Foxconn India: Still a Pipe Dream

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It’s been a year (more actually) since India announced — to great fanfare — a memorandum of understanding with Foxconn to invest $5 billion over the next five years in the nation. For India, it seemed like a marriage made in heaven: the world’s largest electronics manufacturer would be an ideal partner for its goal to develop a local end-to-end supply chain that could not only serve its burgeoning domestic population but also provide a steady stream of exports to the rest of the world.

Yet as the Times of India points out today, the bride is still waiting at the altar.

As we said at the time, Indian officials shouldn’t hold their breath waiting for the relationship to be consummated. Foxconn is really good at promising huge investments, only to fall short in the end.

Actually, we’ve been saying this for years. Foxconn is Chinese to the core. It may on occasion have dalliances with other countries, but it always returns to its mate. Suitors, take note.

 

What’s the Deal with Delly?

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Gayla Delly left Benchmark with no notice last week. Why?

Changes at the top of Tier 1 and 2 EMS firms don’t happen often. Before Friday, in fact, Benchmark had had just two chief executives in its 30-year history.

Cary Wu founded the company as part of a buyout from medical device manufacturer Intermedics in 1986. He remained in charge until December 2011, when he promoted Delly, the company’s longtime head of finance, to the top spot.

Highly dependent for years on the high-end computing sector, especially IBM, Benchmark had been trying to balance its portfolio via acquisitions. With its acquisitions of Suntron and the EMS operations of CTS, both in 2013, the company attempted to broaden its reach into the high-reliability industrial, medical and aerospace/defense markets. It then snapped up industrial communications OEM Secure Technology in 2015.

Many bigger EMS acquisitions are slow to be accretive. The large amount of fixed assets and (typically) lower capacities at the acquired company mean layoffs and restructuring costs will follow. Still, investors are impatient and the deals were met with criticism in some quarters.

Much like Sparton and its now-departed CEO Cary Wood, Benchmark faced strong opposition from a loud activist investor who accused the EMS company of poor fiscal management. (Interestingly, unlike many of its similar-sized competitors, Benchmark has typically been patient with its M&A strategy, choosing to keep its debt levels low.)

The intensity of that criticism, which was public in the spring, had quieted down during the summer after the investor won two board seats. On its quarterly conference call in late July, Delly went to far as to deny any strategic changes in the direction of the company following the seating of the new directors. This makes the timing of Delly’s departure all the more curious.

Last Friday, the announcement came that Delly was being replaced as president and chief executive with veteran electronics executive Paul Tufano, effective immediately. Tufano is a Benchmark board member who has spent more than three decades in the technology and telecommunications industries, most recently as chief financial officer of Alcatel-Lucent. He also has a background in EMS, having been executive vice president and CFO of Solectron. It’s possible the move implies the company will refocus its sights on computing and telecom. We shall see.

Neither Delly nor the company has yet commented on the change.

 

Changing of the EDA Guards

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Turnover among the heads at the major suppliers of electronics design-related software is rare indeed. Since 2010, the top spot of a leading PCB software company has changed hands only once.

The dean of PCB EDA, Makoto Kaneko, founded Zuken in 1976. Wally Rhines has run Mentor Graphics since 1993. His counterpart at Cadence, Lip Bu Tan, has been in place since 2009.

Altium has had three chiefs in its existence, the most recent being Aram Mirkazemi, who was installed in 2014. But for a shareholder revolt in 2012, however, Nick Martin, who founded the company in 1985, might still be in charge.

That’s why it’s was so unusual this week when, on the same day this week, Ansys and NI each named the successors to their respective thrones.

Ansys appointed Dr. Ajei S. Gopal CEO-in-waiting, succeeding longtime head Jim Cashman. Gopal’s been a familiar face around the company, however, having joined its board in 2011.

Cashman joined Ansys as president in 1999, and was named CEO a year later. On his watch, Ansys’s revenues have grown from $50 million to almost $1 billion.

In NI’s case, it’s in some ways an even bigger transition. As a researcher at the University of Texas, James Truchard cofounded National Instruments in his garage in 1976. Come Jan 1., when Alex Davern takes the reins, it will be as chief executive and president of a $1.2 billion firm employing more than 2,000 workers worldwide.  If Davern has an advantage, he’s held a variety of positions in finance at NI dating to 1997, and he’s been Cashman’s right-hand as COO and CFO since 2010.

What’s clear is that the software industry, while dependent on innovation, also prides itself on stability. Since the market is characterized by a relatively small number of major players, the ability to maintain relationships with key customers may have something to do with that. That the leadership at most of the aforementioned companies has been relatively controversy-free doesn’t hurt, either.

From the looks of it, the heir apparents promise more of the same. Given the respective performance of the CEOs they are following, that’s not a bad thing.

 

 

Reshoring

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I am often asked by those in the printed circuit and electronic packaging industries about reshoring. My response generally is that reshoring is a myth. It seems that whenever I try to contact someone by email I get an automated response stating, “I am currently in China and will return to my office on ….” Many of the facilities and much of the equipment that would be needed to reshore have been auctioned off or sent to the scrap heap. Those that operated them have moved on to other jobs. Some have gone to work for Chinese companies.  Further, reshoring intimates bringing back something. However, technology does not stand still. Advances in fabrication processes and equipment require major expenditures to produce today’s, and tomorrow’s products.

Major firms such as Apple have announced intentions to establish independent research facilities in China. Production often follows within the region of successful R&D.

What seems to be occurring is not reshoring but new activity to establish new companies, manufacturing operations and produce product — albeit on a very modest level. However, with a sluggish economy, high corporate taxes, and overly burdensome government regulations there are few venture capital sources available for such efforts – especially in the uncertainty promulgated by the current election year. In fact, affordable financing to modernize and upgrade America’s smaller PCB enterprises is largely unavailable.

We must also consider the question posed by Andrew Strong an associate director of Cambridge Consultants when we think about reconstituting older manufacturing plants for potential re-shoring: “Repair, Replace Or Re-Invent?” I would suggest, assuming that the products to be made have sufficient competitive market longevity, replace with improvements based on recent developments, automation, design changes, new materials, and lean manufacturing principles — assuming sufficient financing is available.

Reshoring continues to be a very “hot topic.” A member of our 2,500+ Linked-In network members wrote the following thought-provoking and incendiary comment: “Reshoring for electronics manufacturing doesn’t make sense due to high levels of process automation, extensive and effective supply chain already established, end product unit value to weight ratio enabling low unit shipping cost and relatively smooth global logistics.

The issues with establishing new manufacturing for other products in the USA are highest corporate tax rates, increasingly difficult regulatory positions discouraging small businesses and startups, government interference in attempting to “pick winners,” and uncertainty about the sustainability and competitiveness of our free market capitalism as we continue to follow the European socialists countries into oblivion.”

Another colleague of the past half-century sent an interesting response to the “silent  complaint” story linking it to reshoring. We posted it on our “Comments & Discussion” page.

What do YOU think? Do you wish to engage in this vital conversation? Should we redefine the challenge? Do you have a workable solution? Let us know!

Auto Electronics: Gearing Up or Headed for the Cliff?

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What would the electronics industry do if automotive demand were to pull a Thelma and Louise and head off the proverbial cliff?

The auto recovery has been the axle of the Western supply chain since 2008. The drivetrain is starting to show some wear, however, with market followers forecasting nominal growth at best for 2016.

The good news is that electronics content in vehicles continues to increase, rising to 8.9% of the $1.42 trillion worldwide electronic systems market last year, up slightly from 8.6% in 2014. Moreover, forecasts call for the share to continue to rise over the next several years.

Less clear is the extent, if any, the seers account for the potential for widespread ride-sharing trends or — worse for some — outright banning of vehicles.

To wit: Some 27 million Americans alone will use some form of ride-sharing at least once this year, a figure that doesn’t include traditional car-pooling. Urban millennials are growing up without the preconception that vehicle ownership equates to status, an important cultural shift.

A drop in demand for hybrid/electric vehicles (HEV) could also decelerate electronics growth. Hybrid sales alone dropped 15% year-over-year in 2015 — reversing a big gain in 2014 — and bottoming oil prices have kept the market for electric sluggish. Hybrids carry almost twice the electronics content of conventional gas autos, making HEVs a key growth engine for electronics makers.

More disconcerting to the auto supply chain is the prospect of a carless environment. This is actually happening, and in places you wouldn’t necessarily associate with technological backlash. For example:

  • Bogota, Colombia, has been car-free on Sundays since 1976, a move that sidelines an estimated 1.5 million vehicles.
  • Likewise, Jakarta has sponsored Car Free Day every Sunday since 2007.
  • San Francisco shuts certain streets to vehicle traffic on various Sundays throughout the year.
  • Oslo plans to ban cars from the city center by 2019.

Car-free days are becoming so widespread, the phenomenon has its own Wikipedia entry. In fact, now there’s even a World Car Free Day (Sept. 22).

The electronics supply chain has gotten plenty of mileage from the automotive industry for nearly a decade. It might be time to find a backup plan, however, if the sector wants to keep trucking on.

Accursed Diode Marking

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Am I a broken record? Pretty much — especially when it comes to confusing diode marking.

For example, everyone knows what the diode symbol looks like, and pretty much everyone knows which side is the anode and which is the cathode. Right? It’s just like in the following picture:

Is that big enough?

Normally, the clearest way to indicate polarity on an LED is to put something like this diode symbol in silk screen next to, or between, the copper pads. In theory, that should remove ambiguity.

Ambiguity in marking is the enemy of polarized parts. Unfortunately, as I cover in this, and many other blog articles, LED manufacturers seem to conspire against us all when marking is concerned.

We recently ran across a case of built-in ambiguity. The PCB had, what looked like, a very clear marking. The image on the right is from the assembly drawing, which is just a blow-up of the board silk screen and documentation layer.

With that marking, I’d quickly come to the conclusion that the anode is on the right and the cathode is on the left. I’d even confidently state that it’s a sure thing and extremely unlikely to cause any problems. But …

Here’s where I’d be very wrong, and why it’s so important to always check the datasheet when dealing with diodes. Take a look at the following clip from the component’s datasheet. Scroll down to the bottom of the image for the punch line.

Wow. I can’t even …,

The board designer was just following the datasheet. That’s a perfectly proper thing to do, except when the manufacturer flips a coin, as it appears to have happened here. In this case, dispense with the symbol altogether and use “A” for anode and/or “K” for cathode in the silk screen. (Use “K” because “C” looks too much like a reference designator for a capacitor.)

Duane Benson
In the land of the insane, only the sane are crazy

http://blog.screamingcircuits.com/

What Do You Do If You Can’t Have Reference Designators?

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The first answer to that question is probably going to be along the lines of, “Put them on the board.”

But, sometimes you can’t have reference designators on your board. Maybe it’s too densely populated and there isn’t room. Maybe, for aesthetic reasons, you’ve chosen to leave them off. With some products, like development boards, it’s sometimes necessary to use the space for instruction or functional identification and reference designators would confuse your customers. 

It’s always best to put reference designators as close to the part as possible, and on the same side as the part, but if that’s not possible, you can still create an assembly drawing. When laying out the board, put the reference designators in a different layer than the text you want in silk screen. Then, create a PDF that has all the component outlines in their place, with reference designators. Make one for the top and one for the bottom. Call this document “assembly drawing” and include it in the files sent in to be manufactured.

Figure 1 shows a good assembly drawing format. It has reference designators and polarity marks.

You might ask why reference designators are needed when all the surface-mount parts are machine-assembled. First, any through-hole parts are hand-assembled. Their locations and board side needs to be clear for the people stuffing them.

Second, CAD systems don’t always have 100% accurate information. If the center point of the footprint is off, surface mount machines (ours and anyone else’s) will center the part where file says to put it, which, in the case, would be the wrong spot.

The reference designators are also part of quality control. It’s another opportunity to remove ambiguity. Ambiguity bad. Certainty good.

Duane Benson
Car 54, where are you?

http://blog.screamingcircuits.com/

Smartwatches Will Never Be A Dominant Technology

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Folks,

We saw a while ago that the decline in sales of PCs, tablets, and smartphones is easy to understand.  There are two main drivers of this trend:

  1. The market is saturated. In other words, almost everyone that wants one has a device.
  2. These devices have such high capability that upgrading is more often done due to worn out units. It is not driven by the need for the new, but only to incrementally improve existing devices.

It is interesting to consider how much effort has been spent on the reliability of electronic solder joints when the anecdotal experience of most people is that, if a unit fails, it is more often due to some mechanical problem like a worn out keyboard or an audio plug that no longer works.  We are replacing old units, not for electrical fails, but for mechanical wear issues.  It will be interesting if someone starts addressing this need more vigorously.

Even with the market for PCs, tablets, and smartphones stabilizing, the numbers of units sold per year is still large. PCs sell at a rate of about 250 million per year, and tablets at 150 million per year, as discussed in the post mentioned above. Smartphones are truly a phenomenon however, with units per year in the 1.5 billion range. Time will tell, but I wouldn’t be surprised if smartphones will eventually be considered more transformational than PCs.

While such devices are sold in hundreds of millions to billions annually, smartwatch yearly volumes are only in the 10s of millions.  I don’t see this figure moving upward much ever.  Let me explain.

Having used an Apple Watch for over a year now, I think I am qualified to discuss the usefulness of this and similar devices.  First of all, let me state that I like my Apple Watch and use it quite a bit. I like the feature that I can see the outdoor temperature with a flick of my wrist, and I use the fitness tracking app constantly. I used to miss an occasional phone call when my mobile phone was on vibrate. However, with my Apple Watch also vibrating on my wrist, such misses are a thing of the past. In addition, I can pull a Dick Tracy and speak into my watch’s telephone feature if I want.

But these features are not enough.  First of all, I must have an iPhone for the Apple Watch to work, but, more importantly, the small size of the watch’s face makes it difficult to use by tapping. Remember calculator watches? It is simply easier to just get out my iPhone 6S to perform various tasks. This is an important aspect of the interaction of humans and electronics; human size factors dictate that a certain minimum size exists for a device to be useful. For most folks, this size is that of an iPhone 6S,® or others might need an iPhone6S Plus, or the largest Samsung Galaxy or equivalent smartphone from other manufacturers.

Considering its diminutive size, I don’t see the smart watch being a dominant technology unless someone invents a projection screen device as envisioned in the Cicret.  And please remember the Cicret is only a concept, not a working device.

Cheers,

Dr. Ron

Mycronic-Axxon Deal a Symbolic Milestone

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Mycronic’s purchase of electronics dispensing OEM Shenzhen Axxon Automation Co. today signals a novel, if inevitable, milestone in the SMT processing equipment history: Chinese process equipment OEMs have reached the point where they are sufficiently viable and significant for Western companies to invest in.

Certainly there are no shortage of domestic Chinese OEMs. But relatively few have reached the technology or market share level needed to draw the interest of Western buyers.

No more.