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PCB pricing to drop until Q3

Posted: 17 Mar 2009     Print Version  Bookmark and Share

Keywords:PCB  copper  pricing 

Average pricing for printed circuit boards is expected to go down until the third quarter of 2009, together with the declining cost of copper, a key PCB raw material, 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 this PCB in the second quarter is expected to fall to 15.3 cents per square inch, down 8.4 per cent from 16.7 cents in October 2008. Pricing is expected to rebound slightly in the third quarter, rising 1.3 per cent to 15.5 cents and will remain at that level in the fourth quarter.

Figure: Average Asian market pricing for the 8-layer, >=5/5 mils line width, 62 mil +/-10 per cent, thickness, FR4 per square inch PCB (in US$), according to iSuppli.

"Weak demand is negatively impacting PCB demand," said Jason Ma, director and senior analyst, pricing and 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 Rs.203.85 ($4.10) per pound in the second quarter of 2008 and then began to drop, falling to Rs.74.58 ($1.50) per pound in February. This drop, combined with falling pricing for another key raw material, laminate, have helped PCB suppliers to reduce costs.

PCB demand is expected to return as a factor driving PCB pricing in the third quarter, with a slight increase in sales helping to boost rates, the analyst said.

Crisis cuts demand
Demand for PCBs has fallen significantly since the global economic crisis began. The major applications for PCBs are notebook PCs and consumer products such as mobile handsets and flat panel displays, all of which have been negatively impacted by the downturn.

Oversupply conditions have forced the PCB suppliers to tighten their belts while banks kept rigid control of their business loans. Moreover, the Chinese government is beginning the process of increasing its tax on corporate profits to 25 per cent in 2012, up from 18 per cent 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, he added.

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