Category Archives: Hot Wires

Mike Buetow’s thoughts on the industry

When Fake Buys Make Real News

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M&A specialists in the electronics industry seem to have caught a case of merger mania. In the process, they unfortunately have seem to have learned the worst traits of the buyout crowd.

A pair of unsolicited bids were announced this week. In one instance, a small EMS company announced its interest in a much larger competitor. In the other, a Chinese connector manufacturer made a play for a smallish Canadian EMS/ODM.

What makes these cases interesting are the details.

In the former, Cemtrex, a company with trailing four quarter revenues of $125 million and a market cap of $31 million, made a play for Key Tronic, a top 50 worldwide EMS that reported sales of $468 million for its just completed fiscal year. Key Tronic’s market cap is $74 million, so Cemtrex’s offer of a one-for-one stock swap was a huge discount to Key Tronic’s value.

Not only that, says Key Tronic, it wasn’t really even  an offer:  “Based on (Cemtrex’s) current SEC filings, Key Tronic understands that Cemtrex has not commenced a formal exchange offer and that any such offer would require additional SEC filings by (Cemtrex),” Key Tronic said.

In the latter, Shenzhen Kaizhong Precision Technology made a written offer for Pacific Insight Electronics. The wrinkle here is, not only was Pacific Insight taken by surprise, it is already under agreement to be purchased by Methode Electronics.

The ODM today confirmed receipt of a written buyout proposal from Chinese connector maker. However, Pacific Insight has already agreed to be acquired by Methode Electronics, whose offer Pacific Insight says is superior to Kaizhong’s. Pacific immediately urged shareholders to reject the unsolicited bid.

Publicly traded companies such as Key Tronic and Pacific Insight have a fiduciary responsibility to their shareholders. However, from time to time outsiders try to make waves or generate publicity by pulling stunts like these. I’m not saying the interest communicated by Cemtrex or  Kaizhong is false, or even misplaced. But in both cases, I think the suitors are overplaying their hands.

 

Dont’ Forget PCB West Next Week!

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Next week is the 26th annual PCB West, the preeminent trade show in the Silicon Valley for the electronics supply chain.

As those who have attended before know – and there are quite a few of you – PCB West focuses on the design and manufacture of PCBs, HDI, electronics assembly and printed circuit board test, and gives engineers, designers, fabricators, assemblers and managers an opportunity to improve skills, increase knowledge and network with peers, colleagues and experts. With an emphasis on training – half the presentations
are at least 2 hours in length – there is no place better to get real, practical, in-depth information.

Our three-day conference features:
• More than 70 presentations on the hottest topics, including noise control, flex circuits, and diagnosing assembly defects. This is our largest conference yet!
• More than 15 day-long tutorials or half-day seminars

• Sessions for all levels of experience and training, from novice designer and engineer to seasoned pro
• Speakers from Analog Devices, TTM Technologies, NXP Semiconductor and many more top companies
• The ever-popular Rick Hartley, Doug Brooks and Susy Webb
• An all new PCB/EMS Management track with special sessions aimed at helping executives make the capital investment and hiring decisions that shape their companies
• Three free day-long tracks on Sept. 13, with topics ranging from signal integrity and IoT PCBs to 3D printing technologies.

Also next week, a special 2.5-day IPC Designers Council Certification Program powered by EPTAC.

All conference attendees receive free admittance to the one-day exhibition Wednesday, Sept. 13, which includes a complimentary luncheon and evening reception, both on the show floor.

For more information or to register, click here.

Looking forward to seeing you at the show! And as always, please feel free to share your thoughts.

It All Adds Up at Count on Tools

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When you work from a home office, nothing is more enticing than an opportunity to “get out” and see a customer and take a facility tour. So, last week, “get out” I did and hit the road from Fayetteville, GA, up to participate in a tour of Count on Tools in Gainesville, GA.  (For those unfamiliar with Georgia geography and traffic – yes, that is a bit of a drive, but, thankfully, I-85 has been repaired.)

This tour was organized by the Georgia Manufacturing Alliance. This group serves manufacturing businesses in the state and provides monthly plant tours, educational sessions and networking opportunities  “designed to help make profitable business connections for our members.” They put on all sorts of very cool tours throughout the state – including one I was sorry I missed of the KIA plant. Jason Moss, the founder and CEO of GMA, has, in fact, been a great supporter of our local SMTA Atlanta Chapter as well as a featured keynote.

But, I digress. Back to Count on Tools – longtime CIRCUITS ASSEMBLY friend, supporter and 2017 Service Excellence Award winner for Automation and Handling Equipment. I was greeted warmly at the door by Curt Couch, president and CEO, and we chatted about how nice it was to see each other outside the confines of a busy trade show.  He and his wife, Rene, started this business about 26 years ago literally in their backyard. And what an amazing success story from such an unassuming but obviously visionary guy. He said he never expected this level of growth, but here they are today with about 40 employees and a 20,000-sq. ft. facility.

For those who may not know, COT is a precision component manufacturer specializing in CNC Swiss automatic machining using standard to exotic materials including stainless steel, titanium, Inconel and PEEK. They are a global supplier of precision engineering components to a wide range of industries. And, of course, in our industry we know them for their nozzles and tooling, automation tooling and component handling equipment. Just this month, they finished an expansion of their manufacturing facility.

The consistent comment from the tour group (which was comprised of professionals from other manufacturing and service facilities throughout Georgia) – “what a beautiful, clean facility, well run and organized.”  And, the camaraderie among the Count on Tools employees was evident as well.

Zach Shook, operations director, Marketing and IT was also on hand, and we discussed our upcoming travel plans for SMTAI and Productronica. I caught up with my friend Tom Foley from ASM, who is a customer of COT. Prime, a contract manufacturer here in Georgia, was also represented as well. (Shameless plug  – our next SMTA chapter meeting will be held at Prime, and our speaker with be Jeff Timms, managing director of ASM Americas.  He will speak on “Enabling the Digital World” which highlights many of the upcoming and future technologies which will drive the electronics assembly industry into the future.)

All In all, Count On Tools is an impressive manufacturing success story and a day well spent!  Thank you Curt, Rene, Zach and the Count on Tools team for your hospitality.

Frances Stewart is vice president for PCD&F/CIRCUITS ASSEMBLY.

How Far Can We Go to Replace Lead?

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The end is nigh for lead in solder, as our columnist Tim O’Neill writes this month in CIRCUITS ASSEMBLY.

Rules governing use of the materials — Directive 2015/863, aka RoHS 3 — are coming online and will be in full force by 2019.

Suppliers have until July 22, 2019 to meet the stricter provisions, which includes no more than 0.1% lead in medical devices, which are joining consumer, industrial and other electronics products on the effectively banned list.

The question Tim poses is, What comes next? Already, the future of commonplace unleaded alloys such as SAC is being questioned. As Tim writes, “It is even feasible SAC 305 will be dislodged by a new de facto alloy that better serves the needs of the market.”

A Norwegian scientist believes he may have the answer. As noted in Phys.org this week, Dr. Henrik Soensteby of the University of Oslo is working on an alternative alloy that contains nothing but common — and essentially benign — elements. In conjuring up his alloy, Soensteby is mixing sodium, potassium and oxygen with niobium, a very strong metal typically used in steel. While niobium dust is reported to cause eye and skin irritation, it reportedly is nontoxic, at least in the volumes used.

It’s not so clear yet how much niobium would be needed. Brazil is the biggest supplier of niobium, producing more than 85% of it each year. Other sources include Zaire, Russia, Nigeria and Canada. World production is relatively light: around 25,000 tonnes per year. Some scientists believe there are ample supplies still in the ground. There’d better be: Some 5 million tonnes a year of lead ores are mined each year, although obviously not all that goes into electronics.

Soensteby is optimistic he can use atomic layer deposition (ALD), a vapor phase method that uses gas at controlled temperatures to stimulate a reaction with the substrate; the output is thin films. It is an emerging technology in semiconductor manufacturing. There are many, many questions, of course. First and foremost, does the alloy actually, you know, work? Also, ALD typically involves higher temperatures than are used in electronics assembly: Would it work with today’s packaging? Will other technologies such as 3D printing or Joe Fjelstad’s solderless Occam process supplant the need for solder in any form?

Still, materials science is the most exciting area of electronics today. We may make fun of folks who walk around with smartphones seemingly permanently tethered to their ears, but we also have them to thank.

 

Register now for PCB West the Silicon Valley’s largest PCB industry trade show: pcbwest.com! Now with full-day electronics assembly tutorials!

 

So Long, Sola

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I have to say, I didn’t think Jure Sola would or could last this long. The cofounder of Sanmina, Sola was one of the poster boys for wanton M&A excess, snatching up more than a dozen companies or OEM plants during the late 1990s and early 2000s. The spree culminated in the purchase of SCI Systems in mid 2001, a $6 billion deal that saddled the company with so much debt, when the ensuring tech collapse occurred, it was forced to take 20 straight quarters of “one-time” charges.

Most execs couldn’t have survived such a bloodletting. Sola wasn’t most execs, however. He continued to place his bets on fabricating in the US — in a memorable line, he told an IPC Printed Circuit Expo audience that “plating was in his blood” — and Sanmina remains the second (or third) largest board supplier in North America. Moreover, he correctly swung to the military and aerospace markets, eschewing the PCs that SCI was so dominant in.

Today the company is half the size in revenue of its peak, but consistently profitable.

Come October Sola will ride off into the sunset with his legacy intact, perhaps not the most beloved man to run a major PCB company, but a success nonetheless. In this era, that’s no small thing.

 

Jim Raby, RIP

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I’m saddened to get the news this morning that Jim Raby has passed away. As longtime readers will know, Jim was one of my favorite persons, not just in the industry but in life. What a tremendous fighter he was for doing things right! I will always miss him. 

My sincere condolences to his wife Ellen, son David and everyone at STI on this sad day. We have lost a fine engineer, gentleman and human being.

Trolling NY

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Apparently someone has decided to toy with New York state by assuming the role of “Foxconn US” and trolling a poor soul named Chris Souzzi, who works for Genesee County Economic Development Center.

I’m no fan of Foxconn, and I don’t think there’s a snowball’s chance in hell they put a plant in the Empire State, but stunts like these aren’t funny (even if that’s what’s intended) and simply go too far.