Hey, @TonyUphoff @THOMASNET, for some reason, sourcing printed circuit boards has been a real challenge lately. What gives?
Great question. You’re definitely not alone.
Our data shows that sourcing activity for Printed Circuit Boards on THOMASNET.com has increased sharply in recent months. In fact, over the last three months alone, buyers and engineers have been evaluating suppliers 25% more than usual.
And just last week, we saw supplier evaluation activity for PCBs climb to 78% higher than its all-time average – and the trend shows absolutely no signs of slowing down.
So what’s happening?
Well, one of the five main components of PCBs is copper foil, and it is in short supply around the globe. Reports estimate that the supply of copper foil is falling short of demand by 2.8 million sheets per month.
Contributing to the shortage is the fact that copper foil is a key component needed for the production of lithium-ion batteries, which are used in electric vehicles. With electric vehicle production ramping up thanks to investments by Tesla, Volvo’s decision to go all-electric by 2019, and large incentives from the Chinese government, demand is exploding.
Because these batteries need a higher quality of copper foil than PCBs, suppliers can sell to the electric vehicle market at higher margins, and that’s where they are focusing their efforts – and their inventory.
Now, buyers are finding that their existing PCB suppliers can't meet demand, and so they are turning to resources like THOMASNET.com to find new suppliers with better access to copper foil. It’s a classic example of scarcity driving the market.
How are these suppliers trying to keep pace? To find out, we spoke with Stephen Gillissie of VR Industries, a full-service electronic contract manufacturer based in Rhode Island. He said that industry lead times for PCBs have gone from 4 weeks to 8-10 weeks, but buyers are pushing for faster lead times. Steve believes the shortage will persist, as new market forces – like renewable energy – will further contribute to the scarcity of copper foil.
In a classic example of the ingenuity of North American manufacturers, Steve and his team are tapping into their design skills to minimize the total amount of copper foil needed for each board. This innovation will help VR keep pace with demand and shorten lead times.
Well, I hope that clears things up.
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