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

In Their Element

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One of the truly fun diversions of the electronics manufacturing community has been the ongoing Friday Element Quiz on the IPC TechNet email listserv.

For nearly two years, a few clues have been posited to the TechNet members each week, who then try to guess the corresponding element. (No element was repeated.)

The quiz was the brainchild of Dave Hillman, an engineer at Rockwell Collins and one of the longtime contributors to the listserv. Each week, Hillman (with the help of a few reference manuals), poses a question to the group. For example:

This element has no biological role for humans. History shows that the mineral containing this element was encountered in silver mines in the Bohemia (Czech Republic) in the Middle Ages and was give a name that is the combination of the words “ill luck” and deceiver” because it was found to have no use. This element plays a significant role in industry today in several different industry segments and is more abundant that tin in the Earth’s crust. What element is being described?*

For those not keeping track, the first winner was Lamar Young of SCS Coatings; the most recent was Hillman’s colleague Doug Pauls. Over the 96 weeks the quiz has run, there have been several repeat winners. The leaders to date are Dr. Bev Christian of RIM, who has picked the correct answer eight times, nosing out Leland Woodall of CSTech, who has correctly named seven elements.

Given there are 112 elements, the FEQ should be winding down. By popular demand, however, Hillman has stocked up on new reference books and pledges to start over.

Let the good times roll.

*The element is Uranium (U).

 

Nam Tai Joins $1B Club

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It’s flown way under the radar but Nam Tai just became the newest member of the EMS $1 billion club, joining 13 other companies (not including the major Taiwanese ODMs like Quanta, Wistron and Compal).

The company crossed the threshold thanks to a spectacular fourth quarter in which sales jumped more than 250% year-over-year. Nam Tai, which ranked 22d on the CIRCUITS ASSEMBLY Top 50 in 2011, will certainly move into the Top 15 when all the 2012 list comes out in April. Nam Tai’s fourth quarter sales alone would be enough to place the company in the top 30.

What drove the upswing? The company finally saw its investments in LCD modules for smartphones and tablets pay off.It was also boosted by sales of LCDs to the automotive industry, particularly US OEMs.

But can this last? Nam Tai has invested heavily in capacity in southern China, and has another 1.2 million sq. ft. “parcel” of land that it plans to develop — twice the amount of its present Shenzhen campus. This is all the more amazing because Nam Tai’s two existing factories are capable of about $150 million in revenue per month each, meaning its current capacity utilization is around 30%. Yet its stated operating margins are a healthy 8.2% and the gross margin as a percent of net sales was 10.5% for the quarter.

Chairman Ming Kown Koo humbly suggests Nam Tai was “lucky” to see gross margins top 10% last quarter, but thinks they will stabilize around 6% to 7% in the coming quarters, even though the company plans to hire 43% more staff — 3,000 workers — this year.

This is a story worth watching. Either Nam Tai will push forward into the next EMS tiers, or it will come crashing down, another victim of over-expansion and unpredictable end-markets.

 

Why a Tight Supply Chain Is Actually Less Restrictive

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This is a great first-hand account of why a tech OEM found manufacturing in Mexcio to be far superior to China. The shorter supply chain, lower inventory, access to plentiful skilled engineering and machine talent (and accountants versed in manufacturing operations) — all of these have played roles in the decision-making and success of 3D Robotics.

Smoke and Mirrors?

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Apple has cut ties with Guangdong Real Faith PZ Electron on the grounds that it was using scores of underage workers.

So while noting that this is a step in the right direction, is it cynical to suggest that Apple’s decision to fire a fairly run-of-the-mill supplier for using underage workers while basically ignoring its much larger (but harder) problem of Foxconn was promotional in nature?

 

Mid Tier EMS Firms Have Top Tier Managers

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Lincoln International today published its quarterly EMS stock index and, as usual, there are several interesting nuggets to be gleaned. One thing that stands out is how well Celestica has been managed over the past several years. It’s the only one of the four top tier companies that is currently net positive in cash. Given that the sector historically offers little or no dividends to shareholders, that tells me Celestica is really ahead of the pack when it comes to creating a profitable business, regardless of whether this is reflected in its share price.

What also stands out is how much better overall the mid tier EMS companies have been at managing their debt loads. Four of the six mid tier companies tracked have no debt, and the other two have net debt of 2% or less of their annual revenues.

 

On Jerry Murray’s Passing

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We at UP Media are, of course, very sad and distressed to hear the news of of our former colleague Jerry Murray’s passing.

Jerry worked for UPMG and its predecessors for more than 20 years. I came late to that party, but I worked with Jerry for five years and think of him every day. As a matter of fact, just before I received the news that he had died, at age 82, I was making plans for coming to San Diego for the IPC Apex show, and I was thinking about where to meet him.

I think of Jerry almost every day, and I am so sorry that he’s gone. He was one of a kind, in the best of ways. Who else had a life like his? He lived in the hottest places on earth and the coldest places on earth. He wrote and wrote and wrote some more: technical, pulp fiction, you name it. He married the love of his life, Suzie, one of the kindest persons I’ve ever had the pleasure of meeting. He was funny and warm and cranky and quirky, sometimes all at once. He knew so much about so many things and was always happy to share it. He had a great life. I’m glad I came along in time to share a little piece of it.

I will be sad, and will cry and mourn my friend. But today I’m just glad he got to live the life most of us dream of.

RIP, my friend.

Public Data

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I was pleasantly surprised this morning to receive a note from IPC indicating a change to its data collection methods.

In an announcement touting its new market research subscription series, IPC said it would use aggregate company data along with “carefully vetted secondary research.”

That sounded like IPC would now use data from the publicly traded EMS companies to help flesh out numbers its participating members report. A quick inquiry to IPC director of market research Sharon Starr confirmed as much.

“The growth rates reported each month will be based on IPC’s survey sample, but we will be looking at published data from the publicly traded EMS companies as a cross-check and may also use this data in our market-size calculations. If growth rates from the publicly-traded companies differ significantly from what our survey participants are telling us, we will address that in the reports,” Sharon told me.

This represents a departure from the past 20 years, where IPC would rely only on the data directly reported by survey participants. For years, report after report showing various manufacturers’ monthly sales numbers would arrive on an unsecure fax machine in the IPC office. Eventually, that fax was moved to someone’s office, but there was little in the way of confidentiality offered, and even if the the reporting company used a unique code, its name on the top of the fax always gave it away. As companies went public and disclosures became more scrutinized, there was a real disincentive for manufacturers to submit monthly data. Over the years, this trend undermined the usefulness of the IPC data: if larger companies weren’t reporting, were the figures as published truly representative?

Parsing the publicly traded firm’s quarterly numbers will go a long way toward ensuring that the data reflect the macro industry trends.

 

Updating the Design Standard

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IPC-2221A, as most designers know, was released in 2003. Since that time, lead-free has gone from a niche technology to a mainstream one, and its added a generous dose of complexity to the design decision tree.

In November, IPC-2221B was, at long last, released, and it’s a good opportunity to reflect on the process of how standards are developed, and why it took nearly a decade to get the latest rev out.

In that time, for example, the task group responsible for J-STD-001, the industry soldering standard, came out with a “D” and an “E” revision, and work is underway on the “F” revision.  Certainly the changes lead-free brought about affected electronics assembly at least as much as design: it’s hard to pin the problem solely on technical reasons.

My experience working on the J-STD-001 suggests the difference in publishing frequency comes down to how the respective task groups call a halt to the changing technology. Going back to when Jerry Rosser was chair of the J-STD-001, for example, that group has a 15-year-plus history of calling a hard stop to new technical additions after a set period of time. Jerry knew the standards would always be disrupted by new technology, and therefore he initiated a plan — still followed — whereby after a period of months, the spec would be frozen, and the only changes from that point to the revision in progress would be to ameliorate the grammar and, on the rare occasion, fix legitimate technical disputes. If, for example, new chip-scale package requirements weren’t ready by the hard stop, they were tabled for the next rev. The ensuing document was never perfect, but it was far more timely than would have been otherwise possible.  To wit, the task group published four revisions, plus one amendment, in one decade alone.

Based on interviews with the coordinator of the IPC-2221, a different tack was taken, which slowed the process considerably.  It took the task group several years before calling a hard stop. Another difference is the decision to include a fair amount of tutorial in the design standard, whereas the soldering task group stripped all that info out years ago, opting instead to segment it into a separate handbook.

Now, to be sure, there is a design guide, but it was published in 1992 and has never been updated. I understand the philosophical reasons for doing things the way the design task group has done them, but in the interest of faster time-to-market, I think it’s time to reconsider whether there’s a better way. Thoroughness has value. But so does expediency.

1 Billion Reasons for Disbelief

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Where do they come up with these numbers?

DigiTimes is now reporting that Foxconn will open a pair of R&D centers in Japan at a total cost of $1 billion. Unless Foxconn is planning to break into wafer fabrication — and it’s not — $1 billion is an otherworldly sum. It’s certainly far greater than would be needed for even the most statest state-of-the-art facility. (Not to mention all those Japanese OEMs that are looking to sell their own internal operations on the cheap.)

This comes on the heels of the proclamation that Foxconn plans to ultimately invest $10 billion in a large-volume production center in Indonesia. Again, given that there are only a handful of EMS/ODM companies that even do $10 billion a year in sales, and that the market for SMT manufacturing equipment is less than $2 billion worldwide, these estimates suggest land costs in Serang compare with those of downtown Tokyo. (They don’t, and even an operation the size of Foxconn’s reported vision — a 1,000 hectare [3.86 sq. mile] industrial city — would cost only a relatively affordable $1.1 billion for the raw land.)

Sorry, but either there’s some gamesmanship going on, or someone needs a new currency converter.