Author Archives: Mike

About Mike

Mike Buetow is president of the Printed Circuit Engineering Association (pcea.net). He previously was editor-in-chief of Circuits Assembly magazine, the leading publication for electronics manufacturing, and PCD&F, the leading publication for printed circuit design and fabrication. He spent 21 years as vice president and editorial director of UP Media Group, for which he oversaw all editorial and production aspects. He has more than 30 years' experience in the electronics industry, including six years at IPC, an electronics trade association, at which he was a technical projects manager and communications director. He has also held editorial positions at SMT Magazine, community newspapers and in book publishing. He is a graduate of the University of Illinois. Follow Mike on Twitter: @mikebuetow

API’s Changing of the Guard

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API Technologies named a new president and CEO today, and, like his predecessor Robert Taveres comes from the component side.

That makes sense because API derives much of its revenue — and profit — from making RF/microwave components. The firm has made headlines of late, however, because its lead shareholder is also the largest owner of IEC Electronics, an API competitor on the EMS side. And that shareholder, the equity group known as Vintage Capital, has been engaged in what turned out to be a victorious proxy battle for the leadership mantle of IEC.

With a new board in place at IEC, and an EMS veteran in charge, will this mean a sale of API’s EMS business to IEC is in the offing?

 

Hats Off to Gary

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Congratulations to Gary Ferrari, who last month became the 33d person to gain induction to the IPC Hall of Fame. For printed circuit board designers, this is something of a symbolic victory, as Ferrari is just the third designer (after Dieter Bergman and Vern Solberg) to make it in the IPC Hall.

Ferrari, who has been an occasional contributor to PCD&F over the years, needs little in the way of introduction to the current generation of designers, in the US and abroad. He has his name on all the major industry design and fabrication standards, having led the development of IPC-D-275 and IPC-RB-276 (now IPC-2221/2222 and IPC-6011/6012, respectively). He, along with Bergman, helped found the IPC Designers Council and drove the certification program. Along the way, he has trained or taught several thousand engineers and designers on a variety of topics from layout to heat management to standards to fabrication and assembly. While not the person whose name you will see on a book, Ferrari is still one of the first phone calls anyone with an engineering problem is likely to make.

The timing is bittersweet in that it occurred just months after the death of Bergman, Ferrari’s longtime friend and colleague. Still, it is a long time coming for one of the true iron men of the industry. I am thrilled for my friend.

What Apple’s Latest Supplier Audit Says About Apple

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Apple’s annual supplier audit was released today and sure enough critics on both sides are already picking through the core and going at it over whether the company is doing enough to ensure the safety and compensation of the hundreds of thousands of workers who plug away in anonymity daily making Apple the wealthiest company ever.

Apple’s latest stats show a 92% compliance rate with its 60-hour workweek, and says the average workweek was less than 49 hours. Of course, that’s as it should be: Most of Apple’s supply chain is in China, whose laws cap the work week at 40 hours and monthly overtime at 36 hours. Adding nine hours per week over four weeks per month comes to 36, which means Apple suppliers are likely often breaking the local laws.

Indeed, that’s consistent with a separate study of nearly 100 Pegatron workers undertaken by labor rights group China Labor Watch, a constant thorn in Apple’s side, which found that more than half of the its workforce performs more than 90 hours of overtime per month, with some peaking at 132 hours.

Apple essentially ignores this by trying to turn a lemon into lemonade. It now touts its ban — as of October — on its suppliers’ charging workers to obtain jobs. As Apple senior vice president of operations Jeff Williams writes in the report, “You’ll see that we consistently report suppliers’ violations of our standards. … Because of these audits, over $3.96 million was repaid to foreign contract workers for excessive recruitment fees charged by labor brokers. And nearly $900,000 was paid to workers for unpaid overtime.” Williams says that this is proof that the system is working.

I don’t agree, but not because there are violations. I suspect any multibillion dollar company with operations (or contractors) in as many places that Apple has will encounter similar, if underreported, problems.

No, the reason I don’t agree is because the same subcontractors keep getting caught for the same violations. That shows a decided lack of regard for their major customer’s brand and mandates.

I think Apple is taking the problems seriously, but its supply chain is not. And the chain has no real incentive to change. As such, until Apple starts firing suppliers, the problems of what amounts to indentured servitude at its contractors’ factories will continue unabated.

Should Flextronics Be Broken Up?

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The findings of a new study by Boston Consulting Group suggest that, over time, many tech companies are guilty of mission-creep, especially large ones.  And when that happens, those companies do not provide the shareholder value they could if they were leaner and more focused.

As part of its study, BCG analyzed total shareholder return, defined as the bottom-line return from capital gains and cash flow contribution. When it did so, it found little distinction between large-cap and small-cap companies:

“The clear takeaway is that regardless of company size, the more diverse the portfolio, the more difficult it is to generate high TSR—and the greater the set of management skills a company needs in order to handle that diversity. Companies must therefore be more deliberate and more explicit in rationalizing each element of their portfolio.”

BCG likens the strategy to the 3 R’s, in this case, Resize, Reform and Rejuvenate.  Marc Andreessen, the founder of Mosaic (later Netscape), put it this way: “If they’re more than 20 years old, then [companies will] probably benefit from being broken up, and many of them will probably be forced to break up if they don’t do it voluntarily.”

So for the EMS pseudo-conglomerates (Foxconn, Flextronics, Sanmina, etc.), what this means is there are arguments to be made — indeed, being made — that having bare boards, assemblies, design services, box build, ODM products, and a host of other products and services under a single umbrella is not an optimal  strategy.

There’s always been some debate over whether publicly traded EMS firms should be compared to other tech firms like Cisco and Microsoft or to traditional manufacturing companies (say, Caterpillar). It’s tough for a mid-size or larger contract manufacturer to attain repeated organic double-digit topline growth, and their margins are never going to be Wall Street pretty. Dumbing down the peer group makes sense.

But the bigger question being asked is whether their size is actually a hindrance. There must be a point at which that happens. Can the data analysis pinpoint that yet? And will market impatience make all of this moot?

 

The Best-Read PCD&F Articles in 2014

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As we did with CIRCUITS ASSEMBLY on Monday, here’s the list of the best-read new articles at PCDandF.com this year.

Leading the pack was IMI president Peter Bigelow, whose piece “When ‘Scaling Up’ Leads to ‘Belly Up’ ” received the most hits of his 10-year career as our columnist.

Next up was “A Two-Team Race?” Dr. Hayao Nakahara’s annual list of the largest PCB fabricators.

Coming in third was “Design for Reliability with Computer Modeling.” Dr. Randy Schueller and Cheryl Tulkoff, both with DfR Solutions, explained a new CAD tool that imports design files and quantitatively predicts product life.

They narrowly beat out “Magnification vs. Resolution in Visual Examination Specifications,” by Louis Hart of Compunetics and consultant Robert Simmons.

Coming in fifth was “Design Practices for Panelization and Depanelization,” by Phil Lerma, fabrication manager at NexLogic Technologies.

In sixth was Patrick Carrier’s “Maximizing Capacitor Effectiveness,” the first of multiple contributions from Mentor Graphics.

Next was “Power Electronics Packages with Embedded Components – Recent Trends and Developments,” by Lars Boettcher, Stefan Karaszkiewicz, Dionysios Manessis and Andreas Ostmann, who summed the work of a cross-industry team’s development and testing of a PCB-based embedded chip technology for an under-the-hood automotive application.

They were followed by “Qualification vs. First Article Inspection,” authored by Charles Hill and Karen Ebner of Raytheon.

The ninth most-read piece was “Effectively Managing PCB Design Constraints,” by John McMillan of Mentor Graphics.

And closing out the Top 10 was yet another Mentor offering, “Passing Electrical Signoff,” by Rod Dudzinski and Minoru Ishikawa.

The top written staff articles were “The One-Stop SoCal Shop,” senior editor Chelsey Drysdale’s look inside Murrietta Circuits, and “Good Values in Vegas,” our staff writeup of the 2014 IPC Apex Expo trade show.

We want to thank all our contributors from last year, and especially our loyal readers. Happy new year!

Is Sharing for Suckers?

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In my January editorial I asked, “Absent a government-industry technical agency, is the US shooting itself in the foot?” My comments were made in response to a former Bell Labs researcher who wrote that the US should consider reestablishing a government-supported technology research center.

A couple days ago in the Boston Globe, MIT science historian Loren Graham, an expert on Russian technology, points to how scientists there have led the way in everything from electric lights to fracking to the laser, none of which they were able to commercialize and thus take advantage of domestically.

Graham points to many reasons for this, specifically the Russians lack of a robust legal, political and economic system that would provide the necessary infrastructure and protections. But interestingly, he is convinced that individual mores are also to blame, saying, “In the Russian scientific community, the belief that business is dirty. And that you should not demean yourself by stepping out of the world of ideas.”

Fascinating.

Some in the US are concerned that the pressure of competition might actually stymie ideas. It seems our counterparts in Russia may share those concerns.

The Most-Read CIRCUITS ASSEMBLY Articles of 2014

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People often ask what our most popular topics are. There are many ways to slice and dice that, but what we’ve done the past few years is announced the Top 10 most-read articles of each year.

Number one in 2014 was “Advances in Fine-Pitch Printing Process Technology,” by Isaiah Smith of Speedline. It narrowly beat out “Circuits Disassembly: Materials Characterization and Failure Analysis,” by a quartet of Raytheon authors led by  John Wolfgong.

Coming in third was “Solder Joint Integrity Test for Finding Latent Defects in PCBs,” by Hiroshi Yamazaki of Hioki E.E. Corp.

The next four continued the technical bent:

4. “Shielding Effectiveness of Polyimide Tape during Rework,” by Adam Gaynor and Bob Wettermann of BEST.

5. “Advances in Concentration Monitoring and Closed-Loop Control,”by Umut Tosun and Axel Vargas of Zestron and Dr. Bryan Kim of Pressure Products.

6. “Automated Dispensing of 2 Component Materials in Electronics Assembly,” by Per Orla-Jensen of Nordson Asymtek.

7. “Printing Miniaturized Devices for the Automotive and Industrial Manufacturing Sectors,” by Clive Ashmore and Mark Whitmore of DEK (now ASM).

Rounding out the Top 10, coincidentally enough, the final three most-read articles were staff-written.

8. “Libra Industries Finds Its Balance,” Mike Buetow’s profile of the Ohio EMS company.

9. “ASM Takes Root in SMT,” in which Chelsey Drysdale detailed her visit to ASM’s European headquarters in Munich.

10. “A Muddled Recovery,” by Mike Buetow, our annual list of the Top 50 EMS Companies.

Interestingly enough, Nos. 5, 7 and 10 were cover stories in the print edition, while Nos. 3 and 6 were web-only. Given that more than 30,000 people see the print edition each month, it would be neat to know how the numbers would have changed if we were truly measuring apples to apples.

I will note that the data might also be skewed this year because of changes to our website. We launched the new CircuitsAssembly.com site late last spring, and in doing so reset the hit counters, not to mention introduced more splashy graphics that highlight the latest articles, so there’s a bias toward features that were published later in the year.

Tomorrow we will list the Top 10 most-read articles at PCDandF.com.

2014: The Year of the Deal

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Today brings to an end one of the most fascinating years of acquisitions since the crazy Internet era of late 1990s and 2000.

Unlike that episode, however, 2014 was a much more orderly state of affairs, and while some of the deals were not foreseen, the pricing (and volume) were within the realm of reason.

To recap:

  • TTM Technologies announced it would buy Viasystems, bringing to a close one of the most talked-about chapters in PCB industry history. The deal has cleared all but the last few regulatory hurdles, and is expected to close in mid 2015.
  • Rogers will buy Arlon, merging two leading suppliers of high-frequency laminate materials, and perhaps further complicating the supply chain for some of the smaller fabricators that lack the purchasing power of the major players, not to mention consolidating the RF/microwave product supply base for the US Defense Department. Given its shoulder shrug of TTM’s Chinese ownership, will the DoD even bat an eye over this, or will it be concerned enough to throw a wrench in the deal?
  • On the assembly side, ASM purchased DEK, which had been readied for sale since late 2011. The acquisition gives ASM top-of-the-line print-to-placement equipment offerings and positions it to compete with the major Japanese players such as Panasonic, Yamaha, Juki and Fuji.
  • Nordson acquired Dima Group, stretching its traditional dispensing and, later, AOI and test focus into SMT placement. Will Nordson keep the pick-and-place lines, or package that unit up and sell it?
  • Likewise, Amtech Systems has a pending agreement to buy BTU, stretching its semiconductor and solar production focus to include SMT reflow.
  • And just yesterday Kulicke and Soffa made a deal to buy Assembleon for $98 million in cash. While Assembleon had been expected to be acquired since Philips first put it on the block several years ago, K&S’s entry into the printed circuit board equipment space was unforeseen. Does it plan to continue to roll up other companies (Speedline?) and build a worthy competitor to ASM?

Most of the major deals that took place in 2014 happened on the supplier side. Does that presage a similar consolidation on the manufacturing end in 2015? Will some of the units long-rumored to be in play (Multek, Hitachi) finally be consummated? Will EMS, which took a breather in 2014 after major deals involving Natel (Epic), Benchmark (Suntron, CTS) the year before, catch a new spark?

We can’t wait to find out. Happy New Year!

 

Higher (Cost) Education

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Rensselaer Polytechnic is an outstanding academic institution, one that has minted more than a few of the stellar engineers working in the electronics industry today.

And you can count me among those who believe that if we want to ensure that top minds continue to consider careers in academia, the pay scale needs to reflect such emphasis.

But the news that Rensselaer’s president received more than $7.1 million in total pay in 2012, according to The Chronicle of Higher Education’s annual pay survey leaves me stunned.

While it’s true Rensselaer president Shirley Ann Jackson has a stellar resume and much of her pay came via a $5.9 million retention incentive that kept her in place for 10 years, the incentive bonus coupled with her annual salary of $945,000 means the real cost came to  $1.5 million a year.

Rensselaer’s annual tuition cost: $46,700 per semester (not including room and board).

How many students do we discourage from or otherwise price out of the leading colleges each year? How many of those who do suck up and write the checks leave so encumbered by student loans that they end up on Wall Street or sales or some other non-engineering area where they can recoup their “investment?” And for good measure, let’s ask what is the mission of the university in the first place?