Average pricing for printed circuit boards (PCB) is expected to decline until Q3 of this year, in concert with declining costs for a key PCB raw material -- copper -- according to iSuppli Corp.
In Asia, the primary market for PCB production and consumption, pricing for a key product that indicates market trends began to decrease in October. Contract pricing for PCBs in Q2 is expected to fall to 15.3 cents per square inch, down 8.4% from 16.7 cents in October 2008. Pricing is expected to rebound slightly in Q3, rising 1.3% to 15.5 cents and will remain at that level in Q4.
"Weak demand is negatively impacting PCB demand," said Jason Ma, director and senior analyst, Pricing & Competitive Analysis for iSuppli. "However, PCB pricing trends now are being dictated by copper costs."
Ma noted the price of copper reached a peak level of US$4.1 per pound in Q2 2008 and then began to drop, falling to US$1.5 per pound in February. This drop, combined with falling pricing for another key raw material, laminate, has helped PCB suppliers to reduce costs.
PCB demand is expected to return as a factor driving PCB pricing in Q3, with a slight increase in sales helping to boost rates, Ma predicted.
Demand for PCBs has fallen significantly since the global economic crisis began. The major applications for PCBs are notebook PCs and consumer-oriented products such as mobile handsets and flat panel displays (FPD), all of which have been negatively impacted by the economic downturn.
Oversupply conditions have forced the PCB suppliers to tighten their belts while banks have kept rigid control of their business loans. Moreover, the Chinese government is beginning the process of increasing its tax on corporate profits to 25% in 2012, up from 18% in 2008. Finally, China's government established new environmental protection laws in 2008 that place new burdens on the PCB industry.
"This combination of factors is hurting PCB makers in China," Ma noted. "Existing companies now must use their own financial resources to buy water recycling equipment, causing many small PCB factories to close. PCB suppliers have been forced to move their facilities to new manufacturing locations like Vietnam or India to set up their factories."
In order to survive, Asian PCB makers must continue to cut costs, Ma said.
Nikkei Electronics Asia
