Eltek Ltd. (NASDAQ: ELTK) entered the second half of 2026 with a difficult quarterly result, even as demand for advanced printed circuit boards remains supported by AI infrastructure, defense electronics and other high-reliability applications. The Israeli PCB manufacturer reported $11.5 million in second-quarter revenue and a $2.7 million net loss, while continuing a manufacturing expansion and ERP replacement program designed to increase future capacity.

Eltek’s latest results highlight a less visible challenge facing the printed circuit board industry: strong end-market demand does not automatically translate into stronger margins for manufacturers investing heavily in new capacity.

The company reported second-quarter 2026 revenue of $11.5 million, down from $12.5 million in the same period a year earlier. Its gross result swung to a $1 million loss, compared with a $3 million gross profit in Q2 2025, while net loss reached $2.7 million, or $0.41 per diluted share, versus net income of roughly $0.4 million a year earlier.

The numbers put Eltek’s ongoing manufacturing transformation under greater scrutiny. The company has been investing in new production lines and equipment intended to increase production capability and efficiency. Its filings say the broader investment program is expected to be substantially completed by the end of 2026 and could support an additional $10 million to $15 million in annual sales, assuming demand remains strong.

The immediate problem is that manufacturers have to absorb the cost and complexity of expansion before the additional capacity produces its full economic benefit.

Demand is strong, but PCB manufacturing is getting harder

Eltek specializes in technologically advanced PCBs, including complex multilayer and flex-rigid boards. The company says it can manufacture boards with up to 40 layers and uses processes involving blind and buried vias and thin materials for demanding applications.

That puts Eltek in a segment increasingly shaped by the growing complexity of electronics.

Grand View Research estimates the global printed circuit board market will grow from about $87.8 billion in 2026 to $130.3 billion by 2033, representing a 5.8% compound annual growth rate. Computing and data-center applications are expected to be among the faster-growing segments.

AI infrastructure is adding another layer of demand. Industry data cited by the Printed Circuit Engineering Association shows AI servers are driving demand for high-layer-count PCBs and advanced copper-clad laminate materials, while Taiwan’s PCB production reached a record quarterly level in early 2026.

For PCB manufacturers, however, higher demand often comes with higher technical requirements. AI servers require greater signal integrity, power delivery and thermal performance, while aerospace, defense and medical customers place greater emphasis on qualification, traceability and reliability.

The result is an industry where capacity alone is not the differentiator. Yield, process control, materials availability and the ability to manufacture increasingly complex boards at consistent quality can determine whether additional capacity actually improves profitability.

Eltek’s investment is also an infrastructure bet

Eltek’s capital program includes new manufacturing equipment and production lines. During 2025, the company installed an outer-layer development line, an Alpha prep line for lamination preparation, a flying-probe electrical testing system and a planarizer integrated into its via-filling process.

The company has invested approximately $17 million in machinery and equipment over the three years through 2025, according to its regulatory filings. It also expects the current investment program to improve manufacturing efficiency and expand sales capacity.

That strategy is consistent with a broader shift in electronics manufacturing. PCB buyers increasingly want suppliers that can handle complex, high-reliability boards without sacrificing delivery speed or quality.

But Eltek’s Q2 results show the transition has a cost. The company previously disclosed that production inefficiencies associated with its investment program and the relocation of production lines had increased its cost of revenue. Currency movements involving the U.S. dollar and Israeli shekel have also affected reported expenses.

An aging ERP system adds another execution risk

Eltek is simultaneously replacing an aging enterprise resource planning system.

The company’s filing says its existing ERP is no longer fully supported by its developer, while the hardware and operating system on which it runs face support risks. Eltek has begun replacing the system, but expects the new platform to take at least 18 months to become operational.

That makes enterprise technology part of the manufacturing story.

For a PCB producer, ERP systems are not simply back-office software. They connect customer orders, production planning, purchasing, inventory, invoicing and supplier payments. A poorly managed migration can affect factory scheduling and customer fulfillment at precisely the time when a manufacturer is attempting to increase throughput.

Eltek’s situation is therefore a useful case study in industrial digital transformation: expanding physical production while modernizing the software infrastructure that coordinates it.

Eltek competes on specialization, not scale

Eltek’s competitive position differs from that of much larger PCB manufacturers.

TTM Technologies, for example, operates on a substantially larger scale and offers PCBs alongside RF and specialty components, integrated electronics and systems. Its portfolio spans aerospace and defense, medical and industrial markets, networking, computing and automotive applications.

Other major competitors include AT&S, Sanmina, Unimicron, Zhen Ding Technology, WUS Printed Circuit and Shennan Circuits, reflecting the fragmented and highly competitive nature of the global PCB industry.

Eltek’s opportunity is narrower but potentially defensible: complex, high-quality, relatively low-volume boards where technical capability and reliability can matter more than commodity pricing.

For enterprise electronics buyers, the relevant question is not simply whether a PCB supplier has available capacity. Procurement teams increasingly need to assess qualification history, production redundancy, materials sourcing, manufacturing-location risk, cybersecurity, ERP resilience and the supplier’s ability to scale without degrading yields.

The bigger test arrives after the investment cycle

Eltek’s second-quarter loss does not by itself establish that its capacity strategy is failing. The company is still in the middle of an investment cycle, and the strategic rationale is tied to future production capability rather than short-term earnings.

But investors and customers will have a clearer test over the next several quarters: whether new equipment translates into higher throughput, better yields and enough incremental revenue to absorb the costs of expansion.

That question is becoming important across the PCB market. AI servers, advanced networking, aerospace systems, defense electronics and increasingly sophisticated medical devices all require more capable circuit boards. Yet suppliers must simultaneously navigate material costs, geopolitical risks, labor expenses, capital intensity and increasingly complex manufacturing processes.

Eltek’s Q2 results illustrate the tension clearly. The PCB market may be entering a period of structural demand growth, but capturing that growth profitably requires manufacturers to modernize both the factory floor and the digital systems behind it.

Market Landscape

The global PCB market is benefiting from several overlapping technology cycles: AI data centers, high-speed networking, automotive electronics, 5G, aerospace and defense, and medical systems. Grand View Research forecasts a 5.8% CAGR for the overall PCB market through 2033, with Asia-Pacific accounting for nearly half of global revenue in 2025.

At the high end, AI infrastructure is creating demand for large-format, high-layer-count and low-loss boards. Taiwan’s PCB industry recorded NT$245.6 billion ($7.8 billion) of output in Q1 2026, up 19.6% year over year, according to data from the Taiwan Printed Circuit Association and ITRI cited by DigiTimes.

The competitive landscape remains fragmented. Large manufacturers such as TTM Technologies can compete through scale and broader electronics capabilities, while specialists such as Eltek can target smaller, technically demanding programs where qualification, customization and reliability are central purchasing criteria.

For enterprise electronics companies, this means PCB sourcing is becoming a strategic supply-chain decision rather than a simple component purchase.

Top Insights

• Eltek’s Q2 revenue fell to $11.5 million, while a $2.7 million loss highlights the near-term cost of manufacturing expansion and operational transformation.
• AI and data-center demand is strengthening advanced PCB requirements, creating opportunities for high-layer-count, low-loss and high-reliability board manufacturers.
• Eltek’s capacity program targets $10–15 million in potential annual sales, but execution depends on production efficiency, demand continuity and successful equipment deployment.
• The ERP replacement adds digital-transformation risk, because manufacturing software directly affects production planning, purchasing, fulfillment, invoicing and customer service.
• Enterprise PCB buyers face a changing supplier landscape, where qualification, reliability, geographic resilience and technical complexity increasingly matter alongside price.

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