It’s always interesting when the seers, also known as the industry’s journalists, get together for a chat.
Hosted by Mike Konrad, I joined Trevor Galbraith, Phil Stoten and Eric Miscoll to discuss post-pandemic production, innovations in our industry, supply chain and labor shortages, and of course, some predictions.
The podcast can be listened to or downloaded from PCB Chat here: https://upmg.podbean.com/e/rm-76-meet-the-press/
Or, if you are really brave, you can see us in action here:
The EMS industry has posted several straight months of what some consider excessively high book-to-bill ratios. The April peak of 1.62 has only marginally fallen over the past couple months and, as of this writing, was 1.48 in June, the most recent data available.
As a refresher, the ratio is calculated by dividing the amount (in dollars) of bookings by the amount in shipments. In other words, if over a set time period a company gets $110 worth of orders and ships $100 worth of product, its book-to-bill ratio would be 1.10. A ratio over 1.0 is considered an indicator of future market growth.
So a positive ratio is a good sign, generally speaking, but too much of a good thing makes folks nervous. And ratios in the 1.40 and above range are historically at the high end.
Some are concerned of an overheated market, but conversations with several leading EMS firms suggest instead that OEMs are offering longer forecasts, which are inflating the numerator. For instance, if the typical window was six months, it might be nine or even 12 months now. That pushes more “orders” into the data pile, but it’s a mathematical anomaly, not a sign of double-booking.
I don’t expect the sky to fall, at least this time.
Years ago, ahead of a US election, I used this space to pen an open letter to the new president. I wrote that the race for office was heated and intense, but the winner should put aside any ill feelings and work toward the betterment of all Americans.
The column was timed to hit readers’ desks in November, just after the election results were announced. Magazine deadlines being what they were, of course, I wrote it in early October – more than four weeks prior to election day. In short, I submitted it to the printer having no clue who was actually going to win.
More than a few readers didn’t catch that little nuance, and they filled my inbox with screeds both positive and negative about the outcome, projecting their own biases on my musings and utterly missing the point I was trying to make about leadership.
Since then, I’ve stayed away – far away – from anything that even hints of politics, sensing it’s too charged a subject to use even as a metaphor for a larger point.
So, when an industry friend whom I respect more than he will ever know suggested I write an editorial about electronics companies requiring vaccination, and, in his words, “come out swinging in favor of it,” my first reaction was indifference.
Then we conducted a survey of US readers and found just under 60% plan to attend face-to-face events this year, and the top reason for staying home is, of course, Covid-19. That’s no way to get business done, not when there’s a perfectly good vaccine – more than one, actually – available and in most cases free.
As Covid-19 cases increase across the nation, primarily with unvaccinated persons, it’s hard not to be frustrated at the current state of the world. This is a largely preventable disease, , provided we choose to prevent it.
Although I will probably pay dearly for using this space as a soapbox for something that goes beyond electronics engineering, I can’t keep quiet knowing just how badly it’s affecting our industry, not to mention our world.
With that, I strongly encourage all companies – not just US-based ones – to mandate vaccinations for all workers, full-time, part-time and contract-based. Any visitors to their offices should be required to show proof of vaccination too.
I realize that the unvaccinated have their reasons, and I’m not going to argue with them. But let it be known I wholly disagree with their stance. We must ensure we are doing everything we can to protect the health of our employees and each other. It’s time to take a stand.
The University of Wisconsin this week became the latest would-be benefactor of Foxconn’s pretend largesse to acknowledge that it has been, in fact, jilted.
A UW-Madison response to a public records request by the Wisconsin State Journal on Monday shows the Taiwanese electronics company gave $700,000 in the first year of a five-year agreement and no money in the second or third year. The amount to date represents less than 1% of the original commitment.
“I am not at this point expecting to receive that gift,” Blank said in an interview with the State Journal editorial board last week. “It’d be nice. I think it’s unlikely.”
— UW Chancellor Rebecca Blank
UW should feel no embarrassment at falling for the Taiwanese ODM’s promises of riches — in this case, $100 million in grants. The list of brides left standing at the altar by Foxconn is long and global.
Perhaps one day, when Foxconn comes knocking, the prospective bride will demand the ring — and the cash — upfront.
Somehow, however, I tend to doubt it.
In case you were wondering whatever happened to IBM’s once sprawling campuses in Endicott, East Fishkill, and other western New York towns, where Big Blue made everything from semiconductors to laminates to circuit boards, the New York Times has the story.
Spoiler alert: Like so many other old mill buildings, breweries, among other businesses, are moving in.
Autodesk’s bid — declined, so far — for Altium took me by surprise. In retrospect, it probably shouldn’t have.
As I’ve noted many times, I fully expect Altium to be acquired. It’s just I was looking more in the direction of Dassault and PTC, the big mechanical CAD (MCAD) players. I should kept Autodesk in my field of view, especially after it acquired Eagle five years ago. I think I was lulled to sleep, as that was a small acquisition and Autodesk hasn’t made much of a push since to burrow into the ECAD space.
The proposal was hefty, valuing Altium at $3.91 billion. That’s not much lower than Siemens paid for the considerably larger and more profitable Mentor Graphics in 2107. Yet Altium thinks it can do better.
It just might. Autodesk’s bid prices each Altium share at AU$38.50, a 41.5% premium over Altium’s closing price on Jun. 4 and a premium of over 47.4% to the one-month volume-weighted average price. Prior to the offering, however, Altium’s stock had peaked at a 52-week high of AU$39.34 in last October. So at $38.50, Autodesk was actually underbidding a bit.
An Autodesk-Altium merger wouldn’t change the face of the ECAD industry immediately. Altium would still run neck-and-neck with Zuken for third place in revenues behind Cadence and Mentor. But it would give Altium the backing of a industry leader in 3-D CAD, and accelerate the inevitable MCAD-ECAD merger.
“You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things that you think you could not do before.” ? Rahm Emanuel
Indeed.
In the wake of the latest components inventory crisis, the lobbyists are out in full-force trolling for subsidies for the semiconductor industry.
And if the usual suspects weren’t enough, many of the blue chip (no pun intended) companies that make up the Semiconductor Industry Association and SEMI this week launched yet another industry organization, the Semiconductors in America Coalition. the group supports the allocation of $50 billion by the US government (read: taxpayers) to fund advanced semiconductor manufacturing. The announcement came at almost the same time – coincidence? – IBM reported successful development of 2nm process using a 300mm wafer.
That prompted a longtime friend and industry observer to suggest, “rather than spending money directly, the US and state governments offer the same deal to the supply chain as a whole as do the South Korean, Chinese, and Taiwanese governments. A holistic response is needed. Maybe a carrot to keep 2nm tech onshore.
“We need to bring a number of critical technologies back; chips, packaging, HDI, transposers and even certain components,” he went on.
“Apple has been using black solder mask for decades now to prevent piracy and it has worked. Their keiritsu approach works. Keeping key technologies within the kimono, as the Japanese say, and bringing those key industrial components back, would help to reaffirm North American industrial security and protect our supply chain.”
I can see where he’s coming from, but Apple really doesn’t have the scale of the other communications and computing OEMs; it’s share of the worldwide smartphone market is about 15%, and it has only 8% of the PC market. It’s probably not the model to emulate in that regard. More interesting is its recent decision to go full bore with its own M1 processor, which is made by TMSC.
I know Samsung and TMSC are also working on (close to?) 2nm. I don’t think IBM alone has the scale anymore to be a difference-maker, which is where the other fabs need to step up. They all smell an opportunity, and it’s hard to blame them for trying to get their hands on “free” money.
What I haven’t seen is an overarching policy proposed by the various trade groups/lobbyists promoting onshore wafer production. It seems more piecemeal to me, with new associations stacked atop legacy ones, all promoting the same message (subsidies) but with no promise of tangible returns.
I’m not against government subsidies for critical tech – and semi is absolutely one of those – but it seems to me they should start with a goal and then fill in the rest (processes, funding, etc.).
Sans a clear objective, the game plan will not only be expensive and a hard sell, but doomed to break down.
Reading that, I can’t help but think of Endicott Interconnect Technology and what might have been.
It must have been 15 years ago when I toured EI, the one-time IBM campus where bare board fabrication, assembly and chip packaging all took place. So self-contained was the operation, in fact, they had their own laminate treater.
EI was where the HyperBGA and CoreEZ high-speed flip-chip BGA packages were invented, as well as custom laminates for semiconductor packages. The engineering talent was second to none. They really could do it all.
What they never mastered, however, was the right scale. Agreements to license their products went nowhere. The layout complicated process flow: I remember having to duck to avoid banging my head as I would my way through the partially subterranean assembly facility. Dwindling revenues coupled with the high cost of doing business in New York ultimately scuttled the company, and the assets were sold to TTM in 2019.
With today’s emphasis from President Biden on down on rebuilding the US semiconductor industry, however, one can’t help but wonder whether EI was the right idea, just 20 years ahead of its time.
Plexus, annually among the highest-ranking performers in the CIRCUITS ASSEMBLY Top 50 EMS Companies list, yesterday announced a new plant to be built in Thailand.
In its press release, the company touted the facility as an example of “Plexus’ commitment to Environment, Social & Governance (ESG) best practices.” And on the surface, much of this sounds great: green building initiatives, an exterior green zone for employees, and other features.
But the Plexus Code of Conduct goes further than just green initiatives. There’s talk — lots of talk — about corporate and individual ethics, core values and leadership behaviors. And ESG criteria are more than green initiatives: the “social” component is tied to standards for managing relationships with employees, suppliers, customers, and the communities where a company operates.
Plexus specifically cites its adherence to the Universal Declaration of Human Rights, a proclamation by the United Nations General Assembly in 1948, which in its preamble notes history’s uncomfortable past with free speech:
Whereas disregard and contempt for human rights have resulted in barbarous acts which have outraged the conscience of mankind, and the advent of a world in which human beings shall enjoy freedom of speech and belief and freedom from fear and want has been proclaimed as the highest aspiration of the common people
And commits its signers to the following:
Everyone has the right to freedom of thought, conscience and religion; this right includes freedom to change his religion or belief, and freedom, either alone or in community with others and in public or private, to manifest his religion or belief in teaching, practice, worship and observance.
– Universal Declaration of human rights, Article 18
And Thailand is complex. It routinely jails citizens, including minors, for speaking out. Defaming the monarchy is punishable by up to 15 years in prison per incident. God save the king, but don’t badmouth him.
This is going to sound like I’m picking on Plexus. In fact, this is a problem facing numerous multinationals. One thing they have in common is membership in an official sounding organization called the Responsible Business Alliance (RBA). Formerly the Electronics Industry Citizenship Coalition (EICC), RBA is a group of companies that “share a commitment to ensure working conditions in the electronics supply chain are safe, that workers are treated with respect and dignity, and that business operations are environmentally responsible.”
Fancy words aside, the RBA is a crock. The companies that make up its membership include Apple, Amazon, Foxconn, Pegatron, Wistron and other OEMs and ODMs that are routinely singled out by NGOs, in social media and the mainstream media for disregarding worker health and local labor laws. In my view, the RBA is used as a shield: listen to what we say, don’t look at what we do.
I can’t argue with Plexus’ decision to locate factories where the labor is skilled and generally cheap. But I can’t rationalize how Plexus’ lofty goals of good corporate citizenship fit with Thailand’s pattern of state-sponsored oppression.
Just as we thought the bloom was off the rose in China. Will the EMS industry trade one labor honeypot for another?