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The Circuitry Supply Chain Offers its Own Vulnerability

The necessity for motherboards may outweigh chip requirements.

Credit: spainter_vfx/Shutterstock

Concern over chip shortages may be drowning out a more significant supply chain threat. The circuit boards on which chips reside may become an endangered species in the United States as manufacturers increasingly rely on offshore sources. This in turn would be as damaging as being unable to obtain chips.

“Chips don’t float,” says William Marsh, president of the Printed Circuit Board Association of America and vice president of government relations for TTM Technologies. “They have to have a home.”

The printed circuit board and printed circuit board assembly industry in the United States has been shrinking over the past few years, he states. This trend has largely been overlooked in Washington as eyes focused on the chip supply chain and its re-shoring efforts, he offers.

Over the past 20 years, many high-technology companies have moved manufacturing offshore, he continues. Over that period of time, the United States has gone from a global market share in printed circuit boards of 26 percent down to less than 4 percent, he says. The same period has seen the number of U.S. printed circuit board manufacturers and assemblers decline from more than 2,500 to less than 145, Marsh says, citing government sources.

The U.S. Navy hosts a congressionally chartered Defense Department printed circuit board executive agent, he offers. This office’s job is to ensure that the department has a healthy, robust and resilient domestic supply chain for International Traffic in Arms Regulations (ITAR)-related products. Even with this office, the industry has continued to constrict, he says.

Many of these manufacturers are single-source suppliers to both the Defense Department and the commercial sector, Marsh continues. One company in particular is the only one in the United States that produces woven glass for printed circuit boards. This represents a vulnerability in the domestic supply chain.

“We can’t build printed circuit boards unless we get the right technologies [and] chemical capabilities from companies,” March says. “There are all sorts of materials that have to be procured in order to produce those boards.

“If we’re talking about domestic resilient supply chains, we have to be very cognizant that our industry has been constricting over the last 20 years, and we need to take steps to reverse that trend,” he declares.

Most of the overseas sources of printed circuit boards are in China, which has more than 51 percent of the global market share, Marsh offers. Taiwan has an additional 22 percent, meaning these two sources provide 73 percent of the total global market share of circuit boards. Again, this compares to the 4 percent market share from the United States. Part of the reason for this imbalance is that many overseas nations provide large subsidies to their printed circuit board industries, he notes.

“We’re not competing against other companies,” he charges. “We’re competing against other countries.”

But this issue goes beyond subsidies. One of the largest challenges that U.S. manufacturers face is bringing research and development back onshore. When a product is sent overseas to be built to specification, the United States is losing related innovation. Reversing this trend will require workforce development amid the re-integration of printed circuit board manufacturing in the United States, Marsh says.

Unlike with chips, the United States is currently able to meet printed circuit board demand, especially for ITAR applications with the Defense Department. But the foreign supply chain still holds sway for production, especially for the long term. If that overseas supply chain were cut off, commercial circuit board customers could be left wanting, Marsh says. This could affect the government when it procures commercial off-the-shelf electronics, he notes.

Another problem is that none of the machines that are used in manufacturing printed circuit boards is made in the United States, he adds. These expensive devices are all made overseas. “The inability to actually invest or modernize to keep up with the evolution of printed circuit boards is one of the driving factors of why the industry has constricted,” he states.

This also applies to substrates, which are a key part of circuitry. Every substrate manufacturer is located overseas, Marsh points out.

He emphasizes that the issue affects the entire electronic ecosystem. “The chip is the brains, the board is actually the body executing commands,” he declares.