Middle East Conflict Hits the Electronics Supply Chain as PPE Resin Shortage Sends PCB Prices Up 40%

On April 27, Reuters reported that after Iran attacked Saudi Arabia’s Jubail petrochemical complex, global supply of high-purity PPE resin was severely disrupted. This material is an important base material for copper-clad laminates, which are in turn a core material for printed circuit boards. Once a Middle Eastern petrochemical plant stopped operating, the impact traveled all the way down to AI servers, smartphones, computers, and other electronic devices.

SABIC accounts for about 70% of global high-purity PPE supply, and its relevant capacity in Jubail had still not resumed production after the attack. Under normal conditions, having one company dominate supply may look like a scale advantage. But once geopolitical conflict hits, it becomes a concentrated risk for the entire industrial chain.

PCB costs were already under pressure. After demand for AI servers surged, demand for high-layer-count, high-performance PCBs rose quickly, and the market had been facing price pressure since late last year. Now that PPE resin supply has been disrupted, another weight has been placed on an already tight supply-demand balance.

In April alone, PCB prices rose by as much as 40% from March levels. That is no longer a mild price adjustment. It is the result of material shortages, AI demand, and supply panic pushing together.

The bigger problem is that PPE resin is not the only material under pressure. Glass fiber and copper foil are also tight, with copper foil prices rising by as much as about 30% so far this year, and the pace of increases accelerating after March.

For PCB manufacturers, this is not a single raw material price hike. Several key costs are rising at the same time. PPE resin is constraining copper-clad laminates, copper foil is lifting conductive-layer costs, and glass fiber is affecting base material supply. PCB makers have very little room to cushion the impact.

Downstream companies are already feeling the pressure. An executive at South Korean PCB maker Daeduck Electronics said the company has already started discussing price increases with customers. More tellingly, the executive said the company’s focus has shifted from “meeting customers” to “meeting suppliers,” because waiting times for chemical materials such as epoxy resin have stretched from about three weeks to 15 weeks.

This also explains why the AI server supply chain is being directly affected. Multilayer PCB prices are around RMB 1,394 per square meter, while high-end models used in AI servers can reach about RMB 13,475 per square meter.

In other words, AI hardware is not affected only by chips. Many material links that look easy to overlook can quickly become cost bottlenecks.

For electronics manufacturers, the difficulty of this round of disruption is that it cannot be solved simply by switching suppliers. PPE resin, copper-clad laminates, copper foil, and glass fiber all require validation cycles. This is especially true for PCBs used in high-end servers and communication equipment, where stability, heat resistance, and electrical performance requirements are much higher.

Even if alternative supply exists, that does not mean it can be switched in immediately. The real weak point in high-end electronic materials is often not whether substitutes exist, but whether those substitutes can quickly pass validation and scale up reliably.

The shutdown of an upstream petrochemical unit may show up only a few weeks later in the costs of AI servers, data centers, smartphones, and computers. The Middle East conflict is turning chemical raw material risk into cost risk for the electronics supply chain.

What the market needs to watch next is not only how much further PCB prices can rise, but when SABIC’s relevant capacity can recover, whether PPE resin supply can stabilize again, whether copper foil and glass fiber prices can fall back, and whether AI server manufacturers will continue accepting higher costs.

If AI demand remains strong and cloud service providers are willing to absorb the cost, PCB price increases may continue to pass downstream. But if rising costs begin to squeeze end-market margins, bargaining across the electronics hardware chain will become more intense.