Introduction
The assembly of printed circuit board assemblies (PCBA) involves significant labor, equipment, and overhead expenses for contract manufacturers (CMs). While the exact PCBA assembly cost depends on many factors, understanding what drives pricing can help product developers budget and source assembly services strategically.
This article examines PCBA assembly cost drivers including materials, processes, testing, quality factors, location, production volumes, and complexity. We’ll look at how pricing varies based on these attributes and discuss cost optimization tactics. With insight into PCBA assembly economics, engineers can estimate and manage assembly costs effectively.
Cost Overview
The core expenses making up PCBA assembly pricing consist of:
Materials – Components, solder, adhesives, PCBs
Direct labor – Operators running production and testing
Equipment – Soldering, dispensing, cleaning, test systems
Facility costs – Space, utilities, depreciation
Overhead – Management, quality, logistics, IT, etc.
Margin – CM profit margin expectation
There are many variables determining the specific price for a given PCBA product based on how these elements scale.
Let’s examine some of the key factors influencing cost in detail…
Materials Cost
Component costs often dominate the total PCBA material expenses:
- Active ICs – Microcontrollers, power semiconductors, FPGAs
- Passives – Resistors, capacitors, inductors, transformers
- Connectors, cables, hardware
- Mechanical parts like housings or fasteners
The bill of materials (BOM) largely defines the base material cost. Component pricing depends on:
- Component type – ICs cost more than simple resistors
- Package style – Surface mount is less costly than through-hole parts
- Lead count – More leads or terminations add cost
- tolerances – Tighter specs increase price
- Quantity – High volumes command discounts
- Lifecycle – Late life components can have inflated pricing
Beyond components, other materials like solder paste, adhesives, labels, and hardware add cost.
Labor Cost
The complexity of the assembly process and test requirements determines labor utilization:
- Loading PCBs into equipment
- Solder paste dispensing
- Robotic and manual component placement
- Soldering – Reflow oven, wave, selective systems
- Adhesive and encapsulant dispensing
- Conformal coating or potting steps
- Cleaning assembled boards
- Testing – In-circuit, functional, burn-in, optical inspection
- Kitting, packing and shipping
High labor content processes like selective soldering or complex testing add cost. Automation offsets labor for repetitive tasks.
Factory Overhead
Running an EMS factory involves considerable overhead expense:
- Facility costs – Building, utilities, property tax, insurance
- Management and admin salaries
- Quality and engineering staff
- IT infrastructure and software
- Equipment maintenance and facilities upkeep
- Training and compliance
- Supply chain, planning, finance departments
These relatively fixed costs are spread across production volumes making overhead significant at low volumes.
Equipment Utilization
Specialized production and test systems required for PCBA processes impact equipment cost:
- Soldering – Reflow ovens, selective systems, wave solder
- Dispensing – Solder paste printers, adhesive dispensers
- Testing – Flying probe, boundary scan, functional testers
- Software – CAD, CAM, MES, ERP, quality systems
- Handling – Conveyors, hoists, racks, static control
- Cleaning – Aqueous washers
Capital equipment depreciation and maintenance is incorporated into unit pricing. Newer systems may enable higher throughput to offset cost.
Location Factors
Where assembly is performed greatly impacts costs:
Low cost regions:
- China – Extensive supply chain infrastructure and competition
- Southeast Asia – Malaysia, Vietnam – Lower wages than China
- Mexico – Reduced shipping and logistics to North America
Higher cost regions:
- United States & Canada – Limited low cost providers
- Western Europe – Higher wages, overhead, regulations
Labor, facilities, and materials costs vary based on country and region. Shipping also factors in.
Quality
The cost of quality depends on:
- Yield – Scrap and rework reduce margins
- Process control – Manual processes generate more defects
- Inspection – Automated optimal vs manual visual
- Testing – High coverage vs simple spot checks
- Documentation – Detailed reporting increases overhead
- Corrective action – Preventing defects has lower cost than containment
- Qualification – Certification audit expenses
Quality programs to maximize PCBA yields and reliability have associated costs but pay dividends long-term.
Volume Effects
PCBA pricing is extremely dependent on production volumes:
| Volume | Pricing Factors |
|---|---|
| Prototypes | Very high touch labor, small batches, expedited materials |
| Low Volume | Manual processes, changeovers, smaller batches |
| Medium Volume | Transition to automation, improved scheduling |
| High Volume | Highest automation, process optimization |
Economies of scale substantially reduce cost per unit at volume. Fixed overhead is distributed across more boards.
Design Complexity
A PCBA’s physical design attributes impact assembly labor and materials complexity:
- Component types – Lots of connectors or odd parts
- Component sizes – Many tiny passives require inspection
- PCB technology – Multilayer vs simple double sided board
- Board shape and size – Rectangular boards allow panelization
- Component placement – Both sides vs single side placement
- Component count – More components takes more operator time
- Density – Fine pitch and spacing need special tooling
- Routability – Completely routed vs wire jumps
- Solder points – DFNs, BGAs, QFNs require process care
- Selective coatings – Extra steps for solder masks or potting
Complexity factors result in more production and inspection steps and drive cost.
NRE and Tooling
Upfront non-recurring engineering (NRE) and tooling costs include:
- Design review
- Test development
- Programming placement and inspection routines
- Solder masks and stencils
- Handling fixtures
- Any long lead tooling
These one-time expenses are allocated into unit pricing depending on volumes. For short run prototypes, NRE costs can dominate pricing.
Geography
Shipping assembled boards long distances adds cost:
- Air freight has high cost for any volume
- Sea shipping has low cost per unit but long transit time
- Customs, duties, and taxes may apply
Manufacturers strategically locate facilities to optimize logistics costs.
Vertical Integration
Some contract manufacturers offer services throughout the product life cycle:
- Design – Full development capabilities including PCB layout
- Prototypes – Low volume assembly with quick turnarounds
- Volume production – Scalability to high volumes with global facilities
- Testing – Extensive test development and coverage
- Box build – Subsystem and full product assembly
- Distribution – Custom packaging, kitting, logistics
- Lifecycle management – Aftermarket support, repair,Upgrades
- Software, firmware, FPGA development
Leveraging vertically integrated partners reduces interface complexity but can command pricing premiums.
Cost Optimization
Here are tips to optimize PCBA cost:
- Standardize: Use common components in consistent packages, reduce custom connectors, minimize board sizes and layer counts.
- Design for Mfg: Enable automated assembly and test. Eliminate placements requiring manual steps.
- Evaluate global supply: Consider qualified offshore sources to realize labor, overhead, and regional supply chain benefits.
- Review BOM pricing: Check alternate suppliers and lifecycle status for inflated components. Standardize vendors.
- Leverage volumes: Commit to forecasted volumes and contract terms to earn scale benefits. Consolidate multiple boards into fewer part numbers.
- Relationships and partnerships: Develop transparent win-win relationships with CMs leveraging their expertise.
Keeping these key cost drivers in mind while making design and sourcing decisions helps manage PCBA assembly pricing.
Cost Estimation Guidelines
While the complexity of cost estimation varies based on product specifics, this provides a general calculation sequence:
- BOM pricing – Use manufacturer published price lists for the exact quantities needed of each component.
- NRE expenses – Estimate or obtain quote for any upfront NRE, tooling, test equipment, etc.
- Material overhead – Add overhead markup percentage to direct BOM cost to cover material handling, inventory, qualification etc. (e.g. 10-15%)
- Unit labor cost – Work with CM to estimate touch labor time for each assembly and test process based on complexity factors. Multiply by shop floor hourly rate.
- Equipment utilization – Estimate production equipment runtime for the process steps and factor in hourly cost rates.
- Factory overhead – Apply factory indirect labor, facilities, utilities, and services overhead rate to direct hours. (e.g. 2-4X direct labor)
- Quality and yield – Add cost impact of any sampling, inspection, containment, rework, scrap etc. based on historical norms.
- Logistics – Local vs international shipping and customs costs.
- Margin – Apply typical margin targets based on volumes and competitiveness. (e.g. 15-30+%)
While simplified, this model allows a realistic budgetary estimate and reveals where opportunities exist to refine manufacturing and design strategies.
Summary
Estimating and minimizing PCBA assembly costs requires understanding key drivers:
- Materials – Component types, packaging, volumes
- Labor – Manual steps, complexity factors
- Overhead – Quality, infrastructure, services
- Equipment – Automation offsets capital costs
- Location – Labor rates, logistics
- Volumes – Higher utilization and scale efficiencies
- Design – Standardization, DFM, testability
Armed with knowledge of cost factors, engineers can make informed design tradeoffs and sourcing selections to achieve cost-optimized PCBA production.
FQA
What are the main elements making up overall PCBA assembly cost?
The primary PCBA assembly costs consist of materials (components, PCBs, consumables), direct labor, equipment depreciation, factory overhead, quality programs, logistics, NRE expenses, and manufacturer profit margin.
What design factors typically increase PCBA assembly cost?
Design choices increasing cost include high component counts, small passives, dense BGAs/QFNs, multiple layers, routing complexity, selective coatings, large board sizes, and designs needing manual steps or exotic tooling.
How does production volume impact PCBA assembly pricing?
Low volumes have very high cost due to setup, tooling, manual processes. Costs decline sharply as volume increases thanks to automation, process optimization, and overhead absorption.
What is the most significant variable determining assembly location economics?
The predominant factor driving regional assembly pricing is local labor rates, which imposes a large variable cost component. Other factors include supply chain infrastructure, logistics, and facility costs.
What are effective ways engineers can design PCBA to optimize manufacturing cost?
Optimizing assembly cost involves standardizing components, reducing lead counts, enabling SMT over through-hole parts, minimizing layers and board sizes, and designing for automated assembly and testability.
