Inflation inside the electronics you buy may soon become a bit more sticky
Most consumers are not familiar with the role resin plays inside electronics like smartphones. A current shortage of the materials may push up prices.
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When the Jubail petrochemical and industrial complex in Saudi Arabia was struck by Iranian missiles on April 6 and April 7, it was the final blow in a convergence of factors — geopolitical, financial, physical — that knocked out a key world reservoir of resin, leaving the crucial component for circuit boards in short supply. The plants had already shut down at the end of March as it became clear transit through the Strait of Hormuz was untenable during the conflict, and it is still not back online.
Whether the PCBs are made in the U.S. or China, the resin still comes from the same sources.
According to Vena, many companies have less room in their economic model to take the hit than Apple. "The bigger near-term squeeze may show up first in lower-margin devices like PCs, accessories, gaming hardware, routers, and midrange Android phones, where manufacturers have less room to eat a 40 percent PCB shock," he said.
Supply chain expert and Wichita State University professor Usha Haley said the Jubail complex in Saudi Arabia supplied about 70 percent of the world's high-purity polyphenylene ether resin. "Production has now come to a standstill and no alternative supplier exists to fill the gap. PCB prices have risen 40 percent in a month, and lead times for epoxy-resin inputs have expanded from three weeks to fifteen," Haley said.
