Inflation in the electronics you buy may soon become a bit more sticky

Anyone who has evergreens in their garden probably knows the familiar feeling of placing their hand on the tree trunk and coming away with a sticky film on their fingers. This sticky substance is better known as resin. Under the right conditions, tree resin hardens. People realized that resin, like many natural substances, could be made synthetically with a soup of petrochemicals. Synthetic versions harden further into a durable, heat-resistant material used in everything from adhesives and coatings to plastics and electronics. Resin is a critical component in the production of printed circuit boards used in everything from smartphones to computers, home appliances and automobiles.

When the Jubail petrochemical and industrial complex in Saudi Arabia was hit by Iranian missiles on April 6 and April 7, it was the latest blow in a confluence of geopolitical, financial, physical factors that disabled a significant world resin reserve and left the critical component for circuit boards in short supply. The power plants were shut down at the end of March as it became clear that passage through the Strait of Hormuz was unsustainable during the conflict and had still not been put back online.

There is little public information today about the exact status of the Jubail complex, but Dow CEO Jim Fittering (Dow has a joint venture with Saudi Aramco at Jubail) said in his company’s April 23 earnings call that it continues to guide “more than 275 days” to reopen the Strait of Hormuz and return supply chains to normal. Based on his comments, the actual repairs needed at the complex seem less critical than the overall logistical situation. “I think most of this can be repaired within this time frame. … I’m just talking to our partners, I think they’re actively working on repairs, and I’m not hearing anything from them that would lead me to believe that this logistical constraint is going to continue beyond this period of time,” Fittering said.

However, experts say that a resin standstill that extends within a 275-day period until autumn will start to cause price problems for consumers in some electronic products.

According to April producer price index data, plastic resins and materials; among contributors caused a 9.4% annual increase in manufactured goods prices; This was the steepest increase in the last three years.

CNBC recently took a rare tour of the facilities of US-based PCB manufacturer TTM, which highlighted the fragile supply chain used to make computer components. The report stated that in 2000, 30% of PCBs were produced in the USA. Today, this rate stands at 4% and China is the world leader in production.

Whether PCBs are manufactured in the US or China, the resin still comes from the same sources.

Nvidia supplier Victory Giant in China, one of the world’s largest PCB manufacturers, has warned that conflict in the Middle East could drive up prices of copper and resin, key components. Printed circuit board (PCB) prices increased by up to 40 percent from March to April, according to a Goldman Sachs note cited by Reuters. TTMThe company, which has seen its stock prices rise more than 400% in the past year, told CNBC that it increased prices by between 5 percent and 25 percent.

Consumers will soon feel the price crunch, but they don’t need to hear about resin at the mall, said Mark Vena, CEO and principal analyst at SmartTech Research.

“Consumers probably won’t hear about a ‘PPE resin shortage’ at the Apple Store, but they may feel it due to higher prices, longer repair times, tighter launch inventory and fewer discounts,” Vena said. Printed circuit boards are the nervous system of every modern device, and when board costs rise the pain spreads quickly through phones, laptops, wearables, gaming consoles, routers and AI servers.

“I would expect upward price pressure on premium electronics, but the next iPhone isn’t necessarily expected to have a clean ‘resin surcharge,'” Vena said.

Supply chain economics inside Apple and the smartphone

Apple is better insulated than most companies because it has massive purchasing power, long-term supplier agreements, advanced forecasting and the ability to redesign constraints faster than smaller players. “But being isolated doesn’t mean immune, because every iPhone is still connected to the high-fidelity circuit boards and global network of materials that everyone else uses,” Vena said. he said. “Apple can eliminate the pain, but it can’t eliminate the massive petrochemical bottleneck,” he added.

Manufacturers could absorb some of the blow led by Apple and offset the increased cost elsewhere, such as through thinner promotions, higher storage costs, and also push consumers toward pricier configurations rather than leading a dramatic base price increase. But this is a niche area of ​​the market where Apple, Nvidia, Google and everyone else are competing for PCB-grade glass fabric from a single supplier.

Many companies have less room in their economic models to absorb the hit than Apple, according to Vena. “The bigger squeeze in the short term could occur first in lower-margin devices such as PCs, accessories, gaming hardware, routers and mid-range Android phones, where manufacturers have less room to absorb the 40 percent PCB shock,” he said.

Vena said that the cost increase for all smartphone manufacturers can be felt most in foldable smartphones. There are reports that Apple could enter this market later in the year, but possible delays to the expected September 2026 release have been reported.

Thad Hwang, founder and CEO of Goji Mobile, said that smartphones will not see price increases in the next few months, especially flagship phones such as the iPhone 17 and Samsung Galaxy S26 series. “Retail prices for these phones are well known and inventories are generally well stocked,” he said, adding that the long-term effects of semiconductor production disruptions and supply chain instability could emerge in the fall.

Usha Haley, a supply chain expert and Wichita State University professor, said the Jubail complex in Saudi Arabia provides about 70 percent of the world’s high-purity polyphenylene ether resin. “Production has now ground to a halt and there is no alternative supplier to fill the gap. PCB prices have increased by 40 percent in one month, and lead times for epoxy resin inputs have increased from three weeks to fifteen weeks,” Haley said.

No resin replacement available for high-end technology

Although industries are exploring alternatives, no ready-made alternative to resin is available.

High purity PPE resin is used because it provides the electrical, thermal and reliability properties needed, especially in advanced PCBs where signal integrity is important. Replacements may work for some low-end electronics, but for premium smartphones, RF components, AI servers, and automotive electronics, any change in material means requalification, redesign, testing, and time.

“This is not like replacing one screw with another,” Vena said.

Engineers can switch to PTFE or epoxy-based laminates for lower frequency applications. But that shortage, along with memory price increases and tariffs, will likely push prices for electronic devices to their highest level in a decade by the fall, supply chain experts said.

Advocates of resin and other plastics point to supply disruptions as additional impetus to move more plastic production onshore. The Plastics Industrialists Association, the industry’s leading trade group, said it was monitoring the situation closely.

“What’s happening right now underscores the importance of building resilient supply networks that support American manufacturers, businesses, and consumers who depend on plastic products every day,” said Matt Seaholm, president and CEO of the trade group, noting that the current resin supply chain is improving. “Global supply disruptions impact every industry, and plastics are no exception. The U.S. has a strong domestic manufacturing and materials base that helps resin supply chains move through times of uncertainty,” Seaholm said.

Sridhar Tayur, a professor of operations management and supply chain expert at Carnegie Mellon University, says the U.S. doesn’t have the manufacturing capacity to replace lost resin, skills go elsewhere, and leaders don’t pay attention until a crisis is already there, as is the case now.

While big companies are in a better position, even they will start to feel the pinch if the shortage isn’t addressed soon, he said. “All of a sudden people will reduce the inventory they have,” Tayur said.

If the facility in Saudi Arabia remains out of operation for a few more months, then the problems will begin. “The situation will affect data centers, routers and high-end 5G phones; this is where the type of resin used is most important,” Tayur said. The impact will surprise most consumers, and those looking at high-end phones may choose to delay purchases due to availability or prices.

For Apple and other electronics manufacturers, “if there is no shortage, there is not much they can do,” Tayur said.

—CNBC’s Katie Tarasov contributed to this report.