The global IT and electronics industries are currently facing a major shock. Military conflicts in the Middle East have severely damaged the production and supply systems of printed circuit boards (PCBs), the most critical components that make up electronic devices. International communications networks reported on the 27th, based on local time, that supply routes for key raw materials have been blocked due to the Middle East conflict, causing a sharp rise in prices of substrates essential for various products such as smartphones, personal computers, and high-performance servers based on the latest technologies. Such price increases are acting as a huge financial burden on electronics manufacturers when combined with memory semiconductor costs that are already on an upward trend. Experts are analyzing that this incident is not merely a temporary price fluctuation but is causing structural cracks throughout the IT and semiconductor supply chain, following the oil and plastic industries.
The fundamental reason for the supply shortage is a severe disruption in raw material procurement. As a result of Iran's attack earlier this month on the Jubail petrochemical complex located in Saudi Arabia, the production of high-purity polyphenylene ether resin, which is essential in the PCB manufacturing process, has been completely halted. The company, SABIC, which operates the facility, was responsible for about 70% of global high-purity resin supply, but production resumption remains impossible so far, leading to a contraction in global market supply. Looking at the trading volume data from Friday, the increase in PCB prices reached a maximum of 40% in one month, which is the result of intense competition for raw materials as demand for AI servers has exploded. In addition, copper prices, accounting for about 60% of PCB costs, have risen by a maximum of 30% this year, and shortages of auxiliary materials such as fiberglass and epoxy resin have also intensified, causing manufacturing unit costs to surge.
Domestic companies are also directly affected by this global supply chain instability. According to a Reuters report, it is reported that Daedeok Electronics, a major domestic PCB company, has begun price increase negotiations with major customers such as Samsung Electronics, SK Hynix, and NVIDIA. In particular, the procurement lead time for some chemical materials such as epoxy resin has increased significantly from about three weeks to 15 weeks, which is acting as a major variable in rescheduling production schedules. Industry insiders predict that if this supply chain instability continues for a long time, companies will face a situation where they have no choice but to pass on cost increases to consumer prices. A person in the industry said, "In the current situation, securing raw materials has become a more urgent task than meeting customer demands."
In the future, the electronics industry is expected to face a double whammy of soaring raw material prices and supply delays until the political situation in the Middle East stabilizes. Especially as demand for AI-related servers continues to increase, rising prices of key components are sure to have a ripple effect on the entire industrial ecosystem. Companies are in an urgent situation to strengthen alternative supply chain construction and inventory management strategies to respond to this. This incident, showing a structural change in the global supply chain rather than a simple fluctuation in raw material prices, is expected to be an important opportunity to reshape the competitive landscape and cost structure of the technology industry in the future.