Demand for Space-Efficient Electronics to Drive Growth in the HDI PCB Market

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Several factors are driving today's PCB procurement trends. The US, authorized the Defense Production Act Title III in 2023 to boost domestic production, affecting the PCB market by 2024. This move aims to reduce reliance on Asia and address challenges in industrial, military, and consumer electronics. The Department of Defense's (DoD) budget for PCBs is set to increase significantly, reflecting this push for greater domestic capability.

This move is among a series of strategic decisions to revitalize domestic production, increasing its prevalence and consistency. According to procurement budget estimates for the fiscal year (FY) 2024 from the Department of Defense (DoD), packaging and printed circuit boards will total approximately $85.76 million in 2024 — up from $43 million in 2023 and $27.3 million in 2022.

The DoD justified the procurement budget increase, noting how challenges facing industrial, military and consumer electronics stem from the country’s inability to obtain or produce these technologies consistently. Today, much of its PCB supply chain has gone overseas to take advantage of cheaper labor and fewer regulations.

While domestic suppliers have expressed hesitancy in working with the DoD — as they’d likely have to prioritize their government contract over other business opportunities — recent incentives, tax breaks and no-strings-attached funding have convinced many. This rising interest comes at a time of skyrocketing consumer demand and emerging technological applications.

As electronics become increasingly complex and compact, manufacturers are receiving incentives to outperform the booming PCB market in Asia with technological and process adaptations. These factors have given rise to several emerging trends, signifying a lasting shift from conventional production and procurement.

Moving towards multilayer and HDI boards

The consumer electronics sector has experienced increasing demand for slimmer, lighter and smaller electronics. At the same time, industries like the automotive and healthcare sectors are adopting advanced technologies like infotainment systems and medical wearables. These trends have prompted the emergence of High-Density Interconnect (HDI) PCBs. The market for flexible PCBs will increase from approximately $19.7 billion in 2022 to $56.7 billion by 2032, meaning it is projected to grow at a CAGR of 11.2 percent in a decade.

The shift toward HDI is to accommodate electronic miniaturization and increasing device complexity without sacrificing quality or time to completion. One estimate places its market value at $25.42 billion by 2030 — an increase of $12.97 billion from its $12.45 billion valuation in 2023. It is projected to grow at a compound annual growth rate (CAGR) of 10.6 percent.

In the same vein, multilayer PCB demand is rising as devices continue downsizing and customer needs become increasingly complex. As telecommunications and defense sectors increase their reliance on digitalization, they look to stacking layers to save space, improve performance and reduce weight.

Other trends contributing to the shift

Advancements in multilayer PCB technology enable novel material usage, driving demand for flexibility. While most PCB manufacturers produce rigid boards, many are shifting some of their production capacity to accommodate flexible boards as their designs become increasingly compact and intricate.

The market for flexible PCBs will increase from approximately $19.7 billion in 2022 to $56.7 billion by 2032, meaning it is projected to grow at a CAGR of 11.2 percent in a decade. The thriving consumer electronics sector is this trend’s main driver.

Notably, consumer demand is rising in tangent with electronic waste — increased production volume doesn’t exist in a vacuum. In fact, e-waste has almost doubled in just over a decade, increasing from 33.8 million metric tons in 2010 to approximately 62 million metric tons in 2022. Consequently, PCB recycling is trending.

This development has a high likelihood of substantially impacting design, logistics and supply. Already, estimates report the global electronic waste recycling market value will reach $94.2 billion by 2032 — up from $30.4 billion in 2023, growing at a CAGR of 13.4 percent. Emerging HDI and multilayer applications may soon have to consider end-of-life strategies.

The major implications of current trends

This shift has significant implications. For one, domestic manufacturers would have to adjust their processes — HDI PCB manufacturing presents atypical challenges. For instance, they commonly feature trace and space widths under 0.002 inches, complicating fabrication, which could cause issues that affect suppliers, distributors and sellers downstream.

Multilayer PCBs present similar issues, as the higher layer count adds assembly steps, lengthening time to completion and increasing manufacturing costs. While the Biden Administration’s increase in funding for FY 2024 may alleviate these challenges’ impacts, supply chain delays and hiccups related to the confusion of the transition may be unavoidable. As electronics become increasingly complex and compact, manufacturers are receiving incentives to outperform the booming PCB market in Asia

Moreover, few companies are currently operating despite the millions of dollars in funding recently allocated for U.S. PCB and packaging solutions. As of 2024, there are only 150 domestic PCB suppliers operating in the United States — down from more than 2,000 in 2000. These figures represent a decline of 30 percent to 4 percent in their accommodation of PCB demand.

The future of PCB procurement

The transition to multilayer and HDI boards has the potential to reshape procurement permanently, having a ripple effect on sourcing, logistics and manufacturing. Moreover, as domestic production works to align with demand, the market for these technologies may shift.

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