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Supply Chain Update
A TCL Group Company
PCB supply chian overview
May 2010
The European and Far East PCB Manufacturers give the following reasons for increased lead times and prices! Please read below, but before you get too depressed, get to the bit where we tell you what our group of companies is doing to lessen the impact on you..........
PCB laminates remain in short supply due to increasing demand particularly in Asia, coupled with lack of capacity, thus driving an increase in lead times.
The surge in demand in Asia was sudden and intense; it has caught many elements of the supply chain rather unprepared. The raw materials for laminate are approximately: 20% resin (only 5 producers worldwide), 30% glass fiber (only 5 manufacturers) and 50% copper foil (17 producers, of which half produce exclusively in-house). Due to the recessionary slowdown in demand, several glass furnaces were shut down. The special quality required for the electronics industry was, in an economically sound way, impossible to produce. However, once a furnace is shut down, it will take months before it can be used productively. Planned maintenance at large glass fibre mills puts pressure on laminate availability. Producer output prices rose 5.0% in the year to March compared to 4.2% in the year to February – the 0.9% monthly increase has been driven predominantly by the increase cost of fuel and petroleum based products.
The already mentioned price increases (more are very likely in the next few weeks) for laminates are having to be ‘passed on’ by the PCB manufacturers; it is essential to their survival.
Even more problematic potentially, than the price increases, is the current shortage of laminate.
Asian PCB manufacturers are already running on maximum capacity (this usually happens at the end of Q2, when the Christmas season begins). There is some evidence due to supply constraints in Asia, many European manufacturers are now also at full capacity.
Laminate manufacturers are consequently running at full capacity. New capacities (in Asia) are planned, but it will take several months for them to deliver significant volumes. It has to be noted that the new capacities are being built not only for standard material, but for halogen-free materials.
We are likely to face a global allocation of basic materials, which will affect the industry much more than anything else. The laminate capacity that still exists in Europe is far from sufficient to supply the local industry. Some Asian suppliers have reduced supply to Europe several weeks back. The remaining trading companies are unlikely to be able to meet the sudden increase in demand.
In addition to the above, a decrease in the availability of copper is another contributary factor - something that happens in most economic upturns. This has resulted in a sudden price increase for laminate. The price increase in China is around 20% and in extreme cases 25%. This price increase is not reflected fully in the total PCB price. If the laminate price in China increases by 20% the PCB price tends to increase approximately 15% It is also more likely that price increases are higher from Chinese manufacturers than from European manufacturers,
PCB shortages may not be the biggest problem that electronics buyers are facing today. The lack of components can force buyers to wait even longer after the PCBs have been delivered. Several semiconductor giants have delivery times around 20+ weeks at present and 3 days just to get the components out from the warehouses, according to an electronics purchaser.
On the PCB-trading side, the average delivery time on trading volumes from PCB distributors is in excess of 5-6 weeks. Just a few months ago, the delivery time was 3-4 weeks.
It is going to be hectic and only the best of relationships between customers and suppliers will be able to secure a reasonable supply
We have been busy trying to secure laminate at best prices for our UK, European and Far East factories but the more forecasts or even order commitments you can give us the longer we can protect you for.
We are working with our factories to ensure you get best lead times and as you know with the variety of locations we have if you can be flexible so can we
You are our number one concern because we know if you are affected so are we
We intend to keep you regularly updated on all aspects of the supply chain, and will increase your contact with your Account Manager.
The Volcano is still rumbling so air freight will continue to be affected sporadically. Our freight forwarding partner Uniserve has developed a global fall back/disaster recovery plan over the last 2 weeks in anticipation of a reoccurrence on a widepread scale. This includes using Continental Europe airports as gateways, sea/air via various transshipment points and express ocean freight services, which can all be turned on with our overseas offices within hours of an announcement of UK airspace being restricted.
May 2010
What are we going to do for you?