Corona virus forcing new solutions in PCB production

This interview was first published at the Swedish Evertiq site

At the same time as the Norwegian PCB supplier’s personnel strength and capacity in China have begun to return to normal levels, they are looking at potential risks regarding access to materials in Europe.

Elmatica experienced that their Chinese operations are getting back on their feet. In an update from the Printed Circuit Broker, the company announces that all suppliers have re-opened the doors to their factories, albeit to a lesser extent.

– Regarding the manufacturing situation in China, all of our suppliers have reopened their factories, however they are still not running with full manpower or capacity, the average capacity is between 60-70%, Elmatica write in an update.

 Due to the fact that the factories were closed over an extended period, this resulted in a reduced production volume. The factories have a backlog to graze off, which according to the PCB broker in some factories can last for four to six weeks.

 At the time of writing, Elmatica is experiencing longer lead times, but says that there are lifelines in the form of European partners. However, there is a limit there as well.

 – There is still free capacity in Europe, but eventually the manufacturers will reach their maximum capacity, the company writes.

 Elmatica also sees a risk of material shortages for the production of PCBs. According to the company, the combination of existing restrictions on shipping and the fact that many laminates are manufactured in China can lead to a lack of access to materials, and in turn lead to longer lead times, even in Europe.

 – We estimate that the supply of raw material will be tightened in the coming months as stocks are emptied and PCB manufacturers are recovering from the low production volume, Elmatica writes.

If even the European manufacturers reach their maximum capacity, how will Elmaticas strategy change to be able to still deliver to customers?

“Elmatica will then activate audited and pre approved manufacturers in our global supply chain in South-Korea, Japan, Canada and Taiwan”, says Didrik Bech to Evertiq.

If the Corona situation is dragged out in time – combined with manufacturers in Europe reaching their limits, how do you think this will affect the supply chain of the industry?

“In the short term many actors will discuss the need to establish alternative manufacturers in Europe. As cost is a key driver for most products, it is feasible to deduct that as the crisis is resolved, the actors will return to their established suppliers and supply chains. However, if governments demand and are willing to support the establishment and investment in more autonomous factories in Europe, then the situation can change dramatically”, says Bech.

What is the timespan Elmatica expects the Corona situation to last?

“Unfortunately I don’t have a crystal ball to tell the future, but this will minimum affect the global supply chain to some extent until august. We have updated our internal procedures today, encouraging people to work from home and restricting further travels and meetings until further notice”, says Bech.

This article was published in Swedish by the Swedish  site of Evertiq – you can read the original version here: https://evertiq.se/news/38590