Author Archives: Gene

About Gene

Gene Weiner has spent his entire career -- spanning more than 50 years -- in the printed circuit and semiconductor industries. He spent the early part of his career in R&D as a student technician at MIT Lincoln Laboratories, then became employee no. 4 at Shipley, and later vice president of sales and marketing at Dynachem and president of New England Laminates. He has been a consultant to leading materials, circuit board and semiconductor companies for several years, and sits on the board of Wong’s Kong King International and the MBA advisory board of the Malcolm Baldridge School of Business at Post University. He was inducted to the IPC Hall of Fame in 2006.

Changing Times

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Many name brands are now gone, never to return.* Others have been sold off (merged into others) and will be bled for opportunistic sales. Their product ranges included dry film photo resist, drilling machines (laser and mechanical), phototool generators, test and inspection equipment, plating solutions and additives (electroless and electrolytic), etching solutions, solder masks, SMT assembly systems, OSPs, and more.

A number of new promising product innovations have not gained traction and may be doomed. Why? Can they be saved? Should they be? How? Is poor time-to-market the cause? Is failure to listen to customers and prospects the cause? Is myopia the cause? Is the lack of focus the root of deferred results? Is failure to seek help (advice? JV?) the problem? Are the products/services not ready for prime time? Does belief overshadow reality? How big is the realizable potential? Where is it? Do they meet customer needs? How should the wares be sold? Should they have been abandoned? How should after-sales service be provided? Will they be lost in the rush to increased board and SMT demand later in 2014? Who is the competition? What role does pricing play? Do they have not-in-kind competition? What can be done to salvage the project in 2014? What should be done?

What new products/services do you believe are needed for 2014-2015-2016?

Stay tuned! We will address these and other issues in “Weiner’s World” in 2014.

As I was reflecting over the relatively poor overall circuit board industry performance of the past two years, my mind wandered back a little more than a quarter of a century ago to 1987 when I gave Shanghai Mayor Ziang Zemin** (and former Electronics Minister of the PRC) a tour of a simulated surface mount production line at the first NEPCON show in Shanghai, China. At that time the circuit board industry there was literally in its infancy. It is difficult to believe that China, in such a short period, has become the world’s leading production site of PWBs. It has become the location of choice for manufacturing boards for the major Taiwan producers. It has become a major source for Japanese and Taiwan firms, too.

The International Printed Circuit & APEX South China Fair, with more than 1,900 booths already sold for its next production, has become the largest show for our industry in Asia.

Specialty chemicals and advanced laminates for the interconnect industry are now produced in China. Manufacturing equipment of increasing competitive quality levels for board fabrication, test, and assembly is made there. China branded vehicles and electronic devices are emerging at a rapid rate with an eye on the domestic market as well as for export.

The $64 questions are: What will the next 5 years bring? How will the other “developed” countries compete? On what basis? Who will fund next-gen products and processes? Will only the “giant” operations succeed? Will new businesses have to really focus on — and be satisfied with — profitable niche markets? Will product life cycles be long enough to justify their development costs? Will new types of partnerships be needed to succeed? Will smaller, lighter, faster boards and devices lead to shorter product life and early obsolescence?

I believe that IC and display demand will increase strongly in the first half along with assembly orders. Board production will feel an upsurge in the second half of 2014 with HDI and rigid-flex boards leading the way.

I liked the theme of next year’s (December 3-5, 2014) International Printed Circuit & APEX South China Fair “Innovation Through Resilience” but wonder if the reverse, “Resilience Through Innovation,” might not be better.

The Japanese yen slid to its lowest level, 104 yen/dollar in almost 7 months. I remember 300+ yen/dollar on my first visit to Japan in the early 70s to present a paper at the first NEPCON Japan event.

… and yet, there is a feeling of déjà vu

Japanese electronics companies are not reaping any benefits from the weaker yen. They have slowly outsourced most of their manufacturing needs to China and other Asian countries over the last two decades. It is extremely difficult to flip the switch and return manufacturing to Japan (or America). According to DKN Research, printed circuit manufacturers are in the same boat, and remain pessimistic about future market trends.

Direct imaging is moving towards becoming “the standard” for primary imaging with a shift from laser to LED in the works. More than 400 of these systems are reported to be in use. Direct imaging of solder mask will expand as photoimageable products requiring less energy to expose are brought to market in 2014. HDI continues to come on strong and should grow 15-18% in the region next year even though the overall outlook is for a soft first half. The use of advanced high tech laminates continues to increase. Greater interest in the employment of robots for SMT manufacturing is developing to counter the continued annual wage increases mandated by the Chinese government. Automotive electronics remains strong. The Shenzhen police department has started to use all electric vehicles (from BYD) with roof-top video cameras and lighting.

We expect the purse strings for capital equipment acquisition to be loosened after April. All are awaiting to see what he required minimum wage increase will be next year. The “new” government is also reported to be signaling that it is increasing its battle against corruption and waste with a new guideline to prevent government officials from using 5-star hotels in 2014. We note that manufacturing companies in China are taxed even though they may have losses.

The island political situation continues to cause some disruption in electronic equipment businesses between Japan and China. Taiwan has now asserted its claim to the barren islands under territorial dispute between Japan and China. North Korea has followed China’s lead and expanded the sea area over which it claims protective rights. We believe that a new wave of emigration from Hong Kong to Vancouver is in the process of starting as young educated families have decided that it is a “better place to live.”

The Hong Kong government has apparently decided to “give” $100 million to poor people (up to $10,000 each) sparking a series of protests (including a column in the HKPCA journal) stating how the money could be better spent on education, food, facilities, technology, job creation, etc.

*An Italian company bought the former Dynachem logo and trademark “Laminar.”

**Ziang Zemin was named President of the People’s Republic of China (PRC) in June 1989.

New Technologies at the TPCA Show

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The mood at the TPCA Show in Taipei last week was relatively somber with light activity on the show floor even as the technical conference had a strong showing. It was a bit of a shock (but not totally unexpected due to the recent sale of the business) to see the total lack of presentation in the large Hitachi Via Mechanics booth.  Some said that the Christmas “slowdown” could be a month early (November) this year. Yet, board suppliers to “Western brokers” were pushing for higher prices.

A major increase in the use of automation (load and unload systems) was noted on equipment previously shown as manually fed systems throughout the show indicated a trend to reduce labor costs and increase manufacturing consistency and yields.
Laminate producers bemoaned the lack of business as they discussed the introduction of new “low loss” materials. Many companies (power supply makers, board builders, specialty chemical providers, bare board fabrication and SMTA equipment reps and providers) stated that this year’s business would wind up down 20% to 30% (or more) than 2012 – in itself a difficult year.

AVI and direct imaging appeared to attract the most attention during the show. Japan’s Inspec and Hioki demonstrated their newest systems to invited prospects in a private demonstration rooms in the TKK booth. Orbotech gathered the largest crowds when its minion of robots performed synchronized dances to the delighted crowds of young engineers and touring students.

Dr. Hayao Nakahara (below) of N. T. Information Ltd. presented “World Economy and its Influence on the Taiwan PCB Industry” to Taiwan’s interconnect Industry’s leaders at the TPCA’s Directors’ breakfast meeting on October 24.

PWB companies that ventured into PV solar manufacturing a few years ago stated that they are cutting their losses in this field and focusing on future interconnect related growth. They stated that only the “giants” in this industry had a chance to profit now or in the future. We queried a number of industry leaders on what their opinions of production three years out for their companies would be like.

The major Taiwan-based substrate makers have developed coreless IC substrates for use in thin profiled mobile devices. Nanya introduced its 5+1B FC BGA at the show. Unimicron’s chairman stated that his firm was already working on a 10um process for organic substrates and had also developed a coreless technology for making very thin IC substrates. NanYa’s VP of substrate manufacturing sees the future for substrates for his operation in SIPs and advanced HDI areas. Unitech’s Vice Chairman looks to focusing on rigid-flex and advanced HDI. He stated that his company will expand capacity for 50 micron circuitry in 2014. Unitech’s rigid-flex board revenues could increase to 20% of the company’s revenues in 2014 from 15% this year. All stated the importance of handheld and automotive applications.

MacDermid, promoting its automated system for plating and via-fill, sees good growth this year with Taiwan and China-based companies.

The quality of China designed and reverse engineered versions of process equipment continued to improve. This will further threaten the survival of Western (and Japanese) equipment makers.

A major American-based flex and rigi-flex fabricator attending TPCA-Impact bemoaned how difficult it is to gather complete and accurate business and process metrics on major Korean, Taiwanese, and Chinese competitors  for his benchmarking efforts.

The joint SMTAI-IPC event in Ft. Worth went well. It was busier than expected, with registration up 40% (to 1,300) over from 2012. Much of the increase can be attributed to the colocation of the event with the IPC’s fall standards development committee meetings. The Evolving Technologies Summit was well received with excellent reviews. CGI reported great enthusiasm for the roll-out of its new optical inspection device. There were some minor issues on meeting rooms due to the “last minute arrangements” and the late finalization of the agreement to cooperate.  However, there is great optimism that next year’s joing activity will improve as both groups will work together in planning stages.

It’s good news if this repeats. China’s growth accelerated in the third quarter, putting to rest for now fears that the world’s No. 2 economy was headed for a sharp slowdown that would rattle world markets according to the WSJ. China’s GNP grew 7.8% from a year earlier, according to data from the National Bureau of Statistics, up from growth of 7.7% in the first quarter and 7.5% in the second.

Watch for a resurgence of PV Solar and electric powered vehicle activity in China as the government is offering extra funding of more than $800 million to reduce pollution by year-end. Hebei has already removed 411 small co-fired boilers and kilns. Beijing will reduce air particle density by 25+% in the next five years by reducing the city’s annual coal consumption to 10 million tons. It plans to close four remaining gas fired plants in the city before 2015.

We believe that this one will be different! We have watched historic pioneers, innovators, and industry stalwarts vanish, decline or merge into obsolescence over the past decade as the profile of the electronics industry and its supply chain went through radical changes and shifts. We have stated that it will take deep pockets, close ties to OEMs, IC companies, and major EMS firms to grow in the future. Small companies with great ideas and products do not normally have the assets to bring their wares to commercial success on their own. They often are not able to directly reach the decision makers in their particular buying publics or influence the decision makers of their prospects’ customers. Mergers often do not have a common expectation prior to their joining together. Where are Shipley, Dynachem, LeaRonel, Sel-Rex, Mica, Fortin, et al today?

We believe that this one will be different! It brings together a specialty chemical company that has continued its focus and profitable operations in difficult times through recession and industry consolidations as well as major technical and geographic market shifts with the former CEO of a corporation that has grown nearly 40 times during the past decade to $8 billion.

We believe that this one will be different! The acquisition of MacDermid by Platform Acquisition Holdings Limited (to be renamed Platform Specialty Products Corporation [PSP]) does several things. It increases MacDermid’s resources. It brings to MacDermid the added financial strength of the investors of PSP. It brings to PSP a seasoned successful specialty chemical executive along with his management team in the person of Dan Leever, MacDermid’s chairman, who will become PSP’s CEO. The move further broadens Platform’s base and positions it to leverage itself into a major global specialty chemical corporation.

No relief in sight. Suppliers of equipment and processing materials in Greater China continue to report low business levels. The  expected annual broad year-end build-up for the Xmas season did not materialize. Equipment and other “unnecessary” purchases now seem to be on hold until after the Chinese New Year, even though there seems to be some recent improvement in China’s economy and export levels.

Taiwan’s decline in notebook production has put a damper on that industry’s participants. As a result, PCB fabricator plant utilization has fallen to less than 70%. This has put a major damper on sales of PCB fabrication and assembly equipment in the region. It will be interesting to see what Taiwan’s circuit makers , with a large footprint in Mainland China, have to say at the TPCA in Taipei later this month.

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Chime Ball Technology (CBT) and Maskless Lithography Inc. (MLI) unveiled their two new joint product offerings at the TPCA Show. First was the fully automated load/unload CBT-MLI 5800 product which addresses 45 microns and above inner- and outerlayer digital imaging. Second was the 30 microns version that incorporates all of the features of the CBT-MLI 5000 series product, with the ability to image lines and spaces down to the 30 microns level. The CBT/MLI system used LEDs as its UV source.

Aiscent Technologies promoted its two-sided LDI system (now installed at Triangle labs in Nevada. Aiscent also showed a photo of its new reel-to-reel system for flexible circuit imaging. The company claimed the capability of processing 10um lines and spaces on a new system – not yet installed anywhere.

Rainbow showed a video of its two-sided wet processing system for liquid photo resists. The first production system is expected to be installed by WKK, Rainbow’s distributor, in China in the Spring of 2014.

MacDermid featured its complete 2-meter per minute desmear and viafill line for HDI. Mike Wood, Business Manager in Taiwan, said that the company expects to sell 10 systems priced at under $3 million each to Taiwan-based companies during the coming year. He stated that there are already 30 lines running with many of these in Korea. Wood presented a paper at IMPACT during the show.
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Printed circuit bookings dropped even in Germany in August! They came in 1.5% less than August 2012 according to ZVEI.

China’s exports unexpectedly shrank in September, in a sign of weakening global demand for its products and a potential headwind for the world’s No. 2 economy. Exports fell 0.3% in September compared with the year-ago period, sharply down from August’s 7.2% growth and far below economists’ median forecast of a 5.5% expansion (source WSJ). However, its GNP ticked upwards the first half of October providing hope for stability and future growth. In electronics we suspect moderate stability will be followed by a strong uptick after the Chinese New Year.

The European Central Bank will create swap lines with China’s central  bank of up to $60 billion due to China’s growing importance in Europe’s trade and financial transactions.

Kyocera has completed the acquisition of Toppan NEC Circuit Solutions, one of Japan’s major manufacturers of the printed circuits and semiconductor substrates.

FujiFilm and Imec (of Belgium) have co-developed a new photoresist technology for organic semiconductors that enables the creation of submicron patterns.

IDTechEx  will host Printed Electronics USA 2013 and Graphene Live 2013 on November 20 and 21 in Santa Clara, California.

China’s smartphone market will exceed 450 million devices in 2014, up 25% from 2013,  according to IDC. China Mobile is expected to carry iPhones by then. Current market leaders in China are Samsung (18.5%), Lenovo (9.8%), and China Wireless Technologies (Coolpad). Other lower cost Chinese brands are also gaining ground (e.g., OPPO).

Applied Materials and Tokyo Electron will merge under a holding company headquartered Holland. The new entity will have a market capitalization of $29 billion!

GE Healthcare Finland Oy, in partnership with GE Idea Works, announced today that it has completed the acquisition of Imbera Electronics Oy, a pioneering Finnish company that has spent over 10 years developing advanced embedded electronics packaging technology and manufacturing solutions. Financial terms of the transaction were not disclosed. Embedded electronic packaging technologies can reduce the size and cost of components used in digital electronics by over 50%, enabling much higher integration for increasingly feature-rich consumer products such as smartphones and tablets. This embedded packaging is also used in advanced avionics, power distribution and a variety of other applications.

 

A Forerunner of Good Things to Come?

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This could be, if the U.S. government provides incentives to manufacture in the US.

Motorola’s dramatic introduction of the Moto X smartphone assembled in the US at a build-cost competitive to that of Apple’s IPhone 5 and Samsung’s Galaxy S4 shows that the world is once again changing. The 16GB phone is based on Qualcomm’s design and semiconductors. It uses SoC packaging and is similar to OTC and Samsung devices.

If price were the sole determinant the Yugo would have been a huge success.

Changes coming. In what should one invest? The development for next generation packaging materials, equipment and processes will be expensive! Should one go for 2.5D as some advocate, or 3D packaging as others propose? Although 2.5D appears to be a viable “short” term solution, recovery of R&D costs may be difficult if a 3D solution succeeds early on, especially with the push for SIP (system-in-package) technology. Applied Materials is working on 3D packaging with the Institute of Microelectronics in Singapore’s Science Park II.

The Assembly & Testing Committee (A/T Committee) of SEMI China has set a new goal — to figure out the technology roadmap. Its intent is to help “local” IC companies clearly identify the challenges for 3D-IC so that the milestone for each challenge can be forecast.

The IPC’s forthcoming conference on Component Technology is expected to provide further insights to the challenges facing today’s component and substrate members of the industry’s supply chain and point out the specific technology gaps currently facing the industry.

China’s domestic PCB fabricators are beginning to flex their muscles. They have greatly improved their manufacturing technologies during the past few years. Domestic smartphones such as OPPO are gaining market share from Samsung, OTC and other foreign brands (Apple is not the leader in China’s markets). Chinese LCD TVs and PCs are establishing broader market bases and beginning to gain acceptance in global marketplaces. The Chinese government “supports” home-grown products and encourages its native brands to use domestic manufacturers in their supply chains.

Now, based upon the growth of fine featured circuitry, new packaging technologies, shrinking margins, and the continued increases in labor costs (20% again this year in SE China),  China’s industry is now focusing on automation (robotics) and improved quality. This was evident in the exhibited products at Nepcon China in Shenzhen this month.

Japan’s dramatic drop in board production the first half of 2013 coupled with the sale of the once mighty Hitachi Via Systems hole forming equipment business (mechanical drill and laser drills) truly signals the approaching end of the era when that country led the world in PCB fabrication and assembly technology.

It is time for new strategies and business models. There is no specific relief in sight yet. EMS bookings in China are down. The usual August business buildup and demand for boards and assemblies for the “Xmas season” has not yet occurred. Equipment orders are still slow in being released. Cisco’s announcement of a reduction of its workforce of 5% is not encouraging. Juniper Networks, Palo Alto Networks and Huawei continue to unfavorably impact Cisco’s results.

The electronics interconnect industry is apparently in the mode of being redefined. Business models are changing again in the midst of economic uncertainty. Orbotech’s upgrading of some of its 4W LDI installations in Asia, refurbishing them, and selling them at deeply discounted prices in the U.S. may be one such example of a business model change.

What Really Counts?

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How do you do it today?

What really counts in this age of digitization, dehumanization and automation? Is the lowest “price” always the lowest cost? How do you define “customer relations” in the digital age? Does management know how to measure value in this world where variables are occasionally beyond actual or affordable control? What happens when custom products are priced as commodities? Does your supplier (who really is NOT your partner) promise you anything, then apologize later? Does your the new buyer/manager at one of your major customers suddenly ask for all of your quality-shipping records back to day 1 because years after nearly perfect performance you were short a few boards on a 1,000 piece delivery while he places the next release with a competitor of yours? (They are really NOT your “partner” either!)

Is there any loyalty left in the digital age? What do the new screen watchers, bloggers, and social media members value? Are we all scrambling for pennies while the dollars end up in the coffers of a few very large corporations?

Does EIT’s chapter 11 filing coupled with the announcement of negotiations to buy its remains signal the end of whatever American high-tech volume PWB leadership remains in America? It joins the long-gone leading domestic innovative volume board makers: Methode, Burroughs, IBM, Collins Radio, UNIVAC, DEC, Autonetics, Hewlett-Packard, Photocircuits, AT&T/Western Electric, Bureau of Engraving, Stromberg Carlson, and others.

Semiconductor forecasts for the next 1-2 years are strong (20+%), but how will they affect the PWB industries? Will advanced fabricators, such as AT&S and Unimicron, start making 2.5D packaging substrates? Will the other packaging companies follow Amkor’s lead? Will CAMEST help keep all informed of the seemingly endless choices and gaps that face the assembly and packaging service providers? How will new materials fit in? The biggest  increases will be in China, Europe, and Korea. Korea declined more than 20% in capital spending for chip production equipment  in 2012. Taiwan will remain the biggest buyer of new equipment at with a spend of more than $10 billion according to SEMI. This bodes well for those still building substrates and PWBs in 2014.*

JPCA Show: More Questions than Answers

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The show must go on! But what show? There were more than 60 small booths representing universities and local institutes at the JPCA filling spots formerly inhabited by PCB makers and their suppliers. Few Westerners (other than exhibitors or employees of Japanese- or Asia-owned companies) could be seen.  There were displays of 2.5D and 3D packages but no affordable solutions. Embedded components were still on many minds, especially with the knowledge that they are used in camera sensors. Embedded actives still await the implementation of “known good die” at the wafer level. Now let’s see, on boards of about an 1/8 of a square inch each, 100 million cameras would need about 12.5 million square feet of PCBs, less than the output of one of the larger HDI fabricator plants in China. One has to wonder if these will be replaced by organic CMOS sensors some day soon.

Printed electronic circuits are still seeking their niche markets. Many of the vaunted bare board equipment displayed were slight retreads of systems already shown elsewhere in the world. Ushio appeared to be one of the exceptions with its new direct imaging system with a 5 micron line and space capability.  A display of the “intestines” of smart phones showed that they have migrated away from their predecessors. Flexible circuits seemed to be limited to use for connecting the touch screen. Main boards sported 10 layers of FR-4 and ALIVH type of construction. AT&S’ booth promoted 2.5D packaging on the heels of its stated intent of producing IC substrates while Unimicron budgeted $325 million to develop thinner high-density chip-scale substrates.

In general, shop owners and equipment suppliers to the bare board industry that attended the JPCA event were rather morose in their outlooks. Increased “rationalization” is expected. The merger of Sony’s and Juki’s SMT equipment businesses sparked further speculation. Conflict with China over the small  uninhabited Senkaku-Diaoyu Islands have put a damper on Japan’s current trade and agreements as well as future possibilities for future growth in electronic (and other) manufacturing. Optimists that hoped for a 2nd half pick-up had their spirits dampened a bit with news of continued slowing growth in China. — I still have a problem understanding why economists are complaining about growth of GNP that is “only” about 7%.

The relative lack of innovation on display, the decline of the PCB industry in Japan and future opportunities were the dinner topics for the “old timers” June 6. Shifting from mass production to short run niche market demands will not fill the gap left by behemoth automated operations designed for very large runs. Moving into printed electronics must await standards development and growth in market demand.

But, there was a glimmer of hope when the rapid rise of display panels was brought up. Demand is multiplying for handhelds, large tabletop systems, automotive systems, and other displays. Shipments of touch screen* panels are forecast to increase to 2.8 billion units in 2016. Some of the technology is related or similar (but different) to board substrate fabrication: coating of ITO onto glass, processing of glass, depositing of films and conductors, imaging, applying protective coatings,

The topic of graphene was introduced by dessert, but time ran out. It should be interesting to hear what one of the IPC’s September keynoters has to say about this one at the TMRC gathering of senior managers and executives.

There surely must be some opportunities for those with vision and creative talents.

*The 11th China (Shenzhen) International Touch Screen Exhibition 2013 will be held November 25-27.

 

‘Follow the Money’

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Although all the presentations and keynote speakers at the Electronic System Technologies Conference in Las Vegas in May were of value, interesting and well-presented to those who attended the various tracks, several caught my attention as being especially worthy of further pursuit. One was the apparent strength of 2.5D solution among a variety of packaging challenges and options. The other, which affects all of the members and segments of the microelectronic supply chain in pursuit of the future and funding, was the stated need for a new business model. R&D and manufacturing funds, profit margins, consolidations, time-to-market have all served to squeeze everybody’s budgets, cash flows and bottom lines, save one group — the OEMs. The advice given was to “follow the money.” Bringing the OEMs back deeper into the supply chain equation may be the only practical solution to selecting and funding future commercially viable solutions — both large and small.

How does one stay linked to the technology changes that blur the clear definitions of various segments of the electronic packaging industries? Please note that I said “industries,” not industry. Will they all wind up the purview of a handful of giant corporations and organizations? How will one find new promising technologies that apply? How will these be funded to get beyond the alpha demonstration or beta stages? Who will adopt and sponsor those that are not yet finished items to which standards can be developed or applied, e.g., process or breakthrough proprietary materials, or production or test/inspection equipment. (I am personally  aware of several that have demonstrated proof or principle, moved beyond the alpha stage, or are just preparing for scaled up production. These are in jeopardy of languishing into oblivion as “no one” wants to invest in “Western” inventions in the PCB or PCBA industry during the current economic malaise.) There is still a prevailing attitude of “I tried that” for advancements in prior technologies that may now make them commercially viable. Perhaps some answers may be found at the CAMEST formation meeting or the proposed resurrection and reconstitution of the TMRC.

Are you following Charlie Barnhart’s columns on EMS, ODM and OEM trends and business? His recent publication on 10 global trends confronting OEM operations is fascinating and chock full of ideas and stimuli for those working on strategies to move forward in the rapidly changing marketplace. Of note is his perspective, with which we agree, on the rate of increasing labor costs in China, slowing growth of outsourcing to EMS companies, unprecedented risk in supply chain sourcing, and shorter demand cycles. He states that OEMs have fewer resources. This applied to more than just OEMs. It includes suppliers of manufacturing equipment. This also provides ne opportunities for creative planning and actions.

Another National Treasure Lost?

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The April 26 news in the Cedar Rapids Gazette announcing the impending closure of Rockwell Collins’ 49-year-old printed circuit operations should be spotlighted nationally for several reasons. It cites declining profits and business as the reason for the decision. It follows by just 6 months the layoff by Rockwell Collins of 300 workers. It signals the continued decline of manufacturing in America along with the accompanying know-how and innovation formerly ascribed to Collins’ printed circuit business. It says that outsourcing PCB production is fairly common in the electronics industry. This is true. But then, the article states that Apple, the “most valuable company in the United States outsources the manufacture of all its components, including printed circuits.” What it does not tell us is that these components are also primarily purchased and assembled into iPhones and iPads in China, mostly by Foxonn (Hon Hai). Tens of thousands of Chinese workers are employed to do this profitably for Apple.  Is the Rockwell Collins spokesperson who was quoted inferring that Collins’ boards are to also be made in China? Is there an ITAR issue involved in this case? In any event, the announced closure plan should remind us that our once strong manufacturing base that produced nearly 60% of the jobs in the US when the Collins PWB works was founded has now shrunk to about 20%, or less. Manufacturing in America is now reported to be only about 20% of our GDP. So I listen to all those that say we must bring jobs back to America and wonder, “How? Over what period of time? In what industries?”

Nepcon China, held in Shanghai April 23-25, was busy, but with tire-kickers, not buyers. The show, slightly smaller than the previous edition, seemed to lack the excitement of previous years as business outlook was cloudy. Several former Chinese companies appear to have dropped out now that show producer Reed is applying uniform prices to all exhibitors. Chinese firms had paid reduced fees for spaces in prior years.

There was little in the way of innovation. There was a plethora of Western reporters from virtually all of the related media. There were at least 3 well known industry journalists from the U.S. and Europe conducting video interviews in English as well as Chinese of exhibitors and celebrity attendees.

Concern over the economic effect caused by the Chinese-Japanese territorial tiff over the Senkaku/Diaoyu islands increased during the show as stories of customs delays in critical spare parts and new equipment shipments were reported. Japan is a major suppliers of SMT assembly and test equipment to our industry in China.

Dr. Philip Carmichael, the new IPC president of China operations, was there meeting people, making presentations, negotiating collaborative deals for the future, and giving interviews. During his short tenure Dr. Carmichael has met every major organization in our industry in China to see how he can increase the value proposition of IPC members. Making sense of 23 different trade shows and major events can be daunting, but Carmichael seemed unfazed by the challenge. He has already increased IPC’s China membership by about 20% this year. He advised us to watch for new announcements in the near future.   The IPC sponsored hand soldering competition remained a crowd-pleaser in Shanghai as it was at its other previous venues.

CTEX 2013, which started as a show in Suzhou named “Circuitex” by Taiwan board makers, will have its 9th presentation May 8-10 at the Suzhou International Exhibition Center. The name “Circuitex” was first coined by MacDermid in the early 1960s when it established its first specialty chemical line of products for the printed circuit industry. This year’s presentation will cover bare boards, SMT and ICs with a focus on products for the iPhone5, IPad Mini, and Nexus 7 by Apple and Google. The event is being promoted as the 9th Suzhou PCB/SMT Show.

Unplugged

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Another federal energy investment has gone South — no, make that West.

Lithium ion batteries have been in the news again following Boeing’s highly publicized Dreamliner battery difficulties. China’s Wanxiang Group has received clearance from the US Committee on Foreign Investment to acquire the assets of America’s battery maker A123 for $257 million. The bankrupt A123, which makes batteries for electric cars and grid storage, was the recipient of $130 million of clean energy federal grants. The Wanxiang Group is an auto parts conglomerate.

Shen Tsai-Sheng of one of the world’s largest PCB makers, Unimicron Technology, stated that utilization rates of Unimicron’s HDI board, PCB, and flexible PCB (FPCB) production will fall below 75% of capacity in the first quarter of 2013, down from 85% to 95% in the 4th quarter of 2012.

Huawei sold 10.8 million smart phones in the 4th quarter of 2012 to become the world’s 3rd largest seller. Samsung was first with 63.7 million and Apple was 2nd with 47.8 million. ZTE, another China maker, shipped 9.5 million units in the last quarter of 2012.

Will the “bounce” last? China’s economy has bounced back. A return to accelerating growth in the fourth quarter 2012 breaks seven straight quarters of declining growth and draws a line under concerns that the world’s second largest economy is heading for a hard landing.
To engineer the rebound, China’s government turned again to boosting credit and investment spending. But beneath the surface, there were also signs a rebalancing toward consumption may be underway.

ASL had its second best year in 2012 and forecasts sales at least as good in 2013. The number one IC lithograph projection printer supplier in the world, headquartered in Holland, has about 80% of the market for advanced exposure equipment (including for 300mm wafers).

An interesting note from the massive CES (Consumer Electronics Show) in Las Vegas this month was the seemingly widespread appearance of nanotechnology coatings to “moisture proof” just about anything.

Updated PWB charts showing use of build up boards and thin PWBs by application in Japan are now available. These have been created and maintained annually by Masamitsu (Matt) Aoki. Several have been published in the Printed Circuit Journal of Japan. Write to us if you would like a copy.

Back to the Future. The “Assembly Processes for Lead Free and Tin-Lead” free BUZZ session at the IPC Apex event in San Diego Feb. 19 chaired by Raymond E. Pritchard Hall of Fame member Don DuPriest has been renamed BZ2 Hall of Famers: Roundtable Discussion. It’s format will be an “open-end” panel discussion by Hall of Fame (HoF) members related to all aspects of the electronic interconnect industry.  The panel, including Bob Neves, Dan Feinberg, Jack Fisher, Vern Solberg, and myself will field questions from the audience ranging from technology, to business, to future changes and requirements, to reshoring. Chairman DuPriest will provide surprise gifts to audience members that ask questions.

New “Kid on the Block.” Taiwan’s MediaTek, which introduced its first chipset in 2011 in a Lenovo phone, has in 18 short months captured 50% of China’s market for smartphone chips. Its chipsets are reported to have greatly reduced the cost and time for manufacturers to introduce new phones to the marketplace.  As a result, the top five producers in China during the third quarter Coolpad, Huawei, Lenovo, Samsung and ZTE. Apple was 6th with just 8% of the market. MediaTek offers guidance on hot to build a phone with its chips. as a result its chips are showing up in new brands in emerging markets in Latin America and India.

Nissan will assemble its new Leaf electric motor in the USA this year for the 2013 Nissan LEAF car to be built in Smyrna, TN. Currently all of Nissan’s electric motors are put together in Japan.

Is A New Vision Needed?

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China’s industry minister has put forth an aggressive goal of building five to eight giants in the electronics industry with $16-plus billion in sales in the next two years through consolidation and overseas acquisitions and alliances. The Ministry of Information and Technology’s blueprint wants to move the country away from low-cost electronics manufacturing toward higher-yield, higher technical segments such as Lenovo and Huawei Technologies.

We believe that China will reduce the mining of rare earth metals to increase margins and offset recent price declines while using these materials as leverage in foreign dealings. The country is still far behind the rest of the world in chip design and manufacture, so we can expect major moves in that arena. The China Development Bank will put $20 billion behind ZTE to help it reach the $16 billion goal. The Haier Group, one of China’s bigger electronics companies, spent $700 million to buy a New Zealand company to increase access to Australia and Europe while increasing its technology base.

One has to wonder how the rest of the world will compete with this massive government supported approach. (China has a stated similar goal for automotive calling for 10 companies to have 90% of its industry concentration by 2015.) One has to speculate who will join forces with China’s electronic industry forays. How greatly does it threaten open markets and free competition elsewhere? How serious a role does industrial espionage play in this new game with newly stated ambitious goals? How big a role will defense issues and security have? Does America need a new vision for the future?

‘The Past is Prelude’

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“The past is but a prelude to the future”

In 55 BC Cicero was attributed with saying, “The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed, lest Rome become bankrupt. People must again learn to work instead of living on public assistance.” Amazing! We never seem to learn!

This is the time of year that all of our industry seers reflect upon the past and forecast the future. It is an all but impossible task this time. Economic woes, political game playing, power plays, personal attacks, and continued posturing and bickering of elected officials in “Foggy Bottom” (Washington, DC) all remain with us — without problem resolution. They took an 11th hour step at year-end (2012) and beginning (2013) that defers major decisions, leaves the future of federal employees in doubt, eliminates the some tax increases for the”middle class” while increasing their payroll taxes. They deferred facing the issue major cuts of sequestration for another two months while further dividing the country.

Meanwhile, there is talk of Japan’s “new” (he was there once before) prime minister Shinzo Abe nationalizing the electronics industry in an attempt to save it.

At the same time, China’s manufacturing unexpectedly expanded in December at its fastest pace in 19 months, boosting optimism that a recovery in the world’s second-biggest economy is gaining traction.

As a result, I must admit that my crystal ball is not only broken, but it also appears to be cracked.

We note that the prognosticators take a “long term” view and state that production of printed circuit boards will reach $76.2 billion by 2015. The IDC’s (International Data Corporation) Semiconductor Applications Forecaster states that semiconductor global growth for 2013 will be 4.9% to $319 billion following a 1% increase in 2012. It is expected to reach $368 billion in 2016.

What will the major drivers be? Automotive electronics, tablets, “smart” phones, and new displays.

What will a fabricator need to improve his ability to succeed in the future (in addition to cleaning up his act, stabilizing his work force, and training it better)? Most likely he will need a strong process engineering team and a very close communication link to designers to ensure that new boards or systems are designed for manufacture. Available processes and materials as well as cost options and the final package must all be considered.

Suppliers will have to provide materials with greater and finer dimensional tolerances and stability through a wider range of manufacturing cycles and environments.

ODM and OEM companies will have to re-evaluate the business strategy of partial or full regional manufacturing to provide product in within a particular geographic marketplace.

Assembly and fabrication equipment makers will have to consider new cost-cutting manufacturing strategies. E.g., noncompeting organizations could share overhead and direct costs by using a common custom “toll” manufacturer for machine assembly.

All segments of the interconnect and electronic packaging industries supply chain will have to evaluate solving problems in providing products and technical support services to maturing or growing manufacturing areas as well as to local markets, e.g., Thailand and India.