The US-China trade war shows no sign of abating. And as predicted, it is wreaking havoc on the electronics supply chain. While OEMs like Huawei get most of the headlines, suppliers of semiconductors are feeling the pain.
Less publicized, but perhaps just as crucial, is the ongoing spat between Japan and South Korea. The Asian nations are locked in a dispute over a group of uninhabited islands located in the straits between the two countries. Relationships are further frayed over issues of war reparations dating to World War II. Japan has struck first, taking steps to put controls on exports of key semiconductor fabrication materials to South Korea for fear they could be used in military applications. South Korea has not publicly countered, but the nation is home to two of the three largest memory device makers.
The tension between Japan and South Korea further complicates an already cloudy memory market picture. DRAM prices are already threatened by a global inventory glut, leading Gartner to forecast a 4% price drop this year. By choking materials supplies, Japan could inadvertently help lower inventories and boost margins. But there’s a point where parts availability could tip the wrong way, ratcheting up lead times and leaving buyers scrambling for sources.
By sales, Samsung and SK Hynix manufacture about 23% of the world’s memory chips. Their combined sales last year topped $110 billion. But there’s no simple answer. Japan is in many cases a sole source of many of these critical materials. How long will South Korea be willing to suffer? And what lengths will it go to to protect its semiconductor dominance?
As it turns out, Exception PCB, a UK-based fabricator, is building circuit boards for the next-gen airfighter. And Exception is owned by Shezhen Fastprint, the Chinese fabricator.
All angst aside, however, how is this different than TTM being the largest board supplier to the US Department of Defense?
AGC continued its consolidation of the laminates market this week, reeling in Taconic for an undisclosed amount. The Japanese company also acquired Nelco last winter, giving it two of the remaining US-based PCB materials manufacturers.
That leaves Isola and Rogers as the last two major players of a once formidable domestic laminate industry to call the US home. And neither company produces the majority of its product in onshore. (Sound familiar?)
With Rogers’ capacity consumed by the 5G rollout, some OEMs and fabricators have been turning more to Taconic as a source for high-rel end-products that required a Made in USA stamp.
The largest vendors — KingBoard, Shengyi, Nanya, ITEQ, and so on — are all based in Southeast Asia. The volume and variety of materials that can be sourced in the US continues to erode, and its hard to see that reversing course. To wit, in its announcement, AGC allowed that “Over time, materials made in Taconic’s Petersburgh, NY, location will be moved to another facility.”
Isola makes FR-4 in Ridgeway, SC, and AGC Nelco makes the same in Tempe, AZ. They join Rogers, Taconic and Arlon as manufacturers of electronics materials in the US.
Will trade tensions peaking, and 5G creating supply issues around the globe, is that enough?
by Olga Zinoveva, Senior Software Engineer, Bright Machines
The User Experience (UX) discipline in the technology sector has evolved rapidly over the last two decades and we’ve all witnessed the changes. For example, the transition from button-based phones and keyboard-only interfaces to increasingly powerful yet easy-to-use, touch-based smartphones and tablets. A parallel change has been happening in factories, with industrial Human-Machine Interfaces (HMIs) evolving from physical push buttons, lights and switches in the 1980s, to the multi-touch screens of today. And we are not done evolving yet!
I have worked on various consumer applications in the past, including games and websites, and was directly responsible for building the UX on a couple of those projects. My experience in consumer UX gives me some insight into the many exciting opportunities that lie ahead for industrial UX. Here are a few I’ve been thinking of.
Defining UX in the factory context
In a setting where a vast array of hardware devices are connected to each other in complex ways, and users range from operators on the factory floor to project managers in remote offices, UX goes far beyond a single screen. Instead, it encompasses the full experience of using the system, from any interface or device that connects to it. Industrial UX is a mix of software (dedicated touchscreen panels or apps) and hardware (buttons, feeders) interfaces controlling the machines on the floor, monitors giving real-time status updates about the production line, and services generating reports based on data collected in the cloud over many weeks. Almost every component we build becomes a part of the user experience, so we must approach design holistically. Every software and hardware engineer, product manager, and data scientist must think like a UX designer.
Increased software capabilities mean increased complexity
The role and responsibility of software in manufacturing is growing rapidly. But with more software capabilities comes more UX complexity. As more tasks move from hardware to software – whether running on the device itself, in a local server, or in the cloud – the number of ways that users can interact with the system and their complexity increase. Yet the UX we build cannot simply hide this complexity from the users. A core concept of UX design is that people always form mental models of how a system operates, whether we want them to or not, and if their model sufficiently differs from reality, it will lead to frustration and mistakes. Therefore, the next-generation factory UX will need to be intuitive and straightforward, but never oversimplified. The goal is to design a UX that helps users build the right conceptual models from the start to maximize productivity and minimize training time and mistakes.
The high bar set by consumer devices
Almost every worker in a modern factory has used a smartphone or tablet – this year, global smartphone usage is expected to hit 2.5 billion (and it’s growing)! As a result, today’s factory workers have a high level of technical literacy and familiarity with certain interaction standards. This represents an incredible opportunity for industrial UX because it can reduce training time for any UX that follows these standards. At the same time, the ubiquity of thoughtfully designed consumer devices has raised the bar for the quality of user interactions, responsiveness, and UX clarity in the factory context. Workers now expect industrial interfaces to work as well as their personal smartphones.
Building UX for the factory of tomorrow is no small feat, but it represents a massive opportunity and an exciting time for UX professionals as they help inform the next wave of industrial innovation.
An edited version of this article also appeared in Design World on June 3, 2019.
He LIVED for
the weekends. Saturdays and Sundays were the only mornings I ever knew Mike to
leap out of bed. It was in his blood. Mike couldn’t wait to hit the casinos. Every
weekend and holiday sunrise, he was among the first to start tossing out his
homespun version of “fish bait.” Mediocre Mike loved to brag.
Slowly but
surely, each Sabbath unsuspecting, wannabe gamblers migrated into the club
where Mike hung out. It seldom failed. A few of the less fortunate souls would
land at Mike’s table. No worries. Mike and his cronies were poised for the pleasure.
With friendly smiles and sinister hearts, they shook down every novice card
player who came their way. What could be more entertaining?
In his mind,
Mikey worked hard Monday through Friday sharpening his craft. He stayed up late
into the evening hours swigging bourbon, practicing his moves, and watching
YouTube videos. When it came to hustling newbies, Mike was good. He was always
prepared. He took pride in his winnings. It gave meaning to his life and made
his son proud.
Of course,
someone had to pay the price. In Mike’s case it was his corporate employer. As
they say, one man’s loss is another man’s gain.
Mike got lucky
and his bankrupt band of gypsies was bought out by a high-quality Fortune 100
company. Mike couldn’t believe his good fortune when his new ship came in. The
sharp household logo added to his prestigious cover at the casino. Mike was on
a roll.
So what does
any of this have to do with leadership failure? Plenty!
In the first
year with his new employer, Mike maintained a low profile. He hid out and let a
hundred or so direct and indirect reports do whatever they liked. After all,
who was Mike to blow the whistle on anyone else? He figured as long as his
fingerprints weren’t on any egregious errors, his gig could go on forever.
And for a
while, it did.
Mike sharpened
his corporate gaming skills as he flipped the switch on his region to autopilot.
Like any
looming bar bill, someone ultimately has to pay the price. Yep. Mike’s employer
took it on the chin. Just one floor below him, one of Mike’s managers, Rambling
Roger, started running a different racket. Roger began practicing a few new moves
on his administrative assistant. Who knew? Everyone. Except Mike, of course.
Mike’s elevator
never stopped on the second floor. It was essential to his third-floor
strategy.
Yet, Roger’s seedy
habits came to light anyway. His once loyal admin turned the tables on him and
sued the corporation for sexual harassment, mental duress, and psychological
cruelty. Mike wasn’t worried. This manager wasn’t one of Mike’s political
buddies. Mike simply ushered in HR and pretended to be appalled by the findings.
Meanwhile, he brushed up on his shuffling skills. And Mike shook off the losses
as a necessary cost of doing business. At the company’s expense, of course!
Over time,
Mike’s regional salespeople were found to be cheating on their commission
plans. His operational leaders turned blind eyes to cost overruns. His staff
took plenty of time running personal errands and convening for smoke breaks.
The billion-dollar brand faltered.
You wouldn’t
need to be a member of Mensa to calculate the cost to his company of Mediocre
Mike’s leadership failure. It was high into the six-figure range. Likely
higher.
What can you
do if you have an employee or leader who has poisoned the well?
Do nothing and hope s/he doesn’t
mess up too badly? Don’t chuckle. It happens daily.
Fire the person and replace him/her
with someone from outside the company? That’s often an illusion destined
to fail.
Replace the person internally?
Perhaps, but it will be most effective if you do the following:
Reset
the culture of the company, division, or team by replacing the leader
internally and bringing in an outside leadership consultant to re-instill the
values of the company.
Mediocre Mike
was a card shark.
He LIVED for
the weekends. Saturdays and Sundays were the only mornings I ever knew Mike to
leap out of bed like a man on a mission. It was in his blood. Mike couldn’t
wait to hit the casinos.
Don’t gamble on
your losses with a leadership failure like Mediocre Mike. The bar tab will
leave you with a hangover that may cost you your company’s reputation.
Keith Martinohas
a passion for helping engineering executives achieve stellar results. Martino
authored the book Expect
Leadership in Engineering. In addition, the team at Keith
Martino has designed and launched Leadership Institutes at multiple engineering
firms across the US.
Martino is quoted in Young Upstarts, Entrepreneur Magazine, NewsMax
Finance, Hotwires, Circuits Assembly, and Printed Circuit
Design & Fab. For more information visit: www.KeithMartino.com
According to the New York Times today, the Chinese government is compiling a list of companies and individuals to penalize in response to the US block on Huawei.
The piece ends with these thoughts:
Forcing out American companies from China’s electronics supply chain could have a major impact on Chinese manufacturers. It would also likely hasten strategies by American technology firms to diversify their supply chains away from China.
Yet if Beijing were willing to take that hit, many companies would struggle to immediately replicate production elsewhere. China’s density of component makers and assembly factories is unmatched around the world.
“It’s a really high-risk way to go about it,” said Andrew Polk, a founder of Trivium, a consulting firm in Beijing. “They are effectively forcing companies to choose, and companies will probably choose the U.S.”
Much has been made over whether Western companies will bail on China if it were to put the screws to them on trade. But if China were to retaliate against the US by shutting down access to certain markets or supply chains, is it unrealistic to think any Chinese companies might relocate as well?
Cemtrex today announced a pending six-for-one (!) reverse stock split of its outstanding common stock. The move comes at the OEM/EMS tries to regain Nasdaq compliance.
Rewind a little more, to April, and Cemtrex’s shareholders were approving a proposal to the number of authorized share shares by 20 million, to a total of 50 million.
As KeyTronic batted away the proposals, Cemtrex grew even more bold, asserting in a followup statement that its intended prey could do with better management. “A combination of the two companies will unlock significant shareholder value for both companies, by enabling cost savings, higher earnings per share and a more attractive price to earnings ratio than either company is currently maintaining.”
Eventually KeyTronic grew a bit aggravated with the unwanted attention, calling the suitor “unqualified” as a buyer. “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.”
The overtures ceased shortly thereafter. By the following January, Cemtrex was consolidating its EMS plants and selling off operations.
Still, even with that episode well in the rearview mirror, I have to think that wherever he is today, KeyTronic CEO Craig Gates must be smiling.
The headlines have been filled with reports on the pending US ban on domestic companies from conducting business with Huawei.
In submitting the order, President Trump cited cyber-warfare, espionage and threats to US national security as rationale for the ban.
Less noted: The impact on bare board and assemblies procured from China. After all, the executive order “prohibits transactions that involve information and communications technology or services designed, developed, manufactured, or supplied, by persons owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary” as determined by the Commerce Secretary.
So while Huawei is a $100 billion company, larger than IBM, Sony, Hitachi, Panasonic and all but a few other tech firms, the declaration could have tentacles that reach far beyond the Chinese OEM. Even if all the defense industry primes, for instance, buy all their boards onshore (doubtful), many others do not, including the financial markets, and key industries such as nuclear, power, and so on.
Almost every North America-based board today shop brokers boards from Asia, mostly China. Their suppliers are, in turn, generally located in China as well. That includes the vast majority of the laminate industry. Sure enough, we are hearing reports of major laminate makers suspending shipments of key materials, including ones for the US defense primes, because of the executive order.
What’s the alternative? North American board fabricators lack the capability and capacity to take on high-volume production. The EMS industry has the capability, but not the capacity. And that doesn’t begin to address the region-to-region cost differences.
Then there’s Washington. The legislators are simply ignorant when it comes to understanding supply chain issues. The executive order targets companies that could put the US economy at risk. Any logical read of that would see that the telecom industry is only one part of the equation. Wall Street is equally at risk.
Just because Cisco or Juniper or HP or IBM or Dell or Arista don’t have Chinese names doesn’t mean they aren’t as reliant on the China supply chain as Huawei. Same goes for their EMS networks. Intel has six chip fabrication plants and three assembly/test sites. Two are in China. Qualcomm is a minority owner of SMIC, which has nine plants open or planned in China. It also has a JV assembly/test house with Amkor in Shanghai.
Take a look at HP’s supply chain. The OEM is sourcing product from China facilities of Foxconn, Jabil, Flex, Celestica, Inventec, New Kinpo, Wistron, Pegatron, Qisda, and TPV, among others. The workers on the HP lines number in the tens of thousands. That can’t be replaced easily, if at all.
Not just the large shops stand to be squeezed. Besides relying on China for raw materials, many smaller North American fabricators also outsource certain services and otherwise procure other relatively finished goods from there, such as engineering or laser drilling or mass lam boards.
Insofar as consumers are concerned, it’s probably a good thing this isn’t happening during the Christmas ramp. But that date is drawing near. Even without the tariffs, given the looming capacity constraints, prices are bound to spike.
And even if the questions surrounding Huawei are sorted out — a big “if” — the fun won’t stop there. At this writing, the US government is considering action against other Chinese OEMs, including ZTE and Hikvision.
Which EMS has received the most private equity funding over the past few years?
Chances are, it’s Tempo Automation. The San Francisco-based contract assembler just added another $45 million (that’s right) in new capital. That’s on top of the $20 million it garnered a year ago, which it used to build a new factory. Overall, we estimate Tempo has raised around $75 million over its six-year life.
Investors are falling in love with Tempo’s emphasis on software-based manufacturing. It has caught the attention of blue chip OEMs like Lockheed Martin, which is also a customer and investor. The latest round of funding, called a Series C, was led by existing investor, Point72 Ventures and includes an array of new and existing outside investors investors. Series C is typically the final funding round prior to an IPO or acquisition.
In an era where PCB assemblers aren’t rushing to go public, this is an interesting development. Privately held Tempo does not disclose its revenue, but it’s likely to be less than $100 million. That level of investment suggests a high level of confidence by outsiders that Tempo is on the right track.
Patty had just finished an
all day workshop on “Common Defects in SMT Assembly and How to Minimize
Them.” The workshop seemed to go really well, and many of the 35 or so
attendees thanked her for a great learning experience.
After most of the people
filed out of the room, two approached her as she was disconnecting and packing
her laptop.
“Dr. Coleman, that was a great workshop. But, I do have one question. You used a term all day that I wasn’t familiar with, ‘SAC’,” a 35-year-old process engineer commented to her.
While saying this, he
presented his business card that referred to him as a “Senior Process
Engineer.”
Patty was trying to
recover from this shock, when the second similar looking fellow asked,
“And what are ‘OSP’ and ‘eutectic’.”
After explaining these
three terms and exchanging a few pleasantries, the two senior process engineers
walked out of the room and bade Patty farewell. As the room became empty, Patty
settled into a chair.
“How can this be?” she
thought. She was stunned that people with enough experience to be called
“senior process engineers” would not know these terms.
Today 6 AM …
Patty was jogging back to her house in Woodstock, VT, when she spied a beautiful red fox. Neighbors had reported seeing the fox numerous times. People believed that the fox was nesting. In addition, a black bear had been sighted by everyone in her family over the past few weeks. Add all of this to the family of deer and the rafter of turkeys in her neighborhood and it was quite an experience for Patty, Rob, and their sons.
The fox, however, created
a new problem. Patty and Rob had bought their twin sons a Yorkshire puppy,
Ellie, about a year ago. At 6 pounds she could be dinner for the fox, so,
unfortunately, they could no longer let Ellie out by herself.
Figure 1. Ellie the Yorkie after a big day. Sadly she has to be
watched when she goes outside of Patty’s house, due to the local predators.
By 7:30AM Patty was
in her office. She was giving a workshop in two weeks at a local chapter
meeting in Boston and decided to create a pre-test to give to the attendees so
that she could assess their current knowledge. Patty planned on having the
students grade each other’s exams and on working the exam in as a leaning
experience at the start of the workshop. By assessing the results of the
pre-test, she wanted to make sure she didn’t use acronyms they don’t
understand, and to also explain topics that the students might not be familiar
with. As she was working on the questions for the pre-test, Pete walked in.
“Hey, Professor C, how
goes it?” Pete asked.
“I’m preparing a pre-test
for the workshop I’m giving in a few weeks,” Patty replied nonchalantly.
“I remember you talking
about doing it a month or so ago. Seems like a good idea to me,” Pete
responded.
“I’m ,glad you approve,”
Patty said wryly. “I just finished it. Do you want to take a look at it?”
she continued.
Patty printed out a few
copies and handed one to Pete. They both looked at it for a few minutes, in
silence.
Finally, Pete commented
sheepishly, “Aaa, Patty your joking, right?”
“Why do you say that?”
Patty asked, a little annoyed.
“It’s just too easy.
Everyone will get 100% and you won’t get any information,” Pete opined.
Patty then reminded Pete
of her experience 6 months ago.
“OK. Maybe you have a
point. But, I still think it’s too easy,” Pete concluded.
“I’ll tell you what. How
about a bet? If the average pre-test grade is above 70%, Rob and I will take
you and your new crush, Mary, out to Simon Pearce. If
it is 70% or less, you treat us,” Patty teased.
“It’s a bet,” replied Pete
quickly.
The Pretest:
What does the letter “S” in SAC stand for?
How much silver is in SAC305?
What is the approximate melting point for SAC305 solder (+/- 4oC)?
Solder paste is approximately how much (by weight) metal (+/- 5%)?
What is not a current common defect in SMT?
Head-in-pillow
Pad cratering
BGA Ball Matting
Graping
Which is a closest to typical stencil thickness?
5 microns
20 mils
5 mils
20 microns
Which is closest to a typical lead spacing for a plastic quad flat
pack (PQFP)?
0.1mm
0.1mil
0.4mm
0.4mils
Which has finer solder particles, a Type 3 or 4 solder paste?
What does OSP stand for?
Place an arrow at the eutectic point of the tin-lead phase diagram
below.
Epilogue (two days after the workshop)
Patty arrived at Ivy U and
couldn’t wait to see Pete. She went to his office but he wasn’t there. Finally,
she found him in the machine shop helping four students with a project that
required some additive manufacturing.
“Hey, Pete! When are you
and Mary going to treat us to our dinner?” Patty teased.
“Don’t tell me the average
was less than 70%,” Pete grumbled.
“Forty-three point zero
eight to be exact,” Patty punctuated.
Figure 2. The Pretest
Scores
“Yikes!” Pete exclaimed,
rubbing the back of his neck. “I guess you were right.”
“It really helped me to
take things slowly and explain all the terms. I think I helped the students
much more than usual,” Patty explained.
“Rob and I both agreed, we
are ordering the most expensive meal that Simon Pearce has,” Patty joked.
At that Pete let out
a deep groan.
Dr. Ron note: All of the events in this post are true. How would you do on the pretest?
