Why Is China PCB Circuit Board So Low Cost

RAYMING PCB & ASSEMBLY
Why IS China PCB Circuit Board So Low Cost?

Introduction
Printed circuit boards (PCBs) form the core of all electronic products.
With electronics manufacturing increasingly shifting to China, a significant
portion of PCB production now occurs in China. The country has firmly
established itself as the predominant global supplier for low-cost PCB
fabrication and assembly.
This article examines the different factors that enable Chinese PCB
manufacturers to deliver boards at remarkably low prices compared to
other countries.
Economies of Scale
China’s expansive electronics manufacturing industry and supply
chain results in enormous economies of scale for PCB production. Some
key aspects:
Huge PCB Demand
As the world’s largest producer of consumer electronics, automotive parts,
industrial equipment etc, China has massive domestic demand for PCBs.
Local sourcing is preferred by most OEMs.
High Production Volumes
PCB Manufacturing & Assembly Services https://www.raypcb.com/

Large PCB fabricators in China cater to both domestic and international
needs. They leverage high volume orders for maximizing utilization and
minimizing overhead costs.
PCB Clusters
Dense PCB manufacturer clusters around Shenzhen and Shanghai
comprising hundreds of board shops divides the work while enabling
specialization.
Mature Supply Chain
Availability of raw materials, chemicals, equipment and components
locally avoids import duties and lead times – keeping supply chain costs
low.
Competitive Market
Intense competition among hundreds of PCB makers ensures the lowest
prices survive. This drives down the costs.
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Labor Cost Advantage

pcb
baking
PCB manufacturing in China benefits from lower labor costs in:
 PCB assembly vs fully automated lines in the West.
 Technical skills like engineering, programming, machine operation
etc.
 Overhead roles like finance, human resources, sales etc.
Typical hourly compensation costs:
Role China United St

Factory worker $5 $30
Engineer $10-$20 $50-$80
Middle management $20-$35 $75-$120
However, labor costs are rising 15-20% yearly as China moves up the value
chain. Automation is being rapidly adopted by PCB companies to offset
this.
Raw Material Sourcing
PCB makers in China enjoy advantages in sourcing essential raw materials:

FR-4 Resin
Local supplies of flame retardant resin from major chemical plants avoids
import duties.
Copper Foil
China’s huge copper production makes copper foil readily available for
PCB laminates.
Other Materials
Laminating films, etching chemicals, tin, gold, acids, solvents etc. can be
sourced locally at low cost.
Components
Sourcing passive and active components from nearby Guangzhou and
Shenzhen electronic markets reduces lead times and costs.
PCB Equipment
Many international PCB equipment manufacturers have sales and service
operations in China for faster procurement. Refurbished equipment is
also available at lower cost.
Supporting Infrastructure

pcb
transmission line
China offers an unparalleled infrastructure to facilitate low-cost, high
volume PCB production:
Factories
New large factories with ready availability of industrial land, power, water
allows massive scaling.
Logistics
Efficient sea and air routes for global exports along with a vast road
network reduces shipping costs.
Technical Support
Many PCB chemical and equipment vendors have technical operations in
China for rapid maintenance and process optimization.
Ecosystem

The complete PCB supply chain – from copper and laminate suppliers to
test equipment vendors to component makers are present locally.
Investor Friendly Policies
Tax incentives, easier approval processes and government subsidies
encourage manufacturing investments.
Process Optimization
Chinese PCB factories have optimized processes for high efficiency:
 Automation – Extensive use of automated manufacturing lines
improves throughput while reducing labor and errors.
 Scale – Large batch sizes allow maximum productivity with lower
changeover and setup costs.
 Lean – Waste and inefficiency are eliminated by lean manufacturing
principles.
 Technology – Advanced manufacturing with automation along with
adoption of cutting edge technical processes.
 Standards – Following world class quality and environmental
management standards like ISO 9001, ISO 14000, IATF 16949 etc.
Limited Overheads

Several structural advantages of Chinese PCB companies allow lower
overheads:
 Limited R&D – Most focus on high volume fabrication vs new
technology development. R&D costs are minimized.
 Sales Network – Leverage resellers and distributors vs large direct
sales teams.
 Minimal Marketing – Spend little on advertising/brand building with
majority orders coming via word-of-mouth and referrals.
 After-sales Service – Post-delivery support requirements are still
evolving. Service costs are less.
 Working Capital – Readily available capital financing at competitive
rates allows bulk buying for better discounts.
Product Mix
Most Chinese PCB makers target less complex board technologies which
have lower costs:
 High layer count PCBs (more than 16 layers) typically manufactured
elsewhere.
 Maximum 6-8 fine line/space capability vs advanced 3/3-4/4 lines.
 Focus on material sets like FR-4 and CEM-3.
 Mainly standard rated processes. Lesser high-reliability boards.

 Concentration on medium and large volumes.
This optimized product mix targets the industry’s broader needs while
requiring lower investments in advanced process capabilities.
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Environmental Factors
PCB
Material
Certain environmental factors also enable lower PCB production costs:
Electricity
Industrial electricity rates in China average $0.08/kWh compared to
$0.10-$0.15/kWh in Europe and North America.
Water
Water required for PCB production costs under $2 per ton in China vs up
to $20 per ton in advanced economies.

Safety Standards
Less stringent safety norms compared to Western nations reduce
compliance overheads.
Pollution Control
Weaker environmental regulation has provided cost savings historically.
But standards are catching up now with increased inspections and
penalties.
Impact of Rising Costs
Several factors in China are now increasing PCB costs:
 Rising labor wages
 Increasingly stringent environmental regulation
 Higher testing and compliance requirements
 Scaling existing infrastructure as land costs increase
 Reduced tax incentives as China graduates to a mature economy
 Geo-political factors that increase supply chain risks
However, China remains well positioned to sustain a competitive
advantage through superior logistics networks, vast talent pool, domestic
demand and efficient processes.

Cost Savings Summarized
The chart below summarizes the typical cost savings achievable for a
2-layer US made PCB vs. sourcing from China for small volumes around
500 boards:
Cost Component US-made China

PCB Fabrication $2000 $1000 50%
Components $1500 $1200 20%
Labor (assembly) $500 $200 60%
Overheads $500 $100 80%
Shipping – $100 –
Total Cost $4500 $2600 42%
And for medium volumes around 5000 boards:
Cost Component US-made China

PCB Fabrication $5000 $2500 50%
Components $15000 $10000 33%
Labor (assembly) $2000 $500 75%
Overheads $1000 $200 80%
Shipping – $500 –
Total Cost $23000 $13700 40%
Conclusion
PCB manufacturing in China offers unbeatable value in terms of price,
technology and quality for most electronic applications today. The
combination of an efficient PCB industry ecosystem, lower costs,
optimized processes, infrastructure, scale and product mix provides a
sustainable competitive advantage that will likely persist even as labor
costs rise. For OEMs in cost-driven segments, China offers the ideal

low-risk manufacturing location. With both local and foreign owned
manufacturers expanding rapidly, China will continue furthering its
dominance in PCB production for the global electronics industry.
FAQs
Does low cost mean lower quality for China PCBs?
Not necessarily. Many Chinese manufacturers produce very high reliability
PCBs. They have imported state of the art equipment and follow best
practices for quality. Rigorous testing also ensures all specifications are
met.
What are some key measures PCB buyers should take to ensure quality?
Visit the manufacturer facilities for process audit. Review their
certifications. Do sample inspections and electrical/functional testing.
Ensure robust specifications. Maintain oversight over BOMs and product
improvements.
Will automation take away the labor cost advantage in China?
It will over time. But automation requires huge upfront capital investment.
There is also a skill and technology gap compared to developed nations
which will sustain the cost edge.

Does China dominate higher layer count and HDI PCBs?
Currently, China’s share of global production is smaller for high layer
count and HDI boards since they require advanced technical expertise
which takes time to build. The country still lags behind Japan, Taiwan and
Korea in this segments but is catching up rapidly.
Which are the leading Chinese PCB manufacturers?
Top makers like Founder, AT&S, TTM, Tripod, Shennan Circuits, Kinwong,
HannStar and Viwe supply PCBs globally. Unimicron, Zhen Ding are
growing rapidly. Numerous mid-sized makers also compete actively.
Related Posts:
1. TOP 10 Fast Turn Printed Circuit Board Assembly Manufacturers in
China
2. Top 10 Printed Circuit Assembly Suppliers in China
3. What Cleaner Can I Use to Clean Circuit Board?
4. Why Is Cem-1 PCB Material still Popular in the Circuit Board
Market ?
https://www.raypcb.com/why-so-low-cost-circuit-board-from-china/

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RAYMING PCB & ASSEMBLY

Why IS China PCB Circuit Board So Low Cost?

With electronics manufacturing increasingly shifting to China, a significant

established itself as the predominant global supplier for low-cost PCB

fabrication and assembly.

manufacturers to deliver boards at remarkably low prices compared to

China’s expansive electronics manufacturing industry and supply

chain results in enormous economies of scale for PCB production. Some

Huge PCB Demand

As the world’s largest producer of consumer electronics, automotive parts,

Local sourcing is preferred by most OEMs.

High Production Volumes

PCB Manufacturing & Assembly Services https://www.raypcb.com/

Large PCB fabricators in China cater to both domestic and international

minimizing overhead costs.

Dense PCB manufacturer clusters around Shenzhen and Shanghai

comprising hundreds of board shops divides the work while enabling

Mature Supply Chain

Availability of raw materials, chemicals, equipment and components

Intense competition among hundreds of PCB makers ensures the lowest

prices survive. This drives down the costs.

Request PCB Manufacturing Quote Now

Labor Cost Advantage

PCB Manufacturing & Assembly Services https://www.raypcb.com/

PCB manufacturing in China benefits from lower labor costs in:

 PCB assembly vs fully automated lines in the West.

 Technical skills like engineering, programming, machine operation

 Overhead roles like finance, human resources, sales etc.

Typical hourly compensation costs:

Role China United St

chain. Automation is being rapidly adopted by PCB companies to offset

Raw Material Sourcing

PCB makers in China enjoy advantages in sourcing essential raw materials:

PCB Manufacturing & Assembly Services https://www.raypcb.com/

sourced locally at low cost.

Sourcing passive and active components from nearby Guangzhou and

Shenzhen electronic markets reduces lead times and costs.

Many international PCB equipment manufacturers have sales and service

operations in China for faster procurement. Refurbished equipment is

also available at lower cost.

PCB Manufacturing & Assembly Services https://www.raypcb.com/

China offers an unparalleled infrastructure to facilitate low-cost, high

volume PCB production:

allows massive scaling.

network reduces shipping costs.

Many PCB chemical and equipment vendors have technical operations in

China for rapid maintenance and process optimization.

PCB Manufacturing & Assembly Services https://www.raypcb.com/

test equipment vendors to component makers are present locally.

Investor Friendly Policies

Tax incentives, easier approval processes and government subsidies

encourage manufacturing investments.

Chinese PCB factories have optimized processes for high efficiency:

 Automation – Extensive use of automated manufacturing lines

improves throughput while reducing labor and errors.

 Scale – Large batch sizes allow maximum productivity with lower

changeover and setup costs.

 Lean – Waste and inefficiency are eliminated by lean manufacturing

 Technology – Advanced manufacturing with automation along with

adoption of cutting edge technical processes.

 Standards – Following world class quality and environmental

PCB Manufacturing & Assembly Services https://www.raypcb.com/