Cost is the primary reason for comparing onshore and offshore manufacturing for PCBs or Printed Circuit Boards. When you need thousands of them, even a minor difference per board can add up to tilt the math. However, with changing tariffs, wages, and capabilities, the situation is not as clear-cut as it was earlier. For a comprehensive comparison between on and offshore manufacturing, we at Rush PCB Inc. bring you this guide, wherein we discuss various aspects involved in PCB manufacturing, namely, cost, quality control, risks involved, and time to market.
PCB Assembly Differences Between Onshore and Offshore Companies
There are major differences in the PCB assembly processes between onshore and offshore companies. These primarily involve cost, materials used, facilities available, quality control, and communication. For instance,
Manufacturing Facilities
South Korea, Taiwan, China, Japan, and some Southeast Asian countries produce about 90% of PCBs worldwide. They also possess a major share of manufacturing facilities, PCB assembly facilities, and mid-level components manufacturing setups.
Design Facilities
Most PCB designs are owned by US Engineering firms. These forms also hold a majority of the IP rights for PCB technologies.
Materials Availability
PCBs mainly use copper, resin, and glass. Chile and Peru supply about 33% of the entire supply of copper. Countries such as Japan, Germany, and the US account for the top three resin producers, and China is the top producer of glass. However, prices do vary globally, to some extent.
Cost Comparison Between Onshore and Offshore PCB Manufacturing/Assembly
US manufacturing saw an overseas shift in the 90s. Lower labor costs were the main reason. Recently, manufacturing technologies have witnessed many developments, while the global supply chains have developed many vulnerabilities. This has complicated the bottom-line comparisons between onshore and offshore activities. These complications can be attributed to:
Labor Costs
A comparison of hourly wages finds China offering the lowest labor costs, about half that of most Southeast Asian countries like Thailand and Vietnam. In the US, hourly wages are about four times that in China.
Even so, offshore manufacturing and/or assembly of PCBs is cost-effective only at scale and with lead times. Offshore labor costs may be cheaper, but the total cost of outsourcing for US companies can range up and down unpredictably. Fuel charges and shipping rates are responsible for most variable costs.
Offshore services like manufacturing and assembly are often associated with several fixed minimum costs. These include rates of containers, legal expenses, and insurance. For these and other reasons, lower offshore labor cost reliably transfers to lower total costs only at significantly large production scales.
Shipping Costs
Rates of container freight for shipping between the US and Asia have been swinging wildly over the last few years. The major reasons are, one, Covid-19 restrictions closing down many Asian production and assembly facilities, and two, uncertainties due to tariff duties. For instance, during March 2022, freight rates have spiked 6 times due to the gaps in the supply chain. Although these shipping costs did begin to normalize, oil prices became more volatile, and lately, shipping companies are hedging their rates against the uncertainties due to import/export tariffs.
Prototyping and Large-Scale Production
Prototyping typically involves multiple iterations to optimize the design. This type of activity is not suitable for outsourcing. It would be cost and time-ineffective to ship several prototypes between continents, especially as onshore PCB prototype/assembly services may offer lower than 24-hour turnaround times. Along the same lines, onshore manufacturers who use just-in-time inventory methods for large-scale production may face repeated shortfalls if they opt for offshore services.
Reliability and Quality Control in Onshore and Offshore PCB Manufacturing/Assembly
Transparency of certification and a shared legal system ensure onshore manufacturing/assembly services offer higher quality and reliability. Typically, onshore manufacturing/assembly services conform to the IPC, a trade association maintaining standards and certifications for PCBs. Here, IPC A-610, the most interesting and useful qualifying certification, is a condition of employment in the aerospace, military, and medical PCB manufacturing industries. The standard allows manufacturers to conform to the highest standards of quality and reliability.
Even when offshore PCB manufacturing companies have IPC certification, US businesses that work with them may not have the same legal recourse to substandard production quality as they have with onshore service providers.
Confidentiality and Intellectual Property
All PCB manufacturers and assemblers are legally obliged to maintain the IP rights of their contracted partners. However, US companies may not be able to secure legal standing and initiate court action against offshore service providers if they leak intellectual property.
Turnaround Time and Time-To-Market in Onshore and Offshore PCB Manufacturing/Assembly
Most offshore PCB manufacturing/assembly services must cross the Pacific to reach the US, as they are mostly based in Asia. Most often, high oil prices and bottlenecks in ports cause the trans-Pacific shipping time to balloon several times.
In contrast, onshore manufacturing and assembly services require about 7-10 days maximum shipping times, even in coast-to-coast scenarios. If the supplier and customer are within the same state, delivery times can shrink even further.
How to Choose Between Onshore and Offshore PCB Manufacturing/Assembly?
Although lower labor costs for offshore PCB manufacturing/assembly may appeal to some manufacturers directly, ultimate bottom-line costs may vary widely due to uncertain fuel costs, variable shipping costs, volatility in the supply chain, and the applicable tariff structure.
Risks Involved
Offshore PCB manufacturing/assembly may involve additional risks to:
Quality
It may not be possible to hold the offshore partner accountable for lapses in quality. Operating within a single legal system onshore can mitigate most of this risk.
IP or Intellectual Property
It may not be possible to initiate legal action when the offshore service partner leaks confidential intellectual property intentionally.
Time-To-Market
Even when the order volume is large, and lead times are long, offshore suppliers may not be reliable, leading to fulfillment shortfalls and failed time-to-market. The risks involved with offshore shipping times and adverse political events can be significantly reduced with onshore suppliers.
Conclusion
Rush PCB Inc. is one of the finest PCB manufacturing and assembly companies based in the US. We are certified for ISO9001:2015, IPC, and AS9100D. Our experts offer not only fast turnaround times but also high-quality full-turnkey services. If you are searching for a US-based and dependable onshore PCB manufacturing and assembly company, consider contacting us.
