Tag Archives: Samsung

Trade Wars Battlefield Goes Beyond US-China

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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.

Even assemblers are getting caught in the crossfire: When the US government initiated a ban on doing business with Huawei, one of its EMS firms, Flex, withheld a reported $100 million in materials and shipments. According to some Chinese blogs, the OEM now plans to sever its business ties with Flex.

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?

M&A Activity is About Connected Cars

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Regardless of how fast autonomous vehicles become mainstream, the connected-car is on the verge of reality.

The Siemens-Mentor deal announced yesterday is a prime example of one conglomerate’s desire to capitalize on the prospective market for connected technologies, which is projected to reach $100 billion or more in the coming decade. Another, less-publicized M&A also underscored this emerging trend.

Samsung announced it will buy Harman International, a deal that should accelerate the Korean OEM’s drive into the connected technologies market.

Harman is a major supplier of automotive electronics: its audio, infotainment, and connected safety and security systems are already in 30 million vehicles worldwide. In exchange for its $8 billion investment in Harman, Samsung will now have close ties to all the largest automakers around the globe.

From the USA Today:

The primary motivator for Samsung’s purchase of Harman is to tap into its automotive business,” said Jack Wetherill, senior market analyst at Futuresource Consulting. “This is absolutely about the connected car. Harman are major players in this business and Samsung are not. They know they need to get into it to leverage their IoT (Internet of Things), their smart home and smartphone businesses to effectively spread, develop and maximize their revenues and potential.”

What this all says is that despite the emergence of ride-share services like Uber and Lyft and Didi Chuxing, coupled with millennial angst about car ownership, no one sees the auto market shrinking any time soon.

The implication of that, then, is that there will be an equally — or perhaps even larger — opportunity for those that invest in smart infrastructure. After all, despite all the bells, whistles and Internet access, the role of the car is still to get the passenger from point A to point B as quickly and safely as possible.

Racing to Failure?

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Reuters is reporting that Samsung has temporarily suspended production of the Galaxy Note 7 smartphone after replacements for the first batch of devices also proved to be almost as good at spontaneously combusting as they are at surfing the Web.

One brand manager went so far as to compare the self-igniting smartphones to the Ford Pinto, whose rear-end fuel tanks had the unfortunate tendency to explode upon contact.

Samsung’s situation isn’t unique: Apple experienced similar problems with previous iterations of the iPhone. But given the speed with which new phone models are brought to market, one begins to wonder whether these defects are part of a larger failure of the process itself.

Is is possible we’ve reached an inflection point whereby, in the rush to get product to market, the validation phase is — pardon the pun — being short-circuited? Are suppliers properly vetted, product thoroughly tested, risks appropriately balanced?

Or has consumer electronics reached a point where it’s a race not to market but to failure?

Oct. 11 addendum: The Korea Herald and others are now reporting Samsung has decided to pull the plug completely on the Note 7. The estimated cost: Billions.

 

 

Users Could Find New CES ‘Wearables’ Painfully Restrictive

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The early reports from CES indicate wearable devices continue to be the hot item. Among the early headliners:

  • Samsung’s WELT wellness belt, which is really a backpack that charges phones via solar panels, among other things;
  • Samsung’s Smart Suit, which to my view does fairly mundane tasks like like unlocking your phone when you take it out of your pocket;
  • Samsung’s lab also made a golf shirt that can sense the weather and UV ratings;


    Samsung’s Smart Suit

  • Under Armour’s Healthbox, which features an activity tracker, chest strap and smart scale; and Samsung’s Body Compass 2.0, a sensor-laden workout suit that performs similar tasks;
  • MadRat’s Supersuit, which is designed to play laser tag and other such games in a closed space;

  • MadRat’s SuperSuit

    Also coming from UA, a smart running shoe that tracks movement and lets users know when the shoe should be replaced.

What these devices have in common is the ability for users to track their activity — and by extension, their wellness — in real-time and on multiple platforms including their smartphones. What they can also do is amass a terrific amount of data that may or may not be used for their original intended purposes. In short, if you can collect and review the data, so can someone else.

Consider: What if health insurers were to require policyholders to wear devices that tracked such details? And what if your insurance rates were to climb simply on the basis of a weekend ice-cream binge? What if auto insurers could tell that you had activated your cellphone while in a driving, and could cancel your policy on the basis of that information? What if it was learned that you habitually played 18 holes during high ozone days?

While the ability to monitor one’s health using actual real-time data is eye-opening, are we opening a door to such data being misused, or at least, applied in a fashion that could have very real and life-changing implications for the user?

 

Robots on Parade at Productronica

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Robots are the rage this year at Productronica.

An 8′ tall robot greets visitors at Productronica.

While German companies are talking up Industry 4.0 (also known as the somewhat misnamed smart factory), the more significant development we’ve seen has to do with the variety and number of robots being demonstrated performing real-world tasks. (This ignores, of course, the oversized Transformer-styled edition that greeted visitors on Day 1 of the show, shown at the right.)

The other visible trend involves established equipment vendors filling out their line cards.

Redesigned DEK NeoHorizon printer

There are quite a few new placement machines. ASM has the TX series, a high-speed dual lane machine in a smaller footprint aimed at the handheld market. The company redesigned the DEK NeoHorizon screen printer; it’s lost its bubble shape in favor of cleaner, more industrial-looking straight lines that match the boxes of the Siplace placement machines. ASM also rolled out a novel feeder that ditches the traditional program and pick routine for a vision-based approach whereby an upward-looking camera directs the nozzle to the appropriate part lying loose on a tray. Reels are eliminated, as are tape and splicing. Programming is reduced to describing feeder and part number. It sounds a bit chaotic, but the cartridge used by the Bulk Feeder X can hold up to 1.5 million 01005 components (the current pickable range is 01005 to 0402; the company is working on metric 0201 and 0603 parts).

Panasonic is showing two demo lines, the NPM DX and NPM VF. The latter is a high-speed odd-form placement machine with a clinching option that feature insertion height check and PCB hole recognition. The DX is a dual-gantry, dual-lane machine with four heads (4, 8 or 16 nozzles) that is said to perform “nonstop data correction.”

The Samsung Decan S2 double-headed chipshooter is rated at 92,000 cph and handles boards up to 510 x 460 mm, with an optional 1,200 x 460mm upgrade. Component range is 03015 to 12mm.

ASM Siplace TX placement lines

Speedline is showing the MPM Edison printer, which is aimed at high-volume applications such as handhelds and automotive. The machine was also shown at SMTAI and SMT Nuremburg earlier this year. Its Vitronics Soltec cousin has the ZEVAm selective soldering platform, which is lower priced than its other lines but can process three PCBs simultaneously thanks to three full-size preheating units. The machine has tilt soldering capability for pitches under 2mm.

Heller reportedly has a fluxless reflow oven that relies on formic acid. The system reportedly was developed in a joint venture with IBM. Echoes of years (decades?) ago: The concept actually isn’t new: sources say Nokia among others experimented with it back in the day.

The partnership of ASYS and Rehm has spawned a slick reel-to-reel printed electronics line, leveraging ASYS’s handlers with EKRA printers and a Rehm infrared soldering system.

ASYS reel-to-reel handler for printed electronics.

It’s hard to move around all the test and inspection equipment, which takes up more about 1.5 halls, or about as much as all the printing, placement and soldering equipment combined. Again, this is where one really can see companies stretching their product ranges. Viscom debuted the X7058 inline x-ray, its fifth generation AXI which targets the EMS industry, and the X7056, a “partial” AXI aimed at the automotive market.

Saki showed its third generation 3D AOI (called 3D ID), which among its eight cameras is a four-way side angle camera for viewing and inspection. The machine is capable of running 50% faster than the second generation model and can be programmed offline. Also new is the BF-X3, a sealed tube, 130kV x-ray which offers adjustable slicing up to 2,000 slices.

TRI rolled out a new 3D AOI (TR7700Q), SPI (TR7007QI), and upgraded its CT on the TR7600 series 3D AXI.

Vi Technology has the 5K3D inline AOI, based on its 2D AOI, featuring two laser cameras and one beam. The 3D sensor is said to have 1 micron resolution.

The A Leader Pro Series AOI has a grid laser for coplanarity checking. The machine is said to be 50% faster than its predecessor.

Yamaha upgraded its 3D x-ray called YSI-X with a 7-micron resolution high-speed option.

Landrex has a new robotic test cell, a three-way collaboration with Omni and Precise Robotics. The demonstration involved a robot picking up boards and putting them in a fixture, then returning them to their rack. The grippers and media presented could be customized, says Landrex president Jim Gibson.

We saw some LED test machines, led by Premosys, but only two flying probe testers.

ASM showed its first SPI, called Process Lens, which was built in-house (so much for the rumors they would buy Koh Young), as well as a new software tool called ProcessExpert that assesses the SPI data and can automatically reset several print parameters (printer height, pressure, stencil wipe, x-y offset).

Several companies showed industrial robots, some of which were simply flying during basic final assembly operations. Multiple cold test environmental chambers (Rehm, SMT) and vacuum soldering lines (Asscon, Rehm, Eightech Tectron, SMT) are on display as well.

Asscon  VP6000 vacuum soldering

There’s not as much talk about closed loop feedback this year, probably because it’s been supplanted by Industry 4.0.

What’s also apparent is that no company has emerged to displace the established world order. So while there are companies not known on the world stage everywhere at the Munich show this week, it’s clear that the next two years will bring more of the same.

Ed.: Check out the robots in action on the CIRCUITS ASSEMBLY YouTube channel.

 

Africa: The Next China?

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As it has many, many times before, Samsung, the world’s largest electronics company, announced in April that it is expanding.

No, that’s not exactly news, until you look at where it intends to grow: Africa.

And it’s going all in.

By the end of this year, Samsung plans to have set up shop in Ethiopia and Kenya, establishing manufacturing sites and directly or indirectly employing thousands of workers.

These are not just distribution centers, by the way. Samsung will assemble TVs and white goods in Kenya, and laptops and printers in Ethiopia. The new sites will build on the electronics giant’s existing operations in South Africa, Sudan and Senegal.

Samsung is moving fast for multiple reasons. Africa is home to one billion people, and the opportunity to capture market share is enticing. Ethiopia and Kenya are neighbors in East-Central Africa, where some 142 million people reside and the economies are flourishing. In Ethiopia alone, the economy has been growing an average 8% per year over the past five years. And East-Central Africa’s electronics market is forecast to grow 11% per year on average over the next decade.

It’s easy to see why that’s attractive to Samsung, whose sales to that region are relatively miniscule – a reported $250 million in 2011 – but expected to reach $2 billion by 2015.

Another reason is the tax incentives. Much like Brazil, it’s far cheaper to build locally than to import finished goods. Foreign entities pay import taxes of up to 60% of the value of goods. The new plant could halve that sum, Samsung says.
It’s about time, some may say. After all, Africa is the second-largest continent in terms of both area and population. Of course, those aren’t necessarily mutually attractive features. It’s logistically far cheaper and faster to serve end-markets where population density is high and infrastructure is intact, for example Shanghai or Munich or New York. The broad swath of land, coupled with its dubious infrastructure and questionable security, adds unwanted complexity to establishing and maintaining supply chains. Ethiopia and Kenya also neighbor Somalia, whose lack of a functioning government and 17th Century approach to wealth redistribution are notorious the world over.

It’s not that Africa hasn’t been penetrated to a degree by outside interests. Northern Africa is host to mid-tier EMS companies like Eolane (Morocco) and AsteelFlash (Tunisia), which are attracted to the low labor rates and proximity to Western Europe.

But while noting such attributes, Eolane general manager Marc Pasquier told us in a recent interview, “There is no business in Morocco. There is no oil. There are no customers. There is no (end) market.” The same could be said of Tunisia, where the lack of a robust domestic supply chain and local civic unrest are also drawbacks.
Low wage rates are always enticing. In the Sub-Saharan population centers, minimum weekly pay ranges from $12.50 (Tanzania) to $20 to $25 (Ethiopia, Kenya).

Moving to the West Coast doesn’t move the needle much; the pay ranges from $14 (Cameroon) to the relatively princely sum of $29 (Angola). Those pay scales will no doubt draw some attention.

But while much has been made of China’s low labor rates (although they aren’t so low anymore) as the underpinning of its rise to become the World’s Workshop, it says here the ability to slash through red tape, coupled with the relatively safe environs, is what gave it staying power.

Companies trickled somewhat quietly into China for the better part of two decades before the major wave in the late 1990s ushered in a new era in electronics globalization and fundamentally changed the market dynamics. Yet, while it trumpeted its huge population and low costs, China’s advantage was (and is) the relative agility of its government. When one party makes all the rules, and the means for contesting those rules is highly limited, decisions can for better or worse be made quickly. In that respect Africa is not China. It is home to 65 countries, territories or entities, and at least as many governments, in some cases iron-fisted tyrants. The Northern half is Islamic; the southern is predominantly Christian. Tension is everywhere. Africa is a long way from being a single, pliable and functioning entity.

So while Taiwanese ODMs ramping in Western China can bemoan a scarcity of workers, the difference is the Chinese can almost seamlessly port hundreds of thousands of its citizens westward to fill those openings. The decision is made and action is taken. That won’t happen in Africa, at least not in the near term. The basic mechanics are different.

Most of the attention Africa has drawn in recent history has been for negative reasons: mass starvation, brutal “civil” wars, forced child labor, murderous despots, big game poaching. Led by Samsung, this latest ray of sunshine is not only long overdue, but looks like it will linger.

Western companies should be looking at Africa, but doing so with a healthy dose of caution.

Troubled Waters Ahead

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Disputes between China and Japan over ownership of several small islets, known as Senkaku in Japan and Diaoyu in China,  are increasing and threatening to draw the U.S. into a potential fire-fight and conflict between 2 of the world’s top 3 economies. Violent anti-Japan protests this past week are threatening the $300 billion annual economic ties between the two nations. A wide range of firms from electronics giants Sony and Panasonic to Japan’s big three carmakers — Toyota, Honda and Nissan — temporarily halted production at some or all of their China-based plants.

Japanese electronics (and other) manufacturers are reported to be making a beeline to the Philippines. These include Furukawa Electric, Murata Manufacturing, and Brother Industries. The Philippine’s Trade and Industry Undersecretary Cristino Panlilio stated that the government is also soliciting suppliers of these Japanese companies in order to nurture local supply chains.

Job creation. Foxconn’s newly announced venture near Sao Paulo, Brazil, is expected to create tens of thousands of jobs by 2016. One has to wonder whether Americans or Europeans will provide the basis of their necessary supply chain needed for the announced board, part, and device production. Or, will a new “home grown” series of material and specialty chemical suppliers be the end result? Will production assembly equipment come from Europe? America, China, or Asia? The numbers will be big!

Samsung toeing the mark? Following its recent loss IP suit loss to Apple, Samsung announced that it would audit working conditions at 249 Chinese subcontractors and suppliers, including 105 that produce goods solely for Samsung. This major decision, coupled with Apple’s main provider Hon Hai’s (Foxconn Technology Group) decision to tackle working condition violations among its 1.2 million workers assembling iPhones and iPads, are certain to change the way that Western and other “foreign” companies do business in China. Samsung stated that it would terminate contracts with suppliers that do not take corrective actions when found and notified of violations of Samsung’s labor and working condition policies.

Litigation: The Next Killer Ap?

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Apple v. Samsung.

Cisco v. Tivo.

The EU v. Intel.

The lawsuits are piling up as tech heavies line up against each other and, in some cases, nations or even larger economic blocs.

If you are a market share leader, fending off (or filing) lawsuits is routine.

Apple claimed a victory in the US, where courts have banned Samsung’s Nexus smartphone and Galaxy Tab 10.1 after Apple complained of patent infringement. But Apple’s record on (in?) its home court hasn’t extended abroad. British courts have ruled HTC’s mobile devices did not infringe four of Apple’s touchscreen patents, China courts found for a nearly bankrupt company that claimed ownership of the iPad trademark, and Italian regulators have opened hearings over the company’s failure to meet domestic warranty laws.

As companies sue and countersue over technology that becomes ever more complicated, not only are the courts tied up by the endless legal maneuvering, but company engineers get dragged into the fray as well.

So too, it should be mentioned, do governments. But while the US debates measures that would ramp its anti-counterfeiting laws, Europe is taking the opposite approach. The European Parliament yesterday overwhelmingly rejected adoption of the Anti-Counterfeiting Trade Agreement, siding with critics who claimed the bill put too much power in the hands of bureaucrats. “With companies trying to gain any advantage within a fiercely competitive landscape, an increasingly litigious environment seems to be becoming a reality most companies need to get comfortable with going forward,” opined Sherri Scribner, a senior analyst with Deutsche Bank.

Still, as tech companies rely as much on the courts as the computer to wage their market share wars, one wonders: Will the next generation of engineers be pressed into battle to design products … or defend them?

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Patently Slow

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Further delays by the International Trade Commission panel tasked with resolving a two-year patent battle between Rambus and Nvidia underscore how difficult it is to determine cases involving highly technical IP – and also why the rules need changing.

The stakes are so high, when Samsung settled with Rambus in January, it agreed to pay $700 million in cash over five years – and buy a big stake in Rambus.  Now the ITC wants to know how that deal might affect the rest of the case.

That’s reasonable, I suppose, but in the meantime, electronics designers face the no-win choice of either designing in chips known to be part of a patent dispute, or finding something (probably) less desirable as replacement.

And who do you think pays in the end?

Parts Wars Heat Up

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Those who think the higher demand will necessarily improve profits might need have some rethinking to do in light of the latest forecasts for chip sales.

New Ventures Research last night issued a report indicating chip demand (units) would soar 18% in 2010, with memory in particular under siege. However, companies like Samsung are now saying they will not increase capex this year to meet the spike, meaning last year’s severe dropoff in investment for new fab capacity will be felt for some time to come.

Let the parts wars begin.