PRINTED CIRCUIT BOARD MARKET What's driving the European PCB industry crisis?

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The European printed circuit board industry is in turmoil. Production levels have massively decreased, and major manufacturers are closing operations across the continent. We take an in-depth look at the crisis in the European PCB industry and consider what lies ahead for this beleaguered yet crucial sector.

The European share of the global PCB market is a fraction of what it once was. In the past year, major PCB manufacturing plants in Germany, Czechia, France, and Estonia have closed their doors and halted operations. This has resulted in hundreds of jobs being lost and poses a serious risk to the European Union’s stated goals of creating a robust, independent electronics industry by 2030.

PCBs are integral components of almost all modern electronic systems. If Europe is to break free of the stranglehold of Asian-produced electronics, it must focus on revitalizing its lagging PCB manufacturing industry. But with the continuing high rates of inflation, the aftermath of a technical recession, and the influx of cheap PCBs from Asian PCB manufacturers, can Europe repair its ailing PCB industry? Or are the foundations of the PCB sector irreparably damaged? The future of the European electronics manufacturing industry might depend on it.

The European PCB industry is in decline

The most recent figures on the European PCB industry make for grim reading. The sector has undergone a massive drop in productivity over the last two decades. In 2000, 16% of all PCBs manufactured worldwide were produced in the EU. By 2022, however, Europe was producing just 2.3% of the global PCB supply. The last twenty years have also seen the number of European PCB manufacturers fall from 555 to less than 180. Of the remaining manufacturers, just 20 are responsible for 60% of European PCB output.

There’s no denying that demand for PCBs is strong. At the time of writing, the European PCB market is estimated to be worth US $2.6 billion. Overall, the PCB market in Europe is projected to rise at a compound annual growth rate (CAGR) of 2.8% to reach US $2.99 billion by 2029.

Despite the continued demand for PCBs, European manufacturers are having a difficult time. Year-on-year billings (revenue) for the European PCB industry declined by 6.5% in the first half of 2024 compared to the same period in 2023, and by 7.8% compared to the second half of 2023.

Bookings (future orders) also declined sharply. During the first half of 2024, PCB bookings fell by 24.4% year-over-year and 17.3% compared to the latter half of 2023. The Book-to-Bill ratio which indicates demand by comparing new orders to fulfilled orders, for the European PCB industry now sits at 0.91. For every €1 worth of PCBs shipped, only €0.91 of new orders are being placed. This downward trend is expected to continue for European PCB manufacturers, with many experts predicting Europe will suffer an even greater loss of the global PCB market share.

Major players in the European PCB industry are not overly optimistic about the future of the European PCB industry. In a recent report, the Institute of Printed Circuits (IPC) has estimated that the EU’s reliance on non-European PCBs will increase from the current figure of 82.5% to 88.9% by 2035. The IPC states that if the current trajectory is maintained, then the EU will be unable to meet PCB demand via domestic production by 2035 and that Europe’s share of the global PCB industry will drop to 1.7%.

A quote from the IPC’s president of Europe and South Asia Operations Sanjay Huprikar underscores the seriousness of the situation:“The growing strategic dependencies highlighted in the report are alarming as they undermine Europe’s ability to achieve key strategic priorities from a strengthening of the defence industrial base to the green and digital transitions.”

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PCB manufacturers across Europe are stopping operations

These stark business conditions are causing manufacturers throughout Europe to cease their operations. The German PCB maker Würth Elektronik Circuit Board Technology announced in October 2024 that it would soon be ceasing production at its PCB facility in Schopfheim. The decision will cause the loss of 300 jobs. Daniel Klein, Managing Director of Würth Elektronik Circuit Board Technology, said “Unfortunately, we currently see no alternative to ceasing production in Schopfheim. This measure is necessary to minimize losses and ensure the company’s long-term competitiveness.”

Germany is not the only EU country where PCB manufacturers have been forced to close. In August 2024, Brandner PCB Oü announced that it would be shutting down operations at its site in Paide, Estonia. The company will cease work entirely on the 29th of November 2024. A spokesperson from Brandner PCB Oü stated that the closure was due to "…the unfavourable business environment for the industry.” Brandner PCB Oü was the last company still manufacturing PCBs in Estonia.

The French manufacturer CSI, a subsidiary of Cimulec, was forced to close its factory in Toulouse in July 2024 after a devastating fire. The damage caused by the blaze rendered the CSI factory inoperable. Although not a direct result of the dire state of the European PCB industry, it could be said that if the sector was not in such dire straits, CSI may have been able to recover from the disaster.

Is Asia driving the European PCB industry crisis?

By far the biggest factor driving the decline in the European PCB industry is the emergence of Asia, and especially China, as the world’s largest producer of PCBs. Asia is now responsible for 90% of worldwide production with China standing as the largest global manufacturer of PCBs.

Chinese PCB manufacturers benefit from lower energy costs, lower labour costs, fewer regulatory restrictions, and significant international and government investments. Many Chinese PCB companies are also much further ahead than European companies in terms of product research and development. Given these factors, PCB manufacturers in China are easily able to outcompete their European counterparts.

At the time of writing, Chinese PCBs account for 65% of Europe's PCB imports. 6% of Europe’s PCBs are imported from Taiwan, 5% from Thailand, 4% from Hong Kong, and 9% from other parts of Asia. Europe is also still heavily reliant on China and other Asian countries for critical materials required for the manufacture of PCBs.

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What can be done to revive the European PCB industry?

To fully achieve its aim of technological sovereignty, Europe needs to take serious measures to reduce its reliance on Asia for critical electronic systems such as PCBs. While the EU Chips Act is certainly a step in the right direction, its narrow focus must be broadened to include other critical electronic components than just semiconductors.

Key figures in the European electronics manufacturing industry have released a ‘call to action’ imploring the EU to take concrete steps to address the PCB crisis. Manufacturers and trade associations have called upon the EU to create a dedicated Electronics Manufacturing Strategy as part of the 2024-2029 European Commission mandate.

Industry recommendations to the EU include the introduction of a Strategic Electronics Manufacturing Act (SEMA) to safeguard the value chain, regulatory and tax reforms to level the playing field, and more investment in future-proofing the skilled workforce. The industry recommendations also call for the scaling up and upgrading of existing European PCB manufacturing facilities.

The accompanying industry statement to the call to action made the seriousness of this situation clear: “The decisions made now will determine the future of Europe’s electronics manufacturing capacity and influence our ability to remain a global technology and innovation leader.”

References

• https://www.ipc.org/news-release/sharp-decline-european-electronics-manufacturing-jeopardizes-strategic-eu-priorities

• https://evertiq.com/news/55721

• https://www.mordorintelligence.com/industry-reports/europe-printed-circuit-board-market

• https://www.emsnow.com/european-pcb-industry-sees-decline-in-billings-in-1h-2024/

• https://emails.ipc.org/links/IPC-Securing-Europe-Electronics-Ecosystem.pdf

• https://evertiq.com/news/56153

• https://www.power-and-beyond.com/site-consolidation-at-wuerth-elektronik-a-4d0b674e4eab30bb47e32e4ab5c10771/

• https://www.we-online.com/en/news-center/press?d=site-consolidation-pcb-production-schopfheim

• https://www.emsnow.com/european-pcb-industry-loses-two-companies/

• https://www.globalsmt.net/industry-news/european-pcb-manufacturer-calls-last-orders/

• http://www.fst-tech.com/en/hangyezixun/2201.html

• https://evertiq.com/news/56224

• https://www.astutegroup.com/news/industrial/european-electronics-manufacturing-a-call-for-strategic-reinvention/

(ID:50222017)