At a time when memory components and processor chips are becoming more expensive and difficult to purchase due to the rapid development of AI technology, the war in the Middle East has also seen petroleum processing halted.
One of the side effects of the closure of these petroleum processing locations is not limited to the global supply of gasoline, but also the secondary raw materials needed to produce a wide variety of electronic components used in many classes of devices.
The one that has been most affected so far seems to be the production of high-purity polyphenylene ether (PPE) resin. This material is one of the critical components for producing the insulating surface material of circuit boards.
SABIC is the company responsible for producing 70 percent of the supply of this PPE material, and they operate in the Jubail petroleum processing complex that was bombed by the Iranian army recently.
The incident has caused SABIC to no longer be able to continue producing PPE, and this has caused the supply of the material to decline further without any new output to replace it. SABIC is also reported to be meeting and discussing with its customers about increasing the price for the material.
Before the incident at the Jubail processing complex, the price of PPE materials had already increased due to increased motherboard production. According to Goldman Sachs analysts, PPE prices increased by 40 percent from March to April after the attack.
However, the price increase seems to be accepted by a number of SABIC customers such as AMD, Daeduck Electronics, Samsung and SK Hynix as they believe that in the near and medium term, demand for it will exceed SABIC’s ability to produce the materials.
It is expected that throughout the year, circuit board and motherboard prices will also increase, affecting many technology sectors, from AI to consumer.
