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Why is PCBA Such a Lucrative Business in China?

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If you are in the electronics manufacturing industry, you certainly know about Printed Circuit Board Assembly (PCBA). PCBA manufacturing is the process of having a bare Printed Circuit Board (PCB) assembled. As is known to all, Chinese manufacturers profit chiefly from low labour costs, as do PCBA manufacturers. Yet, that is not their chief income source. Here in this article, we are going to delve into how PCBA manufacturers make money!

PCBA manufacturers are in the electronic components industry

Of the whole assembled PCB, electronic components can take up 60% to 80% of the cost. The assembly takes up only less than 10%. To maximise profits and reduce costs for clients, PCBA manufacturers have to start by sourcing cheaper electronic components. Most semiconductor manufacturers have manufacturing sites in China, so China does have the edgy in terms of component sourcing. But at the same time, there are many counterfeit component manufacturers in China as well.

Here you might be worried that they are selling counterfeit components to you without your knowledge. However, since they still have to ensure the product works, that is not how most of them do it. Instead, most of them use cheaper alternatives for passive components and genuine ones for active components. That way, the product can work while costs are reduced.

Counterfeit passive components do cause problems sometimes, but they work acceptably most of the time. If the product is not supposed to last long, that can be a not recommended way to reduce costs. Many PCBA manufacturers in China use counterfeit passive components as their default option if clients do not have specific requirements, especially in the consumer electronics industry.

How do you ensure you are getting genuine components from PCBA suppliers?

Still, there are many companies that stick to the rules and source the genuine components from authorised distributors or other legitimate sources, especially companies manufacturing automotive electronics with safety and endurance being the priority, like AUSPI.

The preliminary way to distinguish counterfeit component suppliers from genuine ones is to compare the prices of the components. The price of the same component does not vary too much even from different sources. If the one from your supplier is substantially cheaper, you need to be careful. If you found a supplier with costs a little above average, you are probably looking at a quality supplier. Then you can start ordering some samples to do a test run!

Richie Wang | LinkedIn

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