The ongoing global conflicts and war-like situations are driving component costs higher by the day, with supply chains getting hit in the most brutal way. Amidst the blockage of components through common trade routes, the India Printed Circuit Association has issued an urgent appeal about the hardships in manufacturing and material backlogs affecting supply chains.
India PCB Manufacturing Pressures and Shortages
The IPCA is facing massive issues in meeting the supply and demand, and has highlighted a critical crossroad for India's $7.27 billion local hardware ecosystem. Diving into the core supply issues, the ongoing geopolitical crisis between Iran and the US has severely impacted global logistics of electronic components beyond fuel-related setbacks.
The organisation highlights that over the course of the last 90 days, Air transit rates have drastically shot up by over 50%, while fuel costs also keep rising. Due to the same, the standard copper-clad laminates, which are essential for PCB design, now have a 20-week waiting period. Similarly, raw material output has also suffered immensely following the recent drone attacks on Saudi Arabia.
For those unaware, Saudi Arabia's Jubail facility facilitates the production of over 70% of the world's high-purity Polyphenylene ether resin. Resources like copper foil and glass fibres, which are also responsible for PCB production, are faced with severe shortages as global stocks are focused on next-gen AI and 6G infrastructure. AI is also one of the reasons for the current RAM crisis in the world.
Therefore, the raw component prices have spiked up to 150% and because local enterprises are locked into fixed contracts, they are taking the gut punches by compensating for the increased costs all by themselves. In this case, the IPCA has instructed manufacturers to approach their clients (mainly OEMs) to implement at least a 50% hike to make sure the production isn't affected beyond this.
The cost pressures are apparently also driven by the strengthening US dollar. Manufacturers are also looking into launching more domestic production in the next few months in states like Andhra Pradesh, and lean on China to quickly cater to the consumers and evade the possibility of shortages.
As for the long-term outlook, the Indian Ministry of Electronics and Information Technology is currently tracking these bottlenecks. The organisation says that the current projects funded by the electronic component manufacturing scheme are engineered to fulfill 100% of the demand, eventually. It will be interesting to see if the firms can manage to rise up and counter this, but the situation, as it appears right now, looks incredibly grim and serious.
