With strong demand from the smartphone and tablet PC sectors, HDI board supply has shown signs of shortage since the third quarter of 2010, according to PCB makers. Laser drilling and electroplating equipment as well as capacity at PCB drilling service providers are also experiencing supply shortages.

Global smartphone shipments will reach 384 million units in 2011, up 40% from 2010, according to research firm Gartner. The tablet PC market will increase from 15 million units in 2010 to 45 million units in 2011, said Prismark, and some analysts expect worldwide tablet PC shipments to total 70 million units.

HDI board production capacity will expand 34% in the first quarter of 2011, yet demand from smartphones and tablet PC applications are projected to also increase 30% in 2011, the analysts said. Despite the capacity ramp up, HDI board suppliers will still see orders in excess of capacity of at least 10% in the first half of 2011.

HDI board makers indicated that they began to see signs of shortage in the third quarter of 2010, and supply has since remained tight. Manufacturing equipment for capacity expansion is hard to come by, particularly laser drills, which have a six-month waiting list, the companies said. Taiwan's Compeq Manufacturing and Unimicron Technology, Japan's Meiko and Austria's AT&S are especially in need of laser drills, according to people familiar with the matter.

OEM PCB drilling services are currently in high demand, but the service providers are also experiencing orders in excess of capacity. With a shortage of drilling equipment and insufficient capacity from the OEM service companies, the HDI board shortage will likely become more severe in 2011.