At the conclusion of our webinar, Navigating PCB Supply Chain Challenges, we had several questions submitted to our presenter, Epec President Kendall Paradise. We compiled these into a readable format on our blog.
Q&A From Our Live Webinar
Quick Links:
- How do regulatory and environmental compliance contribute? Can you clarify that further?
- Can you talk more about single-source suppliers on specialty laminates and the risk posed to PCB manufacturers and OEMs?
- What is considered a low-loss material?
- How might short-term supplier allocation practices by laminate affect smaller OEMs?
- What metrics should procurement track to proactively detect and manage emerging laminate lead time risks?
- In what ways can design engineers modify circuit board designs to reduce dependence on scarce laminates?
- If you quote us a board and we place the order with a delivery of 4 weeks, are you holding that pricing or is it subject to change when you ship?
Watch the Recording Below:
Question: How do regulatory and environmental compliance contribute? Can you clarify that further?
Answer: Compliance is things like REACH, RoHS, and emissions limits. That forces producers to change chemistries, invest in abatement equipment, or stop non-compliant lines, all of which raise costs and create slower output. The bigger challenge is that the stricter local environmental rules lengthen the timelines for capacity expansion. You can't just open a laminate manufacturing plant in a lot of the United States and a lot of Europe. They have very strict rules about this because of the wastewater and the emissions. So, regulatory compliance plays a huge role in the amount of product you can build geographically. And that also further restricts quick growth.
Question: Can you talk more about single-source suppliers on specialty laminates and the risk posed to PCB manufacturers and OEMs?
Answer: We just touched upon that briefly, but single-source reliance, it creates concentration risk and any sort of supplier challenge. God forbid; there's something that happens (in terms of a natural disaster). There was just a typhoon in Taiwan a couple of days ago that shut production down there for a couple of days. Those are things that can halt production downstream. But it also limits you when you're building a high-volume part single-source at a supplier; it limits you to whatever their purchasing restraints are. It also limits you to wherever you fall within their organization in terms of the size of the customer and priority to the production line. And it can also expose you to a greater risk of quality issues because if they have contamination on a line. And it tends to lead to longer lead time spikes. Unfortunately, it could eventually lead to price gouging, especially in a market like this, where the cost of laminate is changing every single day. But if you know you're the only source for something, that becomes much easier. And it also slows down alternative material qualification because you're going to be at the mercy of whatever materials it is that they're buying.
Question: What is considered a low-loss material?
Answer: Low-loss materials are defined by two main metrics:
- Dielectric Constant (Dk): low-loss materials typically have Dk in the 2.2–3.5 range
- Dissipation Factor (Df): low-loss materials have Df below 0.001
Question: How might short-term supplier allocation practices by laminate affect smaller OEMs?
Answer: I think that this is something that we're definitely going to see happen, and we're already starting to see it happen. Suppliers, unfortunately, always prioritize or often prioritize large contracts or strategic customers during shortages. And that leaves smaller OEMs with delayed deliveries, if any at all, partial shipments, and larger price increases. As we talked about at the very beginning with the allocation system, the laminate suppliers have gone to about a 50% allocation rate. There are some small factories that have been told that their allocations - they don't even get 50% - they're going to get it every two months instead of every month. So, the smaller that you are, it definitely makes it more challenging in terms of being able to stay on top of your production schedule. This, again, enforces production rescheduling, and it could create contract penalties and disrupt your customer relationships.
Question: What metrics should procurement track to proactively detect and manage emerging laminate lead time risks?
Answer: That's a really interesting question because on-time delivery is, obviously, something everyone in our industry prides themselves on. And I think that that's definitely going to be a little bit different as we move forward. I think it's really important to look at your supplier’s lead-time trends and the time frame in which they're delivering versus what we would traditionally consider an on-time delivery. If you were getting your circuit boards in 25 days from your supplier, what would that look like this month? What about next month? Because it's going to continue to expand. Understanding your leverage with each supplier and making sure you're not overexposed by having too much of a product with any one supplier. Looking at capacity utilization, backlog, and pricing trends. Again, I think this is one of those times when price gouging can happen on the laminate side, because the price is increasing so much. I think people just start to say, "Yeah, I'll pay that to get material." So, pricing trends are very important to keep your suppliers honest. And then internally, one of the big metrics is going to be your time to qualify alternative materials, you know, creating your own timelines of how long it should take to review a stack-up or approve a different data sheet provided. Those are important metrics that we want to be able to look at and judge ourselves by making sure that we're doing everything correctly.
Question: In what ways can design engineers modify circuit board designs to reduce dependence on scarce laminates?
Answer: That's a challenging question to answer because it feels like every hour that passes, the definition of scarce laminate grades grows. It feels like they're all scarce at this point. But we want to protect ourselves as much as we can. From an engineering perspective, its broadening material specifications, allowing for multiple acceptable DKDF or Tg ranges, looking at using alternate stack-ups, and substituting less specialized laminates where performance tolerates. Utilizing suppliers who offer DFM is a great way to do it, to have them take a look at what you're working on. So, there are a variety of ways to try to minimize it. But as I said, I think that this is a global shortage that is going to impact everybody at least a little bit.
Question: If you quote us a board and we place the order with a delivery of 4 weeks, are you holding that pricing or is it subject to change when you ship?
Answer: When you place an order with Epec, you will receive a Sales Order confirmation within 72 hours. That confirmation will have our delivery date, as well as the price you will be charged for the PCB. We will not be changing the price during the production process.
Key Takeaways
- Regulatory and environmental requirements can increase laminate costs, limit production capacity, and slow expansion.
- Single-source specialty laminates create greater exposure to supply disruptions, lead time spikes, quality issues, and pricing pressure.
- Smaller OEMs may face greater challenges during allocation periods as suppliers prioritize larger or strategic customers.
- Procurement teams should closely track supplier’s lead times, capacity, backlog, pricing trends, and alternative material qualification timelines.
- Design flexibility, including broader material specifications and alternate stack-ups, can help reduce dependence on scarce laminate grades.
