektronik points to assessments by industry experts who do not expect a noticeable improvement for glass fabric until 2028. This means that the expansion of AI infrastructure could continue to burden electronics production for a long time to come.
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