The Rule of 72

Posted on by

Four years ago, the big boss, 6′ 6″ tall, 350 pound Mac Savage, said that the goal for the sales of a new product was at least 20% growth rate per year. The team is in a room prepping for a review with Savage (sometimes called Big Mac or, in jest, “The Whopper”) when the person responsible for analyzing the data, Charlie, comments:

“Well in 2016, sales were 100K units and four years later in 2020 they are 200K. So, in four years, sales increased 100%. Therefore, the yearly increase was 100/4 or 25%. So, we beat the goal by 5. So, Big Mac should be happy,” Charlie says.

There is a murmur of agreement among the 10 or so people in the room. And a few comments like, “It’s always good when The Whopper is happy,” were quietly said.

Helen chimed in, “That’s not true; using the ‘Rule of 72,’ the growth rate is 72/4 = 18%. So, we are a bit short.”  

Fred, who was always a bit annoyed at smarty-pants Helen chimed in, “I think Charlie is right, 100% growth in four years is 25% per year.”

Helen responded, “With your logic, if the growth rate was 25% after the first year, sales would be at 125%, right?”

Everyone in the room murmured in agreement.

Figure 1. The Team: Helen is to the far left. Charlie is the bald guy with the beard holding a sheet of paper. John is the chap wit his laptop open. Fred has the red shirt on and June is to the right with the long blond hair. 

“But would second year sales be 150%?” Helen went on.

There was some mumbling, then John, a young new hire said, “You would add 25% of 125%. My calculator says the total would be 125% plus 31.25% equals 156.25%, not 150%.”

John, then got excited and did some more calculations, “The third year is not 175% with 25% growth per year, but 195.3%, and then the fourth year is 244.14%… much higher than 200%. The growth compounds.”

Everyone groans anticipating the disapproval of “Big Mac.”

Charlie finally asks, “is Helen’s 18% growth rate right?”

John makes a few trial and error calculations and says, “18% seems a little low; it’s more like 18.9%, but it’s not 25% or even 20%. But 18% was a pretty good first estimate.”

“The rule of 72 is an estimate, it gets more accurate around 8 years,” Helen chimed in.

“Jeepers, look at the clock, we only have 45 minutes before Mr. Savage comes to the meeting and wants our report,” June warned.

After a brief chuckle that June was the only one to call the big boss Mr. Savage, instead of Big Mac or The Whopper, the team got to work putting together Power Point slides for Charlie’s presentation. They finished with 5 minutes to spare, enough time to freshen their coffee cups or hit the restroom.

At 11AM sharp, Savage came into the room and Charlie started his presentation. Everyone was nervous about Savage’s response.

Charlie summarized that by using the Rule of 72, the growth rate was short of the 20% per year target, but was more like 72/4 or 18%. He pointed out that a more precise calculation showed that the growth rate was 18.9%.

The entire group expected that Savage was going to blow his top that the 20% target was missed. But, he calmly said, “Well, the 1.1% shortage is unfortunate, but I’m impressed that you didn’t say the growth rate was 25%. I am more impressed that that you knew to use the Rule of 72 and more so that you were able to fine-tune your work to get the more precise. Great work Charlie!”

Everyone in the room rolled their eyes, especially Helen and John. Someone from the group was about to speak up, when Charlie, red faced said, “Sir, I should point out that Helen suggested using the Rule of 72, and John did the more precise calculations.”

“Charlie, you are a good leader, giving credit where it is due. Let’s have this team develop an action plan to improve the growth rate. We should meet in a week to review your plan,” Savage said.

There was a palpable sigh of relief among the team.

Savage, ended with, “Who is this new guy John?”

John was introduced by Charlie as a recent grad of Tech.

“John, I got my MBA from Tech,” Savage said.

“John, I want you to derive The Rule of 72; it will be a good experience for you. See if you can do it without looking anything up,” Savage went on.

John was a bit shaken, but he was able to derive The Rule of 72. See his derivation below.

The derivation of The Rule of 72

Cheers,

Dr. Ron

The Miracle of Soldering

Posted on by

Folks,

Imagine you are Guglielmo Marconi, and you opened the first radio factory in Chelmsford England in 1912. Using Lee De Forest’s 1906 invention, the triode vacuum tube, your early radios needed a way to connect the various electronic components together. Enter soldering. Soldering is the most cost effective and reliable, some might say only, way to connect electronic components together. It has been since the birth of electronics with the radio.

It is interesting to ponder some of the effects that the radio had on civilization and society. Before the radio, most of the United States was disconnected. People in California didn’t know what was happening in New York in anything like real time. There was also no national entertainment. Following early broadcasts in the 1920s, radio was a staple of most American homes by the 1930s. Families would gather around the radio after dinner to listen to the news and comedy, drama, music, etc. This golden age of radio lasted from the 1920s through the 1950s until radio was supplanted by television. See Figure 1.

Figure 1. A young girl listens to the radio in the 1930s. It would be difficult to overstate the impact of radio…all enabled by soldering.

Electronic soldering, in a sense, is a miracle of technology. It enables connecting copper to copper at a temperature of less than 230°C. The connection is reversible, conducts electricity well, and is mechanically strong. This soldering temperature is crucial for electronics, as the printed wiring boards and component packages contain polymer materials that cannot withstand temperatures much higher than 230°C. This low soldering temperature is especially impressive when considering that to bond copper to copper without solder would require temperatures near that of the melting point of copper or 1085°C.

To work its magic, solder forms intermetallics with copper. See Figure 2. The intermetallic closest to the copper is rich in Cu3Sn, and that closest to the solder is rich in Cu6Sn5.

Figure 2. A schematic cross section of a component lead soldered to a PWB pad. 

It is important that the soldering bond is reworkable. The electronics industry would have difficulty being profitable without this important feature of soldering as most assembly processes have some yield loss that requires rework.

So, the next time you use your smartphone, PC, or TV, remember it wouldn’t be possible without the miracle of soldering.

Cheers,

Dr. Ron

Figure 1 source: By Franklin D. Roosevelt Library Public Domain Photographs – This media is available in the holdings of the National Archives and Records Administration, cataloged under the National Archives Identifier (NAID) 195876., Public Domain, https://commons.wikimedia.org/w/index.php?curid=2151524


Passive Demand Anything But Passive

Posted on by

The component distributor TTI has released its first quarter market report and the outlook is ominous: 28 passive electronic component types have increasing lead times, while 24 saw price increases. Tantalum molded chip cap lead times are now up to 32 weeks.

Lead times for most connectors remain stable, although prices are climbing. The exception is TE, whose lead times are climbing.

Memory supplies are also generally getting tighter.

With some component manufacturers now requesting 18 month forecasts, the risk for double-bookings is on the rise. Beware! Someone always gets stuck holding the bag of chips.

https://www.futureelectronics.com/resources/market-conditions-report/memory

‘We are Stronger by What Unites Us’: An Open Letter from PCEA and SMTA

Posted on by

My name is Stephen V. Chavez CID+ and I serve as the President of the newly formed Printed Circuit Engineering Association (PCEA). PCEA is a trade association for professionals in the electronics industry. There are several other trade associations, some large or small, some old or new that currently exist. We seek to affiliate in a cooperative manner with each one. I have observed that we all attempt to serve the greater good in the electronics industry. Each group has evolved, grown and hopefully we all seek to coexist.

I know at the PCEA many individuals are involved and have historically been involved with IPC, SMT, IEEE, and many other associations. We have served and continue to serve in each other’s ranks. In particular I have the distinguished privilege to serve as an IPC-CID+ Master Instructor. I also serve as a volunteer on some of the IPC standard committees. I am honored for the privilege to serve in their ranks.

A recent column [Ed. note: Because the column was not in PCD&F/CIRCUITS ASSEMBLY, we are not linking to it here.] I read takes issue with the efforts of IPC in our industry, and while well-intended, I do not recognize the picture it paints. Among other things, the author suggests a lack of contact between IPC and the American educational system. In fact, IPC has a robust college outreach program across the US, and dedicated staff to support it. Keep in mind, the effects of the COVID-19 pandemic has slowed many good efforts to engage with engineers and future engineers worldwide, and this is no exception.

Moreover, in my opinion the best path to take is to volunteer our time – as we in the PCEA are doing – to educate our colleagues, the newer members of our industry, and the future
ones. Note the emphasis on the word “our.” IPC is a reflection of ourselves. Its staff, like
that of PCEA’s and many other associations and professional societies, comes from industry. We are all evolving and attempting to serve the industry at large in so many ways. It is a tribute to IPC that it has successfully navigated the changing industry so well over 60 years, and we all owe them a debt of gratitude and allegiance for so many of their great achievements. I once communicated a perspective about the IPC that bears repeating, “IPC is not a Them, rather, it is an Us!”

SMTA – Tanya Martin, Global Executive Director
SMTA has been fortunate to be serving the global electronics manufacturing and design
industry since 1984. We support professionals by facilitating access to national and international communities of experts, as well as accumulated research and training materials from those dedicated to advancing the industry. Some of our most important work is done within our local chapters (national and international) in connecting professionals for education, training, and fellowship. We have invested great resources into the college and university programs and support many SMTA student chapters around the US to be a bridge between industry and academia.

SMTA and PCEA both agree that IPC along with other trade organizations such as SMTA, IEEE, EIPC, others including the newly formed PCEA can coexist and collectively make this industry better. Each of us has the potential to serve the participants. Many of those participants are involved with several trade associations. We have seen IPC successfully reach into the community, academia, professional development, government advocacy, standards development, engineering, manufacturing, OEM business, contract manufacturing and the list can go on… The same thing can be said about the other trade associations. We believe we are all better served by our common welfare and the things that unite us are bigger than the things that divide us. We at the newly formed PCEA are ardent supporters of the IPC and their mission within the industry. We seek to affiliate and be proponents of their mission to serve the electronics industry. We encourage everyone to respect them not for their perfection but for the general overall benefit that our industry receives on so many fronts.

If faced with the question of whether to be givers or takers to the industry, we choose “givers.” Like all the trade associations, IPC is organic and adaptable, addressing the needs of those they serve the best they can. We are grateful and support their mission!

Stephen V. Chavez CID+
Chairman, PCEA
Collaborate, Inspire and Educate
Cell (602)369?3349
[email protected]
www.pce?a.org

AI and Autonomous Vehicle Challenges: Common Sense, Flexibility, Dexterity, and Situational Awareness

Posted on by

I have been following advances in artificial intelligence (AI) and autonomous vehicles (AV) for some time now. At first, I was a cautious; then I became a skeptic; and now I am a doubter.

AI can do some amazing things. More than 20 years ago, Deep Blue beat World grandmaster Garry Kasparov. Today, AIs can routinely beat chess grandmasters and other world experts at games like Go.

Although impressive, these accomplishments play to AI’s strengths. Any activity that can be reduced to algorithms are natural for AIs. These AI victories have created a belief by many that AIs will soon take over most jobs and eventually become our masters. Witness such motion picture franchises as The Matrix and The Terminator. Some serious intellects buy into this concern as shown in the book Our Final Invention. This book posits that AIs pose a threat to human existence. The book extrapolates the successes of AIs discussed above and predicts that AIs will eventually be many times more intelligent than humans and will somehow develop something like consciousness. Ultimately, the AIs will seek to eliminate us.

I find these concerns almost comical. AIs connected to robots can do some very impressive things. In electronic assembly, they can hand solder very effectively. Perhaps better than humans, and they don’t get tired. But, they are not flexible. If the hand soldering operation changes to a different design, the AI must be reprogrammed. Whereas a human can quickly change from design to design. Lack of flexibility is a major AI drawback.

AIs also lack common sense. As Stephen Pinker has pointed out, no AI can empty a dishwasher. This is a profoundly common sense operation for humans. Yet this task is not only beyond AIs of today, but likely will be for a long time. Even something as simple as unloading boxes from a truck is a challenge to AIs as pointed out recently in Bloomberg BusinessWeek.[i]

This lack of flexibility and common sense makes it very hard for AIs to compete against humans when multiple tasks are required.

It is also difficult for AI robots to display dexterity. They may be able to pick up a chestnut, but crush a strawberry. This task is simple for an 18-month-old human.

The promise of autonomous vehicles is also greatly exaggerated. For a few years, some self-driving cars have been able to drive 95% of the route from my house in Woodstock, VT, to Boston’s Logan airport. However, they have made little progress in negotiating country roads, detours, and routes with complex signage. In addition, AVs lack situational awareness. As an example, AVs can’t look at a group of people near a street corner and sense if they are planning to cross or not.

Detours are hard for AVs. (Source: https://nj1015.com/is-the-detour-sign-a-thing-of-the-past-in-nj/)

So, I don’t see AIs taking all of our jobs or AVs putting truck drivers out of work any time soon. But the good news is that more electronics will be needed as these technologies make their slow advancements. So I see a busy future in the electronics assembly world.

Cheers,

Dr. Ron

The Pareto Chart: Crucial in a Continuous Improvement Plan

Posted on by

The Pareto Chart is a simple way to plot failure data that gives priority to the failure modes with the highest number of fails. This technique was developed by Vilfredo Pareto in the late 1800s to early 1900s. Pareto was studying social and economic data in Italy. He was one of the first to observe the 80/20 rule. In that, about 80% of property in Italy was owned by 20% of the people. Today many people use this rule. I have heard salespeople say that 80% of their business is from 20% of their customers as one of many applications of this rule.

In categorizing fails in electronics assembly, about 80% of fails are in 20% of the failure modes. Let’s look at an example (Figure 1). In this figure, we have plotted the number of fails versus the failure mode. Note that shorts is the most common failure at about 300, whereas opens is 75, missing components is about 50, and solder balls about 35.

 

Figure 1. A Pareto Chart of Electronic Assembly Failure Modes

These data should be used to develop a continuous improvement plan. Obviously, shorts should be focused upon first. Typically, one would use process data such as statistical process control (SPC) data to solve the shorts problem, most likely looking at a process metric like the volume of the stencil printed deposit.

I developed a graph similar to Figure 1 when I visited a client. The manager was convinced that solder balls were a big problem. When I asked the quality engineer for the supporting data, he said there was none. So, I asked if they collected failure data; he said they did. I then asked what they did with the data; he said they filed it away having never looked at it!

I asked to see the last several weeks of data and I plotted the data similar to that in Figure 1. It ended up that solder balls was the fourth biggest defect, not the first. As a result of using a Pareto Chart, the company focused on fixing their defect with the greatest number first, etc.

Pareto Charting is a simple yet crucial process in continuous improvement.

Cheers,

Dr. Ron


The Nature of Disruption

Posted on by

Just finished recording an hour-long (!) podcast with Judy Warner for Altium’s On-Track sessions. And while I don’t want to spoil any surprises, I will briefly touch on one of the topics we covered.

We got on the topic of disruptions. (I know, I know, it’s every keynote speaker’s favorite word. Sorry.)

In my view, ECAD software has to continue to get more intuitive and easier to use, especially for engineers who may only spend 10 or 20% of their time doing layout. If most of your time is spent using other tools, you won’t necessarily develop the hard-coded means to work the layout software. And no one wants to have to relearn the software each time they use it. So the tools must be more intuitive. And along the same lines, they need to be able to perform integrated functions with other platforms in their native environments. Users are most comfortable when operating in the environment they are familiar with.

To that end, I still think the company that breaks the ECAD industry will most likely come from outside the ECAD industry, if for the stunningly simplistic reason that engineers and their marketing colleagues in one industry are always looking for ways to expand into others.

Which is how it came to be that a maker of PCs (Apple) broke the recorded music industry and then broke phones. And a maker of batteries (Tesla) broke the automotive industry.

Going back aways, a software developer (Microsoft) broke computing, which was all mainframes and dummy terminals back in the day. (Now with app-based tablets and Chromebooks tethered to the cloud, we’ve come close to full circle.) And that same software developer broke video gaming, doing $5 billion in revenue from Xbox related sales last quarter alone and helping to spawn and massive market for online gaming.

My advice to Judy and her colleagues at Altium is to keep improving the design to manufacturing handoff — where so many manufacturability and quality defects take form — and to be wary of any company that comes up with a simpler and cheaper way to go from schematic to actual circuits, because while I don’t know who, how or when, I do know it’s inevitable.

Back in Person

Posted on by

The Covid-19 vaccine rollout has begun and we can’t wait to get back to seeing old and new friends in person.

To that end, I want to call your attention to the return of PCB East to the Boston area in June.

We will head to Marlboro, MA, for some 55 hours of training across three days (June 15-17) of printed circuit board engineering training. There, SI expert Lee Ritchey will have a couple of tutorials: Printed Circuit Board Stackup Design for High Performance Products, and also Power Delivery System Design.

We also will offer two full days of Rick Hartley, including a brand new talk titled, “PC Board Design for Optimum Fabrication and Assembly.” As Rick notes, Happy Holden has presented at PCB West a few times where he’s explained how fabricators determine pricing for bare boards and how EMS suppliers determine pricing for PCB assemblies. Happy shares what he calls a “Fab and Assembly Report Card,” which is how manufacturers assess and weight the variables that drive cost.

So, for instance, as most readers know, board size is a major cost driver. But, as Rick explains, what most designers don’t know is that aspect ratio of length to width also has a major impact. Two boards with the same number of layers and same number of sq. inches but with a difference in their respective aspect ratios – say one is much longer than wide – will push up the bare board cost. Same with assembly, which has even more cost drivers than does fab. Rick is going to do is discuss these major cost drivers.

Rick also told me that at PCB West he had discussions during the chat sessions with some of the bare board fabricators in attendance. One of them said (I’m paraphrasing here), “At any point in time as many as 90% of our jobs are on-hold, waiting for correction or clarity from the customer, so we can proceed.” In Rick’s opinion, designers are flying blind when it comes to many the cost drivers and what suppliers need at both the bare board and assembly level, hence the reason for so many delayed PCBs. These delays also add cost.

What Rick wants to do is to highlight and talk about the factors that Really drive up cost, like board size and aspect ratio, layer count, Z-axis uniformity, copper balance, etc.

And Susy Webb will have brand new, two-day tutorial for design engineers, “A Comprehensive Guide to PCB Design Necessities.” Her class will feature an overview of the entire process of board design, from start to finish, addressing the EE designing their own boards or the new designer who needs to thoroughly understand all the steps and processes. She’ll cover everything from the electronics and physics involved, how the rise time and controlling the energy fields impact the signals on the board, choosing parts types, schematics and signal and constraint issues, mechanical issues, and so on. Susy is also doing an all-day webinar.

We are looking forward to these any other presentations, and also to the exhibits on Jun. 16. Registration is now open, so visit pcbeast.com for details.

And Then There Were 2

Posted on by

Isola and Rogers.

That’s what’s left of the US-owned laminate companies today after Taiwan’s Elite Material Co. announced plans to acquire Arlon EMD.

Yes, consolidation has been in the making for years. And with Isola owned by private equity group (Cerberus Capital Management), it’s anyone’s guess as to how stable that number is.

In reality, it was only a matter of time. The US share of global PCB revenues fell from north of 40% in 1984, to about 30% in 1998, to less than 8% in the recession of 2008. It now stands at roughly 4%. Naturally, the supply base is going to migrate to where the revenue is.

Time was, the US was home to several leading names in laminates: Polyclad (now owned by Isola), Westinghouse (acquired by Allied-Signal in 1992), GE (licensed to Cookson, now sold by Isola), Norplex Oak (sold by Allied Signal to Isola parent Ruetgers in 1999, then everntually shuttered), Taconic (bought by AGC), Nelco (ditto), among others. For its part, Arlon was acquired by Rogers in 2014, which then sold part of it to a private equity group the next year. That unit became Arlon EMD, which Elite is buying.

This is not to say there aren’t domestic sources of materials, of course. There are plenty: Ventec and Shengyi are among those that have expanded in the US in the past few years. A startup called Thintronics, with experienced laminate folks like Tarun Amla at the helm, has potential, but is likely years away from impact. There remain domestic flex circuit suppliers too, including DuPont and Sheldahl.

But the vast majority of multilayer and high-performance specialty material suppliers are held by offshore companies. As the US seeks to build back its manufacturing base, it needs to remember how critical the supplier infrastructure is to a successful industry.

Trouble in India

Posted on by

The riots at a Wistron plant in Narasapura could have lingering effects long after the damage is cleaned up.

India has been touted as the “next China,” a label local trade groups and business executives have relentlessly promoted. Besides being the only countries with a population exceeding 1 billion, however, the similarities are perhaps too many for today’s climate.

Even so, despite Prime Minister Modi’s best efforts to convert the nation into an autocracy driven by a Hindu ruling class, India is fighting a current that China avoided during its rise to manufacturing power, and that flow is getting stronger.

Yes, Nokia and Apple suppliers like Foxconn continue to make plans to expand in the country. But the broader supply base still isn’t there, and, perhaps burnt out from their China experience, expats aren’t relocating by the thousands to help the locals set up and manage companies. The semiconductor industry has changed over the past 20 years. New foundry costs are still rising, and the number of players has shrunk. Putting multi-billion dollar plants in India that replicate older technologies while still finding the resources to compete on the leading-edge might be a longshot, at best.

Nor has India provided the incentives China did to relocate. Instead, it has taken a tack similar to Brazil’s: Steep import taxes that while aimed at China, might actually discourage others from migrating there. Already, India and the US have taken economic swipes at each other, with the US dumping India from its preferred buyer program that allowed zero tariffs exports to the US, and India hiking tariffs on product coming from the US. The EU Parliament is taking an equally dim view of the former British colony’s trade and humanitarian approaches.

Indeed, Modi’s approach to alienating and, some argue, encouraging violence toward India’s religious and ethnic minorities puts Western OEMs in a difficult spot. Already under the gun for their massive investments in China, which have helped prop up that country’s autocratic leadership and create an international powerhouse that is now flexing its economic and military muscle all over Southeast Asia, business leaders might be loathe to plow more assets into yet another unpredictable regime. With governments, including the United States, slapping restrictions on Chinese companies for their alleged treatment of Muslim minorities, it won’t be easy to win any PR battles over why India is somehow an exception.

And the pollution coming out of India might be on a par with China’s — or even worse — hardly an attraction for today’s green marketing campaigns.

It remains to be seen, but I think episodes like Wistron’s will delay the push to the “next China.”