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This is a printed circuit board. The base underneath every single chip, inside every electronic. This one is a motherboard that would actually go into networking and communication customer of ours. From iPhones to fighter jets to the most powerful AI server racks by the likes of Nvidia. The problem is, the vast majority of these, and nearly all of those used in AI data centers are currently made in China, but the U.S. still makes them, too. We want to make sure as the AI industry explodes, as demand explodes, that we can count upon some of that demand coming to U.S. manufacturers, particularly for critical sectors. So we came here to Santa Ana, California, to see how it's done by the biggest
manufacturer of circuit boards in the country, TTM. This is about 110,000ft². This was actually the original TTM facility where it all started in the 80s here. What starts as one thin layer of copper goes through up to a thousand different steps, eventually becoming this - a circuit board up to 140 layers thick, costing from the single digits to $100,000, etched with the blueprint where chips and circuitry will be mounted to make up the world's most advanced electronics. Moore's Law is getting to an end.
You cannot increase the complexity of these chips any more. So you need to combine these chips. And that's what we do. Until now, circuit boards have been a quieter part of the chipmaking ecosystem, but not anymore. Demand has skyrocketed in recent years, mostly because of the demand for AI chips and the wars in Iran and Ukraine. Because every circuit board used by the U.S. Department of Defense must be made in the U.S. to keep malicious components from being introduced directly onto the board. And there's simply not enough manufacturing happening here anymore. With China's share of the market soaring over the past three decades. In the year 2000, America produced 30% of the
world's supply of printed circuit boards. Today, that's down to 4%. Some of the advanced chips in AI, Nvidia in particular, they will use Chinese printed circuit boards to mount their chips on. And that's where the vulnerability comes in. The war in Iran has also kept certain raw materials, like resin, from getting out of the Middle East. And all this means circuit board prices have been soaring, too. You have two very large demand signals - AI, data center, networking and defense coming together at the same time. And that puts a lot of pressure on the supply chain.
We are the first journalists to film here inside TTM's original and most advanced U.S. facility. TTM has seven plants in Asia and a total of 16 in the US. But that domestic footprint is growing fast with a new Syracuse, New York, factory starting production later this year and an even bigger plant opening in Wisconsin this year, too. We asked the CEO, executives and industry insiders about the security risks of making nearly all AI circuit boards in China and what the U.S. could possibly do to catch up. Printed circuit boards have been around since the early 1900s, but until now they haven't gotten much attention. They used to look at our business as a commoditized business. It was a PCB.
It just nobody knew what it was. As AI demand surges, it sent PCB demand and prices surging too, and the only two public U.S.-based PCB makers, TTM and Sanmina, have seen incredible stock gains over the past year in general. The supply chain overall for PCB is a concern. The sheer demand and the ramp up and how it's accelerated so fast over the last couple of years, making sure that the global supply chain there is a risk. Overall, the PCB industry is projected to grow 12.5% this year, reaching nearly $96 billion and growing to $123 billion by the end of the decade.
The cost of PCBs reportedly rose by up to 40% from March to April. TTM says it's raising prices 5% to 25%. We are competing with the AI demand. The commercial side is willing to pay a much higher price to get access to that capacity. And so what that does is that really drives prices up across the board. Like many chip suppliers, TTM doesn't disclose its customers. But when it comes to AI, TTM says it's supplying the big guys, think Nvidia, Google, Apple and more. Because from a tiny AirPod to a two-ton Nvidia Vera
Rubin server rack, no chip can operate within a modern electronic without first being connected to a substrate or printed circuit board. A circuit board like this, you'd probably find 50 or 60 chips and capacitors and other stuff on that. They come flexible or rigid, tiny or large, round or straight edged, and at a variety of pitches. The term for how tightly packed features can get for increasingly advanced electronics. Chips don't float. They have to mount on a board in order for that entire package to work successfully.
The printed circuit board is not just a dumb piece of plastic. It's a very complex, highly technical piece of infrastructure in electronics. Many layers, possibility of embedding elements in those layers. It's not just about resiliency of supply, it's also trusted source of supply. Here's how it works. Once a chip wafer comes off the factory line and gets packaged into a larger chip like a GPU, those are attached to a circuit board printed with the map of where each chip goes, either bonded to a resin substrate or melted onto pads using solder balls on the back. This is the building block.
We call it a copper core. It's made of resin epoxy with copper foil on the top and the bottom. Up to 140 layers are carefully aligned and pressed into one panel. You apply heat. You apply pressure 3 hours to 5 hours, bond all the material together, become the final laminated product. More layers means more room for creating denser and denser pathways that electrical signals travel through, so multiple chips can communicate with each other and send signals out to the broader system.
The design is first created using lithography, optical printing through a patterned film or mask. You could actually see the embedded image of what the customer's product is. Then, interconnect pathways are made by drilling thousands of very precise holes with either a laser or a drill bit as small as 0.04mm. So this tip is thinner than a human hair. Yes, we're drilling six of them at a time. Then chips and circuitry are added in a separate assembly process once that bare board is ready.
A simple one can take 5 to 10 days. A highly complex one could take up to six months. All this takes a lot of power and water. Globally, TTM used as much power as 70,000 homes and 2.1 billion gallons of water in 2024. It's now aiming to use 60% renewable energy and recycle 35% of the water used. As for the vast amounts of raw materials needed, they're getting more expensive and harder to find. Nvidia supplier Victory Giant in China, one of the biggest PCB makers, warned in April that the Middle East conflict could push up prices of copper and resin.
You know, a board could be anywhere from $5 up to $100,000. It's going to be the level of complexity that goes into the board, the bill of materials. We use precious metal, gold, palladium. Some of our product has immersion tin. The Iran war is also a driver of rising demand for PCBs because of how many are needed for defense. Here at TTM's California plant, 71% of PCBs end up in aerospace and defense products, while just 21% end up in data centers.
It's the reverse of TTM's biggest standalone China plan because U.S. defense circuit boards are prohibited from being sourced in China. Some of our adversaries have very sophisticated modes of attack chips, substrates. Pcbs represent multiple avenues of attack for a potential malicious actor. Mike Cadenazzi of the U.S. Defense Department looks for threats and risks in potential transactions and global supply chains. If you think about sort of the worst case scenario of this, a PCB that's installed into a weapons platform,
so call it a missile, call it a drone. Upon launch, it does something that it's not supposed to do. A code is enabled, and then all of a sudden the PCB, in combination with the chip, make a decision to actually disrupt the guidance of the munition, and it lands in the wrong location. It could hit anything. You could blow up the ship that it's launched from, cause collateral damage in a civilian area where you didn't mean to do it. The easiest place to disrupt an electronics chain is at the printed circuit board level. Very easy with all the interconnects there, hiding things in substrates and layers.
Al Shaffer spent years helping make technology acquisition decisions under Presidents Obama and Trump. In any of those layers, a potential adversary could put in a switch to route data back to China. Let's say they could put in a kill switch. So if we had these Chinese-made circuit boards in our weapons systems, in theory, they could turn off our weapons at a time and place of their choosing. I find it very scary. That's why national security, it has to be in the U.S. and soon it has to be in Europe. But it's getting hard for the shrinking number of U.S. manufacturers to keep up as wars in Iran and Ukraine
continue, and AI demand shows no signs of stopping. We have built a dependency on basically one part of the world and one nation in particular, China. For almost 89% of the global supply of PCBs, six out of ten printed circuit boards today are made in mainland China. And we feel like that's a risky dependency. The vast majority of circuit boards being used by the world's AI leaders, those can still be sourced in Asia. Does that concern you? It definitely concerns me. The technology is moving so quickly. Capacity the volumes that they're looking for. So that does drive them more to Asia.
Cost drives them more to Asia. But when it comes right down to it, do you trust where it originated? Nvidia declined to comment for this story, but Nvidia and its assembly partners do mitigate risk by physically inspecting all PCBs that come in using X-rays and AI enabled image detection tools to look for anomalies that any country could have introduced. The largest, of course, being China. Indeed, even TTM's U.S. operations are small compared to what it and its competitors do in Asia. I've been in multiple factories in China that will have 100 PCB assembly lines.
Okay. Or 200? You don't see anything of that scale in the US? Nothing. Nothing close. One of TTM's China factories is 46 times the size of the one we saw in Santa Ana. And TTM is one of only two non-Asian companies on the list of the world's 50 largest PCB makers. When Nvidia supplier Victory Giant debuted on the Hong Kong market in April to a $2.6 billion valuation. It was the city's largest listing in seven months. Of course, it largely comes down to one metric. It's cheaper to make these in China.
There is a lot of subsidy that helps China to add equipment, invest capital so they don't have the same business model that we do in the United States. And I think it's important and fair to acknowledge that it's a labor intensive process to manufacture a board for AI. And labor is more expensive in the United States. So TTM is saving on costs by relying more and more on automation from drilling to final inspection. This particular piece of equipment, 100,000 drill holes in a minute per panel in some cases. So it's a very, very automated piece of equipment. It's a perfect example of the kind of investment that companies in the U.S.
like TTM need to make to help us get a little bit closer to parity with Asia when it comes to that cost price point. This is called an automated optical inspection. Way back in the day before we had equipment, it was visually inspected. Raw materials are also cheaper and easier to source in Asia. And there are a number of suppliers where we may only have one source of supply, like copper foil in the United States. And if anything were to happen to that one supplier, it would cripple the industry. The materials, laminates, copper, resins, glass. But then there's the technology to manufacture it itself. When you're talking about drills and presses and
plating equipment and lasers, if one of those pieces breaks, the whole thing could collapse. So what would it take to bring this lesser known part of chip manufacturing back to the US? The short answer is money. The U.S. government started well with the Chips act. The same thing should apply with printed circuit board industries in May. Senators from both parties introduced the Protecting Circuit Boards and Substrates Act that offers a 25% tax credit to companies that choose American made circuit boards, while a companion bill in the House calls for $3 billion in grants for U.S.
manufacturers. It's far less than the $52.7 billion Chips act Biden signed into law in 2022. Because building PCB plants isn't nearly as pricey as the $10 billion plus chip fabs. The costs typically run anywhere between $250 and $400 million. When I talk to supply chain executives, what they typically say is they want to de-risk and they want to diversify. But of course, the numbers need to pencil out. But moving PCB sourcing from China to the U.S. would, of course, mean more spending by tech megacaps eager to prove to Wall Street that AI is profitable.
I would like to tell you that all of our companies are altruistic and want to make sure that America remains strong. A lot of them don't care. It's all about the profit margin. The executives I've spoken with will indicate that risk is a part of their cost analysis, and that if we can truly scale up commercial capacity in the United States, coupled with government incentives, we can get to a pretty competitive position on American made circuit boards. So what if Nvidia came to you with its very deep pockets and said, here is all the money you need to build a PCB factory entirely devoted to us.
What would you say? We would be very happy to talk to them. Indeed, TTM is making a big bet that more customers will be looking for U.S.-made circuit boards soon, expanding into an already built facility in Wisconsin that could be used for AI boards. Its 750,000ft² that we purchased in 2020 for a full turnkey facility ready to bring in equipment. TTM also has a new 200,000 square foot PCB factory entirely devoted to defense in Syracuse, New York. We took on our first greenfield initiative in the United States, broke ground in 2024, and are about ready to go into production now in June. So is the goal that in five, ten, 15 years, there's more production like this happening in the U.S. and less in Asia?
Exactly. That's what I expect. Maybe even for AI? Maybe even for AI. I think AI is a must. Sanmina is also expanding at all four of its manufacturing sites in California, China and Singapore. A lot of things keep me up at night when you think about the pace of the market and how things are moving and the opportunities that are there, but to truly look at them as opportunities. There's also a growing list of startups trying out innovations that could help. Itera is making a fluid circuit board that can be rapidly rewired to reduce the need for so many new boards. And Quilter, founded by a former SpaceX
employee who saw circuit boards becoming a chokepoint there, uses AI to design increasingly complex circuit boards far faster than people can. But for now, PCB champions are rooting for big new U.S. build outs and big U.S. dollars to. The best thing we can do is develop robust domestic PCB industry that starts to be competitive against subsidized pricing from our competitors, and provides options for these firms to buy domestically in a more resilient way from trusted partners.
