The Conflict in Iran Raises PCB Prices by 40% and Delivery Times to 15 Weeks: Could It Be Worse Than the Memory Crisis?
We have already had the opportunity to observe how tensions in Iran can have repercussions on the technology sector, particularly for issues related to helium supply, a fundamental gas for cooling high-precision machinery dedicated to chip and semiconductor production. Unfortunately, the situation could prove to be even more concerning: at the beginning of April, the conflict involved the Jubail petrochemical complex in Saudi Arabia, triggering a domino effect in the global supply chain of printed circuit boards that no contingency plan had anticipated would occur so rapidly.
The target was SABIC (Saudi Basic Industries Corporation), a name that rarely comes up when discussing technology, consumer hardware devices, or AI servers and services. Yet, its centrality in a specific segment of the electronics supply chain is hard to overstate, and the consequences of its halt are now translating into concrete numbers across the entire production chain.
The Bottleneck: SABIC and PPE Resin
Consider that SABIC is responsible for about 70% of the global supply of high-purity PPE (polyphenylene ether) resin, the base material used to produce the laminates from which PCBs are made. The attack forced a total production shutdown at the Jubail facility on the Gulf, and since then, SABIC has been unable to resume operations. Unlike a chip supplier that can be partially replaced by switching foundries, there are no truly viable alternatives for PPE resin: competing suppliers do not operate anywhere near the scale necessary to absorb a 70% deficit, resulting in the material being irreplaceable, the laminate non-interchangeable, and the consequences propagating linearly throughout the supply chain.
According to Goldman Sachs analysts, PCB prices rose by up to 40% in April alone compared to March. This increase stems from an actual shortage of upstream material. Demand had already driven prices up in previous months, propelled by surging orders for servers intended for artificial intelligence. The attack on Jubail came as an additional shock to a market already under strain.
Delivery Times Quintupled
Daeduck Electronics, a South Korean PCB manufacturer that supplies Samsung Electronics, SK Hynix, and AMD, has informed its customers that it has begun negotiations for price increases. However, the most significant data pertains to logistics: waiting times for resin have extended from three to fifteen weeks. Fifteen weeks for a critical production material constitutes a structural blockade that will take months to absorb, even if the SABIC plant were to resume operations in the very near future. A company executive stated that operational priority has shifted from meetings with customers to meetings with suppliers, highlighting the changing bargaining balance within the supply chain.
Further complicating the picture, the war has paralyzed maritime traffic in the Gulf. The logistical routes connecting petrochemical producers in the area to Asian electronics manufacturers are compressed, slowing both the distribution of PPE resin still available in stock and the procurement of other chemical products.
Copper: The Second Pressure Front
The second pressure vector on costs is copper, which accounts for about 60% of total raw material costs in PCB production, according to Victory Giant Technology, a major Chinese manufacturer with Nvidia among its customers. The company warned earlier this month that the Middle Eastern conflict risks raising both resin and copper costs, as disruptions to naval flows in the Gulf also impact the transit of raw materials not directly linked to Saudi petrochemicals.
The combination of PPE scarcity and copper pressure creates a multiplier effect on the final costs of PCBs. Prismark projects that the global printed circuit board market will reach $95.8 billion by 2026, with a growth of 12.5%, but that estimate was made before the war abruptly altered supply parameters.
The demand reaction is, in some ways, the most instructive part of this story. Cloud providers and hyperscalers, according to the Goldman Sachs note, are willing to absorb additional price increases because their projections for AI infrastructure demand remain unchanged. In practice, the price signal for PCBs is not stalling orders: it is simply being transferred to infrastructure costs. Those building data centers will build them anyway, but will pay more. The entire AI sector has annual capex plans exceeding $200 billion, and the conflict in the Middle East is becoming a variable that no risk model had fully incorporated.