Iran Conflict Disrupts Circuit Board Supply, Hits Tech Costs

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The ongoing conflict in the Middle East has caused disruptions in the supply of essential raw materials and driven up the cost of printed circuit boards (PCBs), which are integral to nearly all electronic devices—from smartphones and computers to AI servers, industry insiders said.

This recent setback compounds the challenges faced by electronics manufacturers, who are already contending with skyrocketing memory chip prices. It underscores the wider ripple effects of the Iran conflict, impacting supply chains, plastics, and petroleum.

In early April, Iran targeted Saudi Arabia’s Jubail petrochemical complex, halting production of high-purity polyphenylene ether (PPE) resin—a key component in manufacturing PCB laminates. SABIC, responsible for roughly 70% of the world’s high-purity PPE output and operating at Jubail on the Gulf coast, has been unable to resume production, significantly restricting global availability, according to sources. Additionally, shipping routes through the Gulf have faced severe disruptions due to the war.

Since late last year, PCB prices have steadily increased, driven by rising demand for AI servers. Demand has surged since March as manufacturers scramble for raw materials to offset the effects of climbing costs, sources said.

In April alone, PCB prices rose by as much as 40% from the previous month, according to Goldman Sachs analysts. Cloud service providers are prepared to accept further price hikes, expecting demand will continue to outpace supply in the coming years.

The worldwide PCB market is projected to grow by 12.5%, reaching approximately $95.8 billion by 2026, according to Prismark.

Daeduck Electronics, a South Korean PCB manufacturer that supplies major clients such as Samsung Electronics, SK Hynix, and AMD, has begun discussions with customers regarding upcoming price increases. An executive, speaking on condition of anonymity, explained that the company’s priority has shifted from satisfying customers to managing supplier relationships, as lead times for materials like epoxy resin have extended from three weeks to 15 weeks.

The price hikes are also fueled by shortages of other essential materials like glass fiber and copper foil. Copper foil prices have increased by up to 30% this year, with a notable acceleration in March, one source indicated.

Copper makes up about 60% of the total raw material costs in PCB manufacturing, according to Victory Giant Technology, a major Chinese supplier for Nvidia. The company warned earlier this month that the conflict in the Middle East could push prices for key materials like resin and copper even higher.

For context, multi-layer PCBs can cost approximately 1,394 yuan ($204) per square meter, with high-end variants for AI servers reaching around 13,475 yuan.