WIREDGOV

Costs must be mitigated as it no longer makes sense to impose a tariff

techUK is calling for the removal of tariffs on Printed Circuit Board (PCB) materials which could partially mitigate the current price rises that are having a crippling effect on the UK PCB industry. Most materials are now imported into the UK and it no longer makes any sense to impose a tariff on materials when there is zero tariff on finished PCBs.

The main driver for the sudden price increases for PCB material is shortages in copper foil, though UK manufacturers are also suffering from the drop in the pound due to the Brexit effect. Copper foil manufacturers worldwide have been running at full capacity during 2016 and demand is outstripping supply by about 10%. This is likely to continue throughout 2017. Internal costs have also increased and suppliers were forced to put up their prices at the end of 2016 by 10-15%.

However, this is the tip of the iceberg and increases may well top 50% by Q2/Q3. Increasing the volume of supply of copper foil has a 12 month lead-time, so the industry is not expecting any relaxation in supply pressure anytime soon. Much of the increased demand in copper foil is being driven by Li-Ion Battery Manufacturers, but routine maintenance has also taken some capacity offline. Further to this, in the UK, the recent bankruptcy of one material supplier has left a shortage of foil suppliers.

There is a double whammy to the PCB manufacturing industry as other material costs are also increasing, such as fibreglass. Suppliers are making more money supplying to the larger fibreglass markets, for example, in insulation products, compared with the much smaller laminate market.

While there remains overcapacity in the PCB industry as a whole, manufacturers will be forced to try and absorb as much of these increases as possible, which may be devastating to the industry as a whole. Imposing tariffs on PCB materials, while finished PCB have zero tariff, makes absolutely no sense at all.