A Forerunner of Good Things to Come?

This could be, if the U.S. government provides incentives to manufacture in the US.

Motorola’s dramatic introduction of the Moto X smartphone assembled in the US at a build-cost competitive to that of Apple’s IPhone 5 and Samsung’s Galaxy S4 shows that the world is once again changing. The 16GB phone is based on Qualcomm’s design and semiconductors. It uses SoC packaging and is similar to OTC and Samsung devices.

If price were the sole determinant the Yugo would have been a huge success.

Changes coming. In what should one invest? The development for next generation packaging materials, equipment and processes will be expensive! Should one go for 2.5D as some advocate, or 3D packaging as others propose? Although 2.5D appears to be a viable “short” term solution, recovery of R&D costs may be difficult if a 3D solution succeeds early on, especially with the push for SIP (system-in-package) technology. Applied Materials is working on 3D packaging with the Institute of Microelectronics in Singapore’s Science Park II.

The Assembly & Testing Committee (A/T Committee) of SEMI China has set a new goal — to figure out the technology roadmap. Its intent is to help “local” IC companies clearly identify the challenges for 3D-IC so that the milestone for each challenge can be forecast.

The IPC’s forthcoming conference on Component Technology is expected to provide further insights to the challenges facing today’s component and substrate members of the industry’s supply chain and point out the specific technology gaps currently facing the industry.

China’s domestic PCB fabricators are beginning to flex their muscles. They have greatly improved their manufacturing technologies during the past few years. Domestic smartphones such as OPPO are gaining market share from Samsung, OTC and other foreign brands (Apple is not the leader in China’s markets). Chinese LCD TVs and PCs are establishing broader market bases and beginning to gain acceptance in global marketplaces. The Chinese government “supports” home-grown products and encourages its native brands to use domestic manufacturers in their supply chains.

Now, based upon the growth of fine featured circuitry, new packaging technologies, shrinking margins, and the continued increases in labor costs (20% again this year in SE China),  China’s industry is now focusing on automation (robotics) and improved quality. This was evident in the exhibited products at Nepcon China in Shenzhen this month.

Japan’s dramatic drop in board production the first half of 2013 coupled with the sale of the once mighty Hitachi Via Systems hole forming equipment business (mechanical drill and laser drills) truly signals the approaching end of the era when that country led the world in PCB fabrication and assembly technology.

It is time for new strategies and business models. There is no specific relief in sight yet. EMS bookings in China are down. The usual August business buildup and demand for boards and assemblies for the “Xmas season” has not yet occurred. Equipment orders are still slow in being released. Cisco’s announcement of a reduction of its workforce of 5% is not encouraging. Juniper Networks, Palo Alto Networks and Huawei continue to unfavorably impact Cisco’s results.

The electronics interconnect industry is apparently in the mode of being redefined. Business models are changing again in the midst of economic uncertainty. Orbotech’s upgrading of some of its 4W LDI installations in Asia, refurbishing them, and selling them at deeply discounted prices in the U.S. may be one such example of a business model change.

About Gene

Gene Weiner has spent his entire career -- spanning more than 50 years -- in the printed circuit and semiconductor industries. He spent the early part of his career in R&D as a student technician at MIT Lincoln Laboratories, then became employee no. 4 at Shipley, and later vice president of sales and marketing at Dynachem and president of New England Laminates. He has been a consultant to leading materials, circuit board and semiconductor companies for several years, and sits on the board of Wong’s Kong King International and the MBA advisory board of the Malcolm Baldridge School of Business at Post University. He was inducted to the IPC Hall of Fame in 2006.
This entry was posted in Weiner's World. Bookmark the permalink.