Who Carries the Risk? A PCB Supply Chain Paradox

Estimated reading time: 5 minutes

For as long as I can remember, PCB customers have been encouraged to provide forecasts. Whether discussing standard multilayer boards, advanced HDI designs, or complex aerospace programs, the message has been remarkably consistent: Better visibility creates greater stability.

The logic is difficult to dispute.

When customers provide forecasts and scheduled orders, PCB manufacturers can plan capacity more effectively. Laminate suppliers can better predict future demand. Material allocation becomes easier, production schedules become more efficient, and the entire supply chain benefits from reduced uncertainty.

Most of us have seen this firsthand. Forecasts help avoid shortages, improve delivery performance, and reduce the need for costly last-minute decisions. When supply chain disruptions have become increasingly common, few would argue against the value of visibility.

Yet after many years in the PCB industry, I have started to wonder whether we sometimes confuse two very different types of stability: operational and pricing. Forecasts unquestionably improve the first, but their impact on the second is far less clear.

For example, a customer provides a 12-month forecast and the PCB supplier uses that forecast to reserve capacity and secure materials. The laminate supplier receives a projection of future demand and can optimize production planning. Everyone in the chain benefits from greater predictability.

However, if copper prices rise significantly, laminate prices often follow suit. If resin costs rise, those increases eventually flow through the supply chain. The same is frequently true for energy costs, transportation costs, and currency fluctuations.

In other words, forecasts reduce uncertainty while market volatility persists.

This is not a criticism of PCB manufacturers or laminate suppliers. Commodity markets cannot be controlled by supply chain planning. You see things like global copper trade, or resin producers exposed to petrochemical markets. That leads to fluctuating energy costs and moving exchange rates. No forecast can eliminate those realities.

This is where an interesting paradox emerges. If forecasts reduce uncertainty throughout the supply chain, why do they so rarely create meaningful price stability? Perhaps the answer lies in how the industry has chosen to use forecasts.

Historically, forecasts have been viewed primarily as planning tools. Their purpose has been to improve capacity management, optimize purchasing, and reduce operational risk. They were never intended to function as financial hedging instruments. Yet forecasts clearly create value.

A supplier with accurate demand visibility faces less uncertainty than a supplier operating without it. Better visibility reduces risk. Reduced risk should, at least in theory, create opportunities for greater predictability. The question is whether the industry has fully explored those opportunities.

Other industries offer some interesting perspectives. Airlines, for example, cannot control fuel prices any more than PCB suppliers can control copper, resin, or energy costs. Yet airlines often experience very different financial outcomes during periods of volatility because they adopt different approaches to managing risk. Some rely more heavily on fuel hedging, some negotiate longer-term agreements, and some remain more exposed to market fluctuations. The lesson is not that volatility can be eliminated. Rather, it is that exposure to volatility can be managed in different ways.

This raises an interesting question for the PCB industry: Are we dealing with an unavoidable market reality, or are we simply relying on the risk-sharing models we have always used?

Other industries have adopted various approaches to sharing volatility risk between suppliers and customers. Automotive programs frequently rely on long-term agreements supported by committed volumes. Aerospace contracts often include mechanisms designed to stabilize both supply and pricing. Commodity-index pricing is common in sectors where raw material costs represent a significant portion of total product cost.

The PCB industry has certainly used some of these approaches, particularly in larger strategic programs. However, much of the industry is operating under a model where forecasts improve operational performance while commodity-driven price movements remain largely outside the partnership discussion.

Perhaps that is entirely appropriate.

After all, suppliers should not be expected to absorb unlimited market risk simply because customers provide forecasts. Nor should customers be expected to accept unlimited volatility when they provide long-term visibility and purchasing commitments.

Somewhere between those positions lies a potential opportunity. Could stronger customer commitments support longer periods of fixed pricing? Could agreed adjustment bands reduce the frequency of price changes while still protecting suppliers from major market movements?

Could strategic inventory programs provide greater insulation from short-term fluctuations? Could more transparent commodity-based pricing models improve trust and predictability for both parties?

I am not suggesting there is a universal solution. Every supply chain is different, and every customer-supplier relationship has unique requirements.

There is also another dimension that is difficult to quantify. Throughout my career, I have seen situations where forecasts proved inaccurate, allocations occurred, factories became overloaded, or unexpected disruptions threatened deliveries. In many of those cases, the difference was not a contract clause, a forecast, or a pricing mechanism. It was a relationship.

Trust built over years of collaboration often opened doors, created flexibility, and helped both sides find solutions when formal systems reached their limits. A phone call between people who know and trust each other can sometimes solve problems faster than the most sophisticated supply chain processes.

This is not unique to the PCB industry, but it has always been one of its strengths. Long-term partnerships often create a willingness to share information, discuss challenges openly, and search for solutions that benefit both parties.

Relationships cannot replace sound commercial agreements, nor can they eliminate commodity volatility. However, they remain one of the most powerful and least measurable forms of risk management in our industry.

Perhaps that is another reason why this discussion matters. When customers provide forecasts and suppliers provide support, the value created extends beyond capacity planning and pricing models. It also strengthens the relationships that help supply chains navigate uncertainty when markets become unpredictable.

What interests me is the discussion itself. For many years, forecasts have been presented as a partnership tool. They reduce uncertainty, improve planning, and strengthen supply chain performance. Those benefits are real and measurable.

Yet when prices move, the remaining risk often flows through the supply chain much as it always has. Perhaps that is inevitable, or perhaps it reflects an assumption that has rarely been challenged.

The more I think about it, the more I believe the real paradox is not whether forecasts create stability. They clearly do. The paradox is that forecasts create the conditions necessary for greater stability throughout the supply chain, while the industry has largely chosen to apply those benefits to operational performance rather than financial predictability.

Yet perhaps the discussion is even broader than that. Forecasts, commitments, and long-term partnerships do more than improve planning. They build trust, and that may be one of the most valuable risk-management tools our industry possesses.

As PCB technologies advance and supply chains become increasingly strategic, it may be worth asking not only how risk should be shared, but also how the benefits of strong partnerships can be used to create greater resilience for everyone involved.

I do not pretend to have the answer, but I believe it is a conversation worth having.

Jan Pedersen recently retired as the director of technology at NCAB Group. He served as chair of IPC-6012D Automotive Addendum Task Group D-33AA for more than 11 years.