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
Foxconn, for once, was probably the first company in the electronics manufacturing sector to acknowledge the looming financial hit from the coronavirus. Apple, which relies on the Taiwanese ODM for the majority (?) of its production, was naturally forced to follow.
In a timely column on CIRCUITS ASSEMBLY, EMS expert Sue Mucha lays out a strategy for handling sharing bad news with suppliers and customers. “Transparency matters,” she says. “The goal shouldn’t be to paint a rosier picture than the situation dictates. The goal is to fill the communications void and establish trust that your company will provide news as the situation evolves.”
That begs the question, why haven’t more firms come forth with sales or profit warnings? Are Apple, Foxconn, Jabil and Plexus the only ones that will be affected? Or are they simply the vanguard?
I’m not one to make light of health epidemics, especially given that my college major was initially epidemiology. But the global slowdown in electronics demand — underscored by the earnings reports over the past couple months — is poised to worsen in the grip of the coronavirus outbreak, which started in China and has now reached more than a dozen more countries.
In response, businesses in Wuhan, the epicenter for the disease, have closed and Chinese government has effectively quarantined the entire city of 11 million. Wuhan is the capital of Hubei province, and between the two entities there are roughly 1,500 factories and related facilities.
Among the electronics manufacturers affected at ground zero are Avnet, Siemens, and Foxconn. After Hubei issued a mandatory shutdown notice, Foxconn furloughed more than 13,000 workers at its campus there. (The plant generates an estimated $300 million in revenue per year.)
As the disease spreads, so too have the shutdowns. IMI announced last night it is suspending operations at plants in Shenzhen, Jiaxing, Chengdu and Suzhou. The furloughs will last up to several days.
While electronics assembly plants can be brought back up to speed fairly quickly, the impact missing even a few days of revenues will be felt in the quarterly results. And here’s the possible silver lining.
Many companies have been reporting weaker results in the most recent quarter. For instance, Celestica’s revenues were down 14%, Amphenol’s dropped 3.3%, and Sanmina’s were off 16%. TTM went so far as to sell its entire mobility unit. Plexus saw sales rise, but is cutting an entire design unit. (UPDATE: Flex reported sales down 7%, adding to our picture of how widespread the weakness is.) Often the US-based firms see a slowdown in presidential election years as OEMs take conservative approaches to ordering ahead of potential administration changes. The outbreak, deadly and unwished for as it is, gives cover to management for any recurring revenue drops, at least for a quarter or two, and perhaps longer if the coronavirus gains a wider foothold. A cynical view, to be sure, but hardly an unrealistic one.
Already, airlines are bracing for lower capacity utilization and Asian firms are fearing the worst as businesses enact travel restrictions. Again as with SARS, the timing comes as Asia (and most of the world’s major economies) is experiencing tepid growth, and the best way to stop a recovery in its tracks is to sever the flow of goods and services.
For everyone’s sake, let’s hope this virus burns out fast.
Those who have been in the PCB industry since at least 2001 will likely remember the New York buyout firm known as Hicks, Muse, Tate & Furst. Better known as Hicks, Muse, they laid waste to the industry, buying up the largest fabrication shops like AT&T’s 400,000 sq. ft. plant in Richmond for dollars on the penny (you read that right), then attempting the same with EMS, before watching it all fall to pieces with multiple bankruptcies and revaluations. (The entity known as Viasystems eventually landed under the control of Tim Conlon, a highly capable executive who right-sized the company and made it profitable enough to sell to TTM in 2015.)
One of the beneficiaries of the merger mania in the late 1990s and early 2000s was Bob Herring.
Not once but twice, Herring built up and sold printed circuit board fabricators to larger bidders. The latter time, Herring sold Herco Technology and a second firm, Synthane Taylor, to Teradyne for about $122 million in stock.
You know how this ends. Teradyne’s stock collapsed, Herco was shuttered, and then came the lawsuits.
Herring later turned his sights to media, launching a news network that is popular in certain segments of the American public.
Tom Hicks of Hicks, Muse turned his sights on sports, buying — and bankrupting — the Dallas Stars hockey team and Texas Rangers baseball team, among others.
As the safe harbor warning every equities firm is obligated to announce says, past performance does not guarantee future results. But if I were one of Junior’s friends, I’d keep wallet in my pocket.
CES 2020 offers the latest augmented and virtual reality technology, creating immersive experiences across industries from health care to agriculture and manufacturing to retail.
From CES, get a first-hand video look at emerging technologies that are pushing boundaries of innovation in vehicle technology. https://vimeo.com/383851852
I like articles like this one from Forbes— even if they are out of date, because they cast attention on the intrinsic complexities of manufacturing.
But, while Forbes may think manufacturing inefficiencies cost the industry $8 trillion a year (no idea where that figure comes from, by the way), it points to the need for tools like the digital twin.
In his most recent monthly column my friend Gene Weiner pointed out the irony of calling a printed circuit board a commodity. “When did printed circuits become mass-produced unspecialized products?” he asks.
As I told Gene, it’s true PCBs are custom, but in some (many?) instances they are highly mass-produced. Think residential LED lighting, or game consoles or the most popular phones, etc. My sense is that calling them “commodity” or “custom” is a bit of a red herring. Large OEMs call PCBs commodities even though they know each is specific to a particular program. I think to most its a catchall word for “volume procurement.”
There is real tension on costs between customers and suppliers, and without artificial price bottoms I can see no reason that won’t continue. I think it’s highly unlikely sellers will be able to change the pricing model as long as the process technology remains essentially the same. It’s too entrenched, and often the buyers (which more and more often are EMS companies) have lower margins than the fabricators, so there’s no incentive for them to switch to a pricing model that will cost them more. A move to a different process technology (3-D/additive manufacturing) might well change the pricing curve.
It’s not that simple, of course. As double-Ph.D. and former CTO of Multek Craig Davidson once said, “Never underestimate the tenacity of incumbent technology.” It’s perhaps the best quote on technology adoption I’ve ever heard.
I used to think that with the many brilliant minds in our industry, we would successfully disrupt ourselves — in other words, the ideas that obsolete our current ways of doing things would be conceived and implemented by one of our own — maybe some genius in the basement of Apple or Intel or IBM. I’m less confident of that now.
I now lean toward the notion that the true disruptive change will come from someone outside our industry who has knowledge of both hardware and software and who uses a truly novel process to develop a widget that the public embraces. The mass appeal of the product (not the process, to which the general public is ambivalent) will be the proof of concept. And the investment money will follow.
You are putting in a new assembly line to assemble some large boards for which your company just received a three-year contract. The boards are 45cm long and you expect the cycle time from the component placement machines to be 40 seconds per board. Your boss is pressuring you to get another 5-zone oven, as they are cheaper and take up much less space than a 7- or 10-zone oven. But, you are concerned that a 5-zone oven may not have the capacity that is needed to keep up with the component placement machines. Let’s make some calculations and see if your concerns are justified.
Table 1 shows some typical reflow oven metrics:
Let’s assume that you will be using a typical modern SAC solder paste. By studying the reflow profile above, we see that the amount of time needed in the heated zone is about 4.5 min. or 270 sec.
So if we choose the 5-zone oven the belt speed will be:
Belt Speed = BS= Heat Tunnel Length/Time in Heated Tunnel = HTL/Time = 180 cm/270 sec. or 0.66 cm/sec
The component placers will be presenting a 45cm board every 40 sec., so the belt speed needs to be:
So clearly a 5-zone oven won’t work. What about a 7-zone oven? Let’s calculate the belt speed for this oven.
BS = HTL/Time = 250cm/270 sec. or 0.926cm/sec
Now we can see that the 7-zone oven won’t do the job either.
How about the 10-zone oven? Let’s see if the belt speed is greater than the 1.125 cm/sec needed.
BS = HTL/Time = 360cm/270 sec. or 1.33cm/sec
Success! Since 1.33cm/sec is greater than 1.1125cm/sec, this 10-zone oven will work. The extra belt speed will permit a small amount of spacing between the boards. Let’s calculate what it will be:
To summarize: For our 45cm board that has a cycle time of 40 sec., we need a 10-zone oven with a heated tunnel length of 360cm. There will be an 8.32cm spacing between the boards in the oven.
If you would like an Excel spreadsheet to make these calculations send me an email at [email protected].
Cemtrex’s run in EMS ended today with a decided whimper. The New York-based company sold its remaining contract assembly assets to a German private equity group for about $7 million.
It brings to a close one of the stranger stories in recent EMS memory. Cemtrex grew through acquisition, buying up a German EMS company, and later another, and green-fielded plants in Romania and India.
Then there was bewildering and lame hostile takeover attempt of Key Tronic, at the time a Top 50 EMS in terms of revenue. In offering a 1:1 stock swap, Cemtrex called out the larger EMS for its seemingly underwhelming profitability. Key Tronic’s response — at once clinical and dismissive — was one for the ages: “Our initial research shows [Cemtrex] reports approximately $45 million of EMS revenue. In our opinion, this does not qualify [Cemtrex] to make any statements as to how it might operate an EMS business like KeyTronic which is over 10 times [its] current size in terms of revenue.”
Cemtrex never filed the paperwork for a potential acquisition and the proposal quietly vaporized. And today, so did its aspirations of EMS supremacy.
I don’t have all the details, but the industry icon Ralph Morrison passed away Aug. 2.
Ralph spent more than 50 years in the electronics industry. He was responsible for teaching thousands of engineers all about the fundamentals of how voltage and currents work. Up until about eight years ago, he was a constant presence at the PCB West design conferences.
He wrote several books, including Solving Interference Problems in Electronics, Grounding and Shielding Techniques in Instrumentation, and The Fields of Electronics: Understanding Electronics Using Basic Physics.
I didn’t know Ralph in his prime, but we developed an amiable relationship over the past 18 months as he did some writing for us. I truly enjoyed him — he had an economy with words that I will always strain to achieve.
According to longtime friend Dan Beeker, a memorial service will take place in October. I will miss his emails and occasional phone calls, and most of all, his kind words about the role we editors play in helping designers and engineers better understand their craft.
