Printed Circuit Boards

Industry Snapshot

In 2008, the U.S. printed circuit board (PCB) industry's shipment values equaled just over $7.2 billion. During the mid- to late 1990s, the PCB industry was robust, fueled by significant growth in the telecommunications industry. However, when the telecom industry leveled off at the end of the 1990s, PCB manufacturers were left with overcapacity and too much inventory. In addition, many companies had narrowed their focus on the telecomm sector, and when it bottomed out, PCB manufacturers were not diversified enough to withstand the loss. The industry was further hurt by the recessive economy of the early years of the first decade of the 2000s. By the middle of the decade, the industry was recovering with gradually increasing revenues.

Organization and Structure

Establishments that manufacture boards for industrial and commercial sale account for approximately 90 percent of the market. So-called "captive" PCB makers, primarily large original equipment manufacturers (OEMs) that make their own boards, comprised the remaining 10 percent.

During the early 1990s, the primary markets for PCB were industrial controls, military commercial-off-the-shelf (COTS), which are items that require no military specifications or drawing and can be bought "off the shelf," and telecom. Smaller markets included medical, transportation, and specialized scientific applications. The market shifted significantly as PC motherboards and peripheral component interconnect (PCI) slots dropped in price and flooded the marketplace during the late 1990s. Many manufacturers retooled to provide computer PCBs. In the mid-years of the first decade of the 2000s, the primary market sectors were military COTS, telecom/communications, and embedded PCs. U.S. manufacturers focused largely on the telecommunications and networking sectors, leaving PCBs for personal computers to international companies.

Despite significant restructuring and consolidation during the early years of the first decade of the 2000s, the industry remains fragmented. According to the U.S. Census Bureau, 726 companies were involved in the production of PCBs in 2007. Of that number, about one-third employed less than 10 workers.

After growing 15 percent during the late 1990s to more than 85,000 in 2000, employment fell dramatically during the first decade of the 2000s until 2007, down 45 percent in 2002 to 46,890, and continuing to decline to 32,596 employees in 2006. The number of production workers dropped from 68,393 in 2000 to 33,226 in 2002, and dropped even further to 23,869 in 2006. However, industry employment increased as of 2007 with 40,985 who earned more than $1.96 billion in pay.

Background and Development

Printed circuit board assembly companies (PCBAs) comprised a growing, specialized segment of the PCB industry. More than just contract assemblers, PCBAs provided design, global procurement, cost reduction services, and access to advanced technology. The use of PCBAs grew dramatically in the early 1990s, and industry observers expected that trend to continue because of the cost-savings measures these companies provided. There were nearly 800 PCBAs in operation in the United States in 1992, with an estimated value of $5.9 billion. PCBAs had approximately 80,000 employees in 1991, while independent board makers employed about 70,000.

At the start of the 1990s, PCB makers adapted to the increased use of smaller circuitry products and a greater demand for surface mount technology, which were two important industry trends. The drive among electronics firms toward smaller components was cited as a reason for the decline in PCB use from 1988 to 1991. Smaller components required smaller or fewer boards and less space on the PCB.

Spurred by demand, the industry moved quickly toward surface mount technology. Surface mounting involves the soldering of components directly onto the surface of a board, which in turn allows components to be mounted closer together and even on both sides of a board. However, in 1989, less than 12 percent of boards included surface-mounted components. By 1992, more than half of all PCBs were assembled with one or more surface-mounted components.

During 1997, contract manufacturers continued to invest heavily in conventional surface mount technology (SMT) equipment rather than in new technologies such as chip on board (COB) and ball grid arrays (BGA). The manufacturers were slow to adopt the new technologies, but about 25 percent of them focused on BGA as their next generation packing technology. By mid-1996, copper-clad printed circuit board materials were used increasingly in the electronics industry because of their excellent electrical and thermal properties.

In the mid- to late 1990s, one of the most popular trends in the industry was the reuse of the vast amount of waste generated each year. More than 10 million pounds of trim and rejected boards were generated each year.

In June of 1998, the Environmental Protection Agency (EPA) issued guidelines for PCB disposal. Proler International Corporation launched a new circuit board recycling operation in the summer of 1995--Proler Recycling, in Coolidge, Arizona--to process recycled boards. According to American Metal Market, in 1995, Proler Recycling was the only company in the United States that recovered all three metal components (tin, copper, and lead) from circuit boards and successfully converted them to high purity metals. At the time, the other companies typically recovered only one of the metals from the circuit boards.

In 1996 Daimler Benz was using a four-stage process for recycling circuit boards. The technology, which was in the pilot plant stage in Germany, involved Benz's customized version of first shredding the electronic scrap and then using various techniques to separate out and clean the various scrap elements. According to Benz, the recycling technique cost the company about $198.48 to $338.80 per metric ton of circuit board scrap and provided a return of $529.28 to $1,984.80 per ton, depending on gold content.

New "via" technologies capable of addressing complex capability requirements also became important in the mid-1990s. The 1996 IPC Printed Circuits Expo showcased several of these technologies. DuPont Advanced Fiber Systems demonstrated a method of producing high-speed micro-vias in dimensionally stable, non-woven Aramid-reinforced laminates using laser-ablation technology. Mommers Print Service B.V. demonstrated a less expensive but more complex technique that also involved laser formation of micro-vias. As circuit board makers scrambled to stay on technology's cutting edge, the need for greater interconnect density on printed circuit boards seemed to be the next step for circuit board manufacturers.

Although the domestic PCB industry continued to remain globally competitive in its utilization of advanced manufacturing technologies, increasing overseas production resulted in a significant decrease in the U.S. share of the world PCB market from 40 percent in 1980 to 29 percent in 1990. In 1991 Japan ranked first in worldwide production of rigid PCBs with 33.8 percent of the market, and the United States ranked second with 26.9 percent. Germany, Taiwan, the United Kingdom, and Hong Kong ranked third through sixth.

Due to rapidly changing technology, PCB manufacturers constantly modified their products to adapt and grow. Surface mount components rapidly became the norm, copper baths were replaced by direct metallization, and the need for adhesives was phased out through the use of thermocouple probes that measured and adjusted temperature. Research was performed to manufacture PCBs with smaller holes to allow more space on the boards and accommodate changes in semiconductors. The trend for units that took up less space was seen in smaller digital frequency units that required only one PCB rather than multiple boards.

Another popular trend of the late 1990s was the increased use of signal analysis tools to design printed circuit boards capable of operating at high frequency levels. These tools were used to accurately analyze the signal integrity of printed circuit board designs with respect to several circuit parameters, such as crosstalk, ground bounce, resonance, and dispersion.

During the late 1990s and into 2000, the PCB industry rode a wave of tremendous growth that was driven by the rapid expansion of the telecom industry as well as the dot-com sector. Many PCB manufacturers jumped on board. Roy Sakelson noted in his CircuiTree.com assessment, "In the crazy days of the late 1990s, when the telecomms market appeared to need an infinite amount of printed circuits . . . the thought that there could be too much PCB capacity seemed absurd. Instead, the mantra of the day was 'If we build it, they will come.'."

However, the telecom industry ran into problems beginning in 2000 that threw the PCB industry into a tailspin, causing contraction and consolidation. Manufacturers were besieged with overcapacity, overstock, and subsequently were left holding the bag. The number of boards shipped to telecom companies fell 65 percent over three years. Global demand for PCBs dropped $10 billion. The problem was exacerbated by the economic recession of the early years of the first decade of the 2000s that also cut into revenues from other market sectors. Over 100 PCB companies either closed or were absorbed by larger enterprises.

Current Conditions

By the middle years of the first decade of the 2000s, the PCB industry was beginning to show signs of new life. The industrial controls segment was a mature, slow-growing market with little potential for any sudden bursts. However, sales were significantly large and steady enough to help bolster the industry. On the other hand, with the war on terrorism and the military presence in Iraq, military COTS experienced double-digit growth during the early to mid-years of the first decade of the 2000s. Although lower in volume, military provisions require advanced features such as the ability to operate in extreme environments, thus pushing up the intellectual value and creating a higher profit margin.

In 2008 the industry shipped more than $6.5 billion in products, a decrease from the $7 billion shipped in 2007, while spending just under $2 billion on materials. In addition, as the economy began to improve during the mid-years of the first decade of the 2000s, the sales of computers and other electronic equipment began to pick up, which began to bode well for the industry. The global economic recession of 2008, however, led to a decrease in sales from 2007 to 2008.

Industry Leaders

Sanmina-SCI Corporation, based in San Jose, California posted sales of $7.2 billion in fiscal 2008, down from $10.7 billion in fiscal 2006, and had 45,610 employees. Viasystems Group, based in St. Louis, Missouri, was one of the few dedicated U.S. manufacturers of PCBs, with 2008 revenues of $1.68 billion and 25,738 employees. The company emerged from bankruptcy early in 2003 and focused on its overseas operations to cut overhead. Solectron USA, headquartered in Morrisville, North Carolina was another industry leader.