What is the PCB Book-to-Bill Ratio?
The book-to-bill ratio measures the health of the PCB market by comparing orders booked to products billed and shipped over a specific period, usually monthly. A ratio above 1.0 means that more orders were received than filled, pointing to strong demand. Conversely, a ratio below 1.0 suggests weak demand, as shipments exceeded new orders.
IPC publishes the PCB book-to-bill ratio each month based on data from its member companies, which include PCB Manufacturers, assemblers, suppliers, and original equipment manufacturers worldwide. The ratio serves as an important leading indicator of demand and growth for the electronics industry.
PCB Book-to-Bill Hits 1.29 in March 2021
According to IPC’s latest findings, the PCB book-to-bill ratio jumped to 1.29 in March 2021, up from 1.15 in February and marking the highest reading since May 2018. A ratio of 1.29 means that for every $100 worth of PCBs billed and shipped, $129 in new orders were booked.
“The March ratios reflect the continuing recovery in the electronics manufacturing sector,” said Shawn DuBravac, IPC’s chief economist. “Strong new orders drive the book-to-bill ratio to a 34-month high and indicate a robust start to 2021.”
Regional Breakdown
The following table shows the March 2021 book-to-bill ratios for different regions:
| Region | Book-to-Bill Ratio |
|---|---|
| North America | 1.15 |
| Europe | 1.06 |
| China | 1.41 |
| Rest of World | 1.22 |
As the data shows, demand is strongest in China with a ratio of 1.41, followed by the rest of the world at 1.22. North America and Europe are seeing more modest but still positive ratios of 1.15 and 1.06, respectively.
Factors Driving PCB Demand
Several key factors are contributing to the surge in PCB demand:
5G Rollout
The ongoing global rollout of 5G wireless networks is a major driver of PCB demand. 5G requires a significant upgrade to network infrastructure, including new base stations, antennas, and mobile devices. All of these products rely heavily on PCBs, from the high-frequency circuit boards in antennas to the multilayer boards in smartphones.
According to a report by ResearchAndMarkets, the 5G infrastructure market is expected to grow from $12.9 billion in 2021 to $115.4 billion by 2026, at a compound annual growth rate (CAGR) of 55.2%. This rapid growth will continue to fuel demand for 5G-related PCBs in the coming years.
Automotive Electronics
The automotive industry is another key driver of PCB demand, as vehicles become increasingly electrified and loaded with electronic features. From infotainment systems and digital instruments to advanced driver assistance systems (ADAS) and electric powertrains, cars today contain a growing number of PCBs.
The average vehicle now contains over $350 worth of PCBs, according to IPC, and this figure is expected to rise as more electric and autonomous vehicles hit the roads. IHS Markit predicts that the automotive PCB market will grow from $14.8 billion in 2020 to $19.7 billion by 2025, a CAGR of 5.9%.
Industrial Automation and IoT
The trend toward industrial automation and the Internet of Things (IoT) is also boosting demand for PCBs. Factories are deploying more robots, sensors, and connected equipment to improve efficiency and enable remote monitoring and control. All of these devices require PCBs to function.
The industrial IoT market is forecast to expand from $77.3 billion in 2020 to $110.6 billion by 2025, according to MarketsandMarkets. This growth will drive demand for a wide range of industrial-grade PCBs, from simple single-layer boards to complex, high-density interconnect (HDI) boards.
Medical Electronics
The COVID-19 pandemic has highlighted the importance of medical electronics, from diagnostic equipment and patient monitors to ventilators and imaging systems. These devices all rely on PCBs to operate reliably in critical healthcare settings.
The medical electronics market is projected to grow from $72.5 billion in 2020 to $91.5 billion by 2025, a CAGR of 4.8%, according to MarketsandMarkets. This growth will sustain demand for medical-grade PCBs that meet strict quality and regulatory requirements.
PCB Supply Chain Challenges
While the high book-to-bill ratio bodes well for the PCB industry, it also presents some challenges for the supply chain. With demand outstripping supply, lead times for PCBs have increased and some manufacturers are struggling to keep up.
The following table shows the average lead times for different types of PCBs, according to a survey of IPC members:
| PCB Type | Average Lead Time (Days) |
|---|---|
| Single-layer | 7 |
| Double-layer | 10 |
| Multilayer (4-6 layers) | 15 |
| Multilayer (7+ layers) | 20 |
| HDI | 25 |
As the data indicates, lead times are longer for more complex PCBs like multilayer and HDI boards. This is due to the additional processing steps and materials required, as well as capacity constraints at some manufacturers.
To meet the surge in demand, PCB manufacturers are investing in new capacity and technology. Many are adding new production lines, expanding their facilities, and upgrading their equipment to improve efficiency and quality. Some are also diversifying their supplier base to mitigate risk and ensure a steady supply of raw materials.
However, these investments take time to come online, and the PCB industry still faces some headwinds. The ongoing global chip shortage has limited the supply of certain components, while rising raw material costs and geopolitical tensions have added uncertainty to the market.
Despite these challenges, the outlook for the PCB industry remains positive. With strong demand from key sectors like 5G, automotive, industrial, and medical, PCB manufacturers are poised for growth in the coming years.
Frequently Asked Questions
What is the difference between the book-to-bill ratio and other industry metrics?
The book-to-bill ratio specifically measures the ratio of new orders (bookings) to shipments (billings) over a given period. It is a leading indicator of demand and growth. Other metrics, such as sales growth or capacity utilization, provide different insights into the industry’s performance.
How does the PCB book-to-bill ratio compare to other industries?
The PCB industry’s book-to-bill ratio of 1.29 in March 2021 is considered very high, indicating strong demand. Other industries may have different ranges for what constitutes a “high” ratio. For example, the semiconductor industry’s book-to-bill ratio was 1.14 in March 2021, also indicating healthy demand but not as strong as the PCB industry.
What is the typical lead time for PCB orders?
Lead times vary depending on the complexity of the PCB and the manufacturer’s capacity. Simple single- or double-layer boards may have lead times of 1-2 weeks, while complex HDI boards can take 4 weeks or more. Lead times also tend to increase when demand is high and supply is constrained, as is currently the case in the PCB industry.
How does the chip shortage affect the PCB industry?
The global chip shortage has limited the supply of certain electronic components that are mounted onto PCBs, such as microprocessors and memory chips. This can delay PCB Assembly and shipment, even if the Bare Boards are ready. Some PCB manufacturers are working closely with their customers and suppliers to mitigate the impact of the chip shortage and find alternative sources.
What is the long-term outlook for the PCB industry?
The long-term outlook for the PCB industry is positive, driven by strong demand from key end markets like 5G, automotive, industrial, and medical. While there may be some short-term challenges related to supply constraints and geopolitical risks, the overall trend points to continued growth and innovation in the PCB market. As electronic devices become more advanced and ubiquitous, the need for high-quality, reliable PCBs will only increase.
