The imbalance in supply and demand during COVID-19 in 2021 and 2022 created a global bubble of consumption. When the pandemic ended, pressure from destocking and rate increases to curb inflation led to a massive downturn in the global PCB industry in 2023. The Science and Technology International Strategy Center (ITSI) of the Industrial Technology Research Institute (ITRI) estimated that the total output of the global PCB industry in 2023 declined by 15.6% to US$73.9 billion. In China, Japan, Taiwan, and Korea, among Chinese-owned plants, their relatively low proportion of substrates, as well as strong growth in automotive applications, meant they outperformed the global average with a decline of just 9% for the year; Korea on the other hand had the highest proportion of substrates with most concentrated in consumer electronic memory applications so experienced a decline of more than 20%; while substrates accounted for a significant proportion of the industry output in Japan and Taiwan, their relatively balanced product mix as well as the support of automotive applications meant the level of decline fell somewhere between China and Korea.
The lower base period of 2023 meant that the electronics industry as a whole should experience stronger growth in 2024. The restocking of inventories should also see the PCB industry enter another cycle of growth. Consumer demand will need more time for a positive feedback cycle to reestablish itself but may still benefit from upgrades to some product specifications. The output of the global PCB industry is expected to climb back up to US$78.2 billion in 2024, an increase of 6.3% from 2023. Once consumer market growth approaches that of the global economy, the global PCB industry output should begin sustaining 4-5% long-term growth.
The following four key issues were identified by the Taiwan Printed Circuit Board Association (TPCA) and ISTI regarding the development of the global PCB industry in 2024:
1. International competition in building a resilient semiconductor industry is affecting PCB and substrate ecosystems
National governments have rolled out policies aimed at strengthening their semiconductor supply chains in the wake of COVID-19 supply chain disruptions and semiconductors becoming a strategic commodity. The U.S. for example announced the “CHIPS and Science Act” in August 2022 and used that as the framework to launch the “National Advanced Packaging Manufacturing Program” (NAPMP). Substrates were designated as one of the seven key areas of investment, with the first subsidy program to be announced in early 2024. Japan also passed the “Economic Security Promotion Act” in 2022, which designated semiconductors and other fields as “critical materials.” Shinko, a leading Japanese substrate manufacturer, can therefore expect to receive up to 17.8 billion Yen in subsidies towards the construction of its next-generation plant.
In addition to the increase in incentives, the US-China technology embargo is continuing to intensify, forcing foreign-owned companies such as TSMC, Samsung, and SK hynix to limit their expansion in China. China is therefore even more reliant on its domestic semiconductor industry now, but there are still questions over its economic slowdown and the sustainability of its massive subsidies. What should be closely monitored in the future is the effect of China’s push to accelerate its level of domesticalization on advanced packaging, a field that is not yet under sanctions.
The “Supporting American Printed Circuit Boards Act” (H.R. 7677) was introduced to the U.S. House of Representatives in 2022. The Act called for the government to provide US$3 billion in funding to increase the production of PCBs. The bill was ultimately not voted on but served as an indication that PCB was now attracting the attention of policymakers. Later on, President Biden and Prime Minister Trudeau announced on March 24, 2023, that the two countries would spend US$52 million to support PCB production in North America. Domestic PCB production will also be expanded under the “Defense Production Act” to prevent gaps in critical technologies that threaten national security.