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—Part of this EE Times series: A Vulnerable U.S. Electronics Supply Chain. Other articles in the series include: Experts: U.S. Military Chip Supply Is Dangerously Low and Reshoring Chip Industry Risks Failure With Just More Fabs.
Recent efforts by the U.S. government to rebuild the nation’s nearly extinct printed circuit board (PCB) industry are tentative and inadequate steps toward one of the weakest links in the domestic electronics supply chain, experts told EE Times in exclusive interviews.
On March 24, U.S. President Joe Biden and Canadian Prime Minister Justin Trudeau announced that both nations would contribute funds to support the North American manufacture of critical technologies that include semiconductors. The agreement earmarked $52 million for PCB production.
On March 27, Biden issued a determination that action to expand domestic production of PCBs under the Defense Production Act (DPA) is necessary to avert a shortfall of critical technology that would severely impair national security.
“The DPA, which is a law from the early 1950s, allows the government to much more quickly—and without a lot of red tape and bureaucracy—do things that it deems critical for national defense and national security,” David Schild, executive director of the Printed Circuit Board Association of America (PCBAA), told EE Times in an exclusive interview. “What you see is the White House saying, ‘We’re going to categorize PCBs under DPA.’ It gives the Pentagon now the ability to spend money that we’ve already allocated.”
The U.S. portion of global PCB production has plunged to 4% today from 30% about 25 years ago, according to data provided by PCBAA. During the same period, China’s share has soared to 54% from 8%. The global PCB market, worth $78 billion in 2021, is forecast to nearly double to $128 billion by 2030, according to Precedence Research.
Now, most of the boards that connect chips and other parts in electronic systems—ranging from data centers to drones—are made in China, the main strategic adversary of the U.S. For longer than six years, China and the U.S. have been engaged in an intensifying cold war to achieve dominance in technology.
“To avoid a scenario where we get embargoed on PCBs, the amount of capacity that would be needed is just staggering,” Hari Pillai, president of the Technology Components Group at Sanmina, told EE Times in an exclusive interview.
Sanmina, one of the largest U.S.-based PCB makers, counts on defense-related production for about 60% of its business. And it would have difficulty boosting output to meet a wartime surge in demand.
“We couldn’t quadruple our shipments in the U.S. [on short order],” Pillai said. “I don’t think any competitors are sitting around with a lot of idle capacity in the U.S.”
Vulnerabilities go beyond PCB gap
The effort to fill the PCB gap underscores a range of vulnerabilities in the U.S. electronics supply chain running from chips to semiconductor packaging and on down to the board level.
To revive the U.S. PCB industry, domestic manufacturers must count on more than defense sales; they will need to gain a larger share of the high-end commercial business for boards used in computing, communications and medical systems. That’s where another legislative proposal—the Supporting American Printed Circuit Boards Act of 2022, a.k.a. HR 7677—could help.
The U.S. government efforts last month create “more awareness and support for things like HR 7677,” Pillai said. “HR 7677 could result in two to three cutting-edge [PCB] fabs being built in the U.S.”
The proposed act—which was introduced on May 6, 2022, in a previous session of Congress but didn’t receive a vote—would provide $3 billion in funding to expand production. Building an advanced PCB fab is a two-year process that costs as much as $400 million. By contrast, a state-of-the-art chip fab costs as much as $20 billion to build.
Though the bill was not enacted, its provisions could become law by being included in another bill.
In addition to PCB-fab-building, H.R. 7677 also would offer demand-side stimulus through a tax deductibility element, allowing buyers of U.S.-built PCBs to get tax relief, Pillai said.
“It’s the right balance of incentives—so that not everything is funded by the government, by joining with private money to help reduce and even the playing field a little bit with the Chinese,” he added.
Every board shop that’s left in the U.S. is servicing commercial or aerospace and defense markets, and they’re facing “really stiff competition” from foreign suppliers, PCBAA’s Schild said, noting that foreign governments provide heavy subsidies on land, facilities and labor.
A fragile, complex ecosystem
PCB manufacturing is a part of the electronics ecosystem that’s as complex as semiconductor production.
Innovation in PCB design helps electronic systems perform at higher speeds. A circuit board is like a freeway that connects processors with high-speed data, Pillai noted.
“We’re doing a lot of work pushing the envelope in terms of improving signal integrity and allowing faster speeds,” he said. “We are doing a technology called ‘back drilling.’ It’s not very common in the industry. It allows us to achieve higher levels of signal integrity, which allows [companies] like Google and Facebook and HP to achieve faster computing. That innovation is also a benefit to Raytheon and Northrop Grumman and weapons processors and systems.”
The decline of the PCB industry threatens an infrastructure of materials and technology suppliers in the U.S., according to Pillai:
“I see this erosion of the circuit board business, but it takes with it the supply base in terms of high-speed laminates with dielectric materials that can achieve the performance levels that we’re trying to achieve.”
Dire warning issued
The U.S. PCB industry is very close to extinction, according to Schild.
“There are too many single points of failure,” he said. “The U.S. has one woven-glass manufacturer, two copper-foil manufacturers and just two companies in Silicon Valley making test boards that semiconductor manufacturers rely on. If you’re going to reshore semiconductor production, you should reshore other elements of that supply chain. The defense business alone simply won’t sustain our industry.”
Today, some commercial off-the-shelf technology sourced in places that the U.S. wouldn’t consider friendly is making its way into the defense supply chain, Schild told EE Times. The U.S. needs to strengthen ITAR (International Traffic in Arms Regulations) controls by having the Pentagon vouch for its supply chains and secure them, he added. “The NDAA [National Defense Authorization Act] calls upon them to do that, but it gives the government and industry from this point four years to accomplish that.”
Schild argued that PCBs are used in more than just defense equipment that’s critical for national security:
“What about the energy infrastructure? What about hospital infrastructure? What about banking and financial services? Critical infrastructure in the U.S. is broadly defined, and that critical infrastructure should rely on trusted microelectronics.”
Hyperscaler companies like Amazon and Google run data centers using high-end PCBs made with 60-70 layers and multiple lamination cycles. It’s the same type of board that’s used by the military to take advantage of speed and signal integrity. PCB makers hope that, with the new U.S. incentives, the hyperscalers will source more of their boards in the U.S.