U.S. PCB dependence on China raises AI and defense supply risks

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Dan Blystone

19 hours ago

U.S. PCB dependence on China raises AI and defense supply risks — China PCB risks for US

As artificial intelligence hardware demand accelerates, printed circuit boards are emerging as a strategic weak point in the U.S. electronics and defense supply chain. Nearly all AI circuit boards for Nvidia and other chip groups are made in China, intensifying security concerns and adding pressure for domestic manufacturing support.

Highlights

U.S. PCB production share has dropped from 30% to 4%, while 60% of PCBs are now made in China, raising AI and defense supply risks.
TTM Technologies shares surged nearly 500% and Sanmina stock tripled over the past year, driven by soaring AI and military circuit board demand but facing rising costs.
The global PCB market is expected to grow 12.5% in 2024 to almost $96 billion, prompting U.S. lawmakers to consider new subsidies and domestic sourcing requirements.

Defense sourcing push gains urgency

As reported by CNBC, U.S. officials and industry groups are warning that printed circuit boards, a core component beneath nearly every chip, create a potential security vulnerability because malicious components can be inserted into the hardware. The concern has grown enough that the U.S. Defense Department is requiring most of its purchases to come from a shrinking base of domestic factories.

Mike Cadenazzi, U.S. assistant secretary of war for industrial base policy, says chips, substrates and PCBs represent multiple avenues of attack for a potential malicious actor. He warns that a compromised PCB could even cause a missile to malfunction in flight.

The U.S. once accounted for 30% of global PCB supply, but that share has fallen to 4%, according to the Printed Circuit Board Association of America. The group says six out of 10 PCBs are now made in mainland China, a reliance that its executive director David Schild describes as risky as Washington and Beijing remain locked in competition over AI technology.

Domestic manufacturers face demand and cost pressure

Supply constraints are also colliding with rising commercial and military demand for circuit boards used in AI systems and defense equipment. TTM Technologies and Sanmina are the only two public companies making PCBs in the U.S., and both are expanding alongside the AI hardware market.

TTM shares have climbed nearly 500% over the past year, while Sanmina stock has tripled. But the companies are also facing heavier military demand linked to ongoing conflicts in the Middle East and Ukraine, while disruption tied to the Iran war is raising costs for key PCB materials.

The global PCB market is projected to grow 12.5% this year to nearly $96 billion and reach $123 billion by the end of the decade, according to Prismark Partners. U.S. lawmakers are weighing subsidies and new legislation that would require defense electronic components to be sourced domestically, aiming to strengthen capacity as strategic and industrial risks mount.

Our earlier report on defense logistics modernization covered the Defense Logistics Agency’s push to upgrade end-to-end supply chains by September 2026 using AI, advanced analytics, and supplier performance tracking to improve readiness and reduce shortages. The piece highlighted early gains in medical, clothing and textiles supply chains, along with multiple-award programs and regional supplier expansion designed to strengthen procurement flexibility for global operations.

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