How circuit boards could be the next AI chokepoint
Printed circuit boards (PCBs), the foundation for AI chips and electronics, have become a critical supply chain chokepoint as China dominates manufacturing while US demand from AI data centers and defense sectors surges. The US lacks sufficient domestic production capacity to meet growing demand, creating security risks and price pressures.
Summary
Printed circuit boards are the foundational component beneath every chip in modern electronics, from iPhones to fighter jets to AI server racks. Historically a quiet part of the chip manufacturing ecosystem, PCBs have suddenly become a strategic focus due to skyrocketing demand driven by two major factors: the explosive growth of AI-powered data center networks and increased defense spending related to global conflicts including wars in Iran and Ukraine. The problem is stark: China now manufactures the vast majority of printed circuit boards globally, including almost all those used in AI data centers. While the US does produce PCBs, with companies like TTF operating as the largest domestic manufacturer in Santa Ana, California, domestic capacity is insufficient to meet surging demand. US Department of Defense regulations require all boards used by the military to be manufactured domestically to prevent the insertion of harmful components, but there simply isn't enough American production capacity. Additional supply chain pressures come from geopolitical disruptions, such as the war in Iran preventing the export of critical raw materials like tar from the Middle East. These converging factors—massive AI infrastructure demand, defense requirements, Chinese market dominance, and material shortages—are creating rapid price increases and putting severe strain on the entire PCB supply chain.
Key Insights
- The vast majority of printed circuit boards, and almost all of those used in AI data centers, are manufactured in China
- Every circuit board used by the U.S. Department of Defense must be made in the U.S. to prevent harmful components from being placed directly on the board
- China's market share in PCB manufacturing has grown rapidly over the past three decades
- Two critical demand signals—AI-powered data center networks and defense requirements—are converging at the same time and putting significant pressure on the supply chain
- Wars in global regions like Iran and Ukraine have disrupted the export of critical raw materials needed for PCB production, such as tar from the Middle East
Topics
Transcript
[0:01] This is the printed circuit board, the foundation beneath every chip in every electronics. This is a motherboard that is truly suitable for our customers in the networking and communications industry. From iPhones to fighter jets and the most powerful server racks with artificial intelligence from companies like Nvidia. The problem is that the vast majority of these boards, and almost all of those used in AI data centers , are now made in China. But the US also produces them. We want to make sure that as the AI industry grows , as demand grows, we [0:31] can count on some of that demand to come to American manufacturers, especially for critical sectors. So we came here to…
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