Properly interpreting the pin one location can be the difference in placing the part.

You would think that in this day and age, all our machine friends would be smart enough to just know what we're thinking. Unfortunately, that's still not the case. There are some instances when we have to put in extra effort to make our intentions clear. Locations and polarities on your printed circuit board are a particularly good example. Ambiguous polarity markings and pin one markings printed on your PCB can wreak havoc on your prototype. In theory, for SMT parts, it really shouldn’t matter; the centroid would take care of the placement orientation. But, you may have noticed that it’s not a perfect world. It took me awhile to figure that out, but I have finally concluded as much.

It’s not uncommon for the CAD library part to have the wrong zero degree rotation orientation. The IPC specified location for pin one orientation for square chips like QFPs, QFNs and BGAs is either the upper left or middle top (Figure 1). (Check out our centroid guide at http://i.screamingcircuits.com/docs/understanding-the-centroid-file-r2-2.pdf for more detail.) If it’s wrong in CAD, the centroid will be wrong, as will everything downstream. That’s why markings on the board are still important. Sometimes human intervention still comes through in the end.

What do you do if your part is ambiguous, though? This particular chip (Figure 2) has three markings that could be interpreted as pin one indicators. At first glance, I’d assume it’s the dot in the center top. It would match with the text. However, there is a white dot in the lower left that could be pin one indicator, which would mean, in this case, the CAD library component had the incorrect zero rotation orientation.



Datasheets aren’t always easy to find. The one for the part shown is behind a registration wall. If you have a part like this, it’s really helpful if you include some documentation when you send your files to your assembly house. I found the datasheet for this particular part and was able to confirm that it is correct as placed with pin one down in the lower left (90⁰).

Ed.: Read Duane’s blog each week at circuitsassembly.com/blog/.

Duane Benson is marketing manager at Screaming Circuits (screamingcircuits.com); dbenson@screamingcircuits.com. His column appears bimonthly.

Test, clean energy and process control represent huge potential for EMS.

The industrial products industry for electronics assemblies is large and diverse. It is very attractive and profitable for many EMS suppliers because of the wide range of complex and high mix of electronics product assemblies. But it is also mysterious and vague, unless one understands the specific application for electronic content embedded within each product. OEMs and EMS seek participation of the other, because cost reductions of these assemblies are mandatory, so good partnerships are essential for staying competitive in this evolving industry.

We have segmented the industrial product market into four categories for easy understanding. These categories include process control, test & measurement, “other” industrial, and clean energy. Table 1 summarizes the total available market for electronic cost of goods sold (E-COGS) of industrial assembly products by market segment and geographic region for 2012.

While the market for industrial product assembly has been growing at approximately 5 to 7% annually, the EMS product assembly market has been growing at a much higher rate because of economies of scale inherent within the outsourcing value proposition. To date, EMS assembly accounts for approximately 23% of the total available market for industrial electronics in terms of revenue, but this percentage is increasing dramatically as the outsourcing is demonstrated. The largest industrial product market to date is Test & Measurement equipment sector, which is also the most electronic-intensive (Table 2).

Industrial process control is comprised of 13 leading product segments according to our field research and includes automation/programmable logic control, construction/agricultural/mining, electric motors, electrical distribution/smart grid, elevator systems, environmental management, fluid control/hydraulics, marine/waste water, oil/gas, power supplies, robotics, smart meters, and UPS/batteries. The leading application by far is automation/PLC, which is embedded in nearly every aspect of this market. The leading region for the assembly of these devices is the Americas followed by Asia Pacific (APAC), as most Asian OEMs prefer to manufacture in-house. The electronics content of process control equipment varies considerably by individual product, with automation/logic (primarily PLCs) and smart meters having the highest concentration.

Our research has identified approximately 52 leading industrial OEMs that are estimated to account for approximately 80% of all process control products. Leading suppliers include GE Industrial, Siemens, ABB, Hitachi, Yokogawa, Schlumberger, Mitsubishi, Emerson, Fujitsu, Bosch and many others. Most market leaders have internal low-cost manufacturing operations in all geographic regions, yet employ a variety of EMS subcontractors in areas where it makes economic sense in terms of supply and demand. The majority of subcontracting involves printed circuit boards (PCBs), and in some cases, the final integration or box assembly of the industrial product.

The test and measurement industry is challenging to segment given the wide range of high technology products, but we have profiled this by equipment size, applications and customer base. We have identified four distinct T&M equipment sectors, which include inspection equipment, metrology/instrumentation, semiconductor capital equipment, and general test and measurement hardware found in the home and industry. The leading region for manufacturing and consuming these devices, by a very wide margin, is the APAC region. While semiconductor manufacturing exists extensively in the Amercias and Europe/Middle East (EMEA), Asia has become the dominant region for most testing of semiconductor products because of the many end-products such as mobile phones and PCs.

Our survey profiled 24 leading industrial OEMs that currently manufacture test and measurement equipment. Major suppliers include Applied Materials, Tokyo Electron, Thermo Fisher, Agilent, Lam Research, Rohde & Schwartz, Parker Hannifin, ASML and Yokogawa, among others. Most large companies have transferred their manufacturing facilities to low-cost manufacturing operations in the APAC region, and their subcontractors have followed this trend in support. In most cases, the OEM is responsible for the final integration or box assembly of the industrial product, while the EMS manufactures the complex PCBs that account for the highest proportion of semiconductor electronics assembly. In certain cases, such as with small handheld test equipment, the EMS company will assemble and ship the entire product (PCB and box assembly).

“Other” industrial products comprise applications that do not fit neatly into a clear sector, sometimes defying classification altogether, including ATM/gaming equipment, HVAC, laundry/home appliances, lighting/LEDs, security/safety products, tools, and material handling/specialty equipment/other industrial hardware. Many of the sectors are quite large, such as LED lighting systems, while others are composed of multiple companies and derivative products, such as HVAC and home appliances, which nevertheless constitute significant markets, albeit minor ones for electronics assembly overall. (That is, the electronic content is less than 10% of the overall COGS.) As we have uncovered, the range of products is very extensive, but they are rich in electronics assembly potential.

Our survey identified 42 leading industrial OEMs that manufacture “other” industrial equipment. Setting aside for the moment the LED lighting industry (which includes OSRAM, Philips Lumileds, Nichia, Panasonic and Samsung), leading suppliers include Siemens, Cooper Industries, NCR, Electrolux, and United Technologies, among others. In many cases, the large OEMs maintain low-cost manufacturing facilities or employ subcontractors for PCB production. In some cases (such as with ATMs/gaming/vending machines), EMS companies play a vital role, given the complexity of semiconductor electronics on the PCB. For other products, such as tools and security products, the PCB assembly is not significant, given the overall assembly of the product.

While there is no standard definition of clean energy technology, we have defined it as a diverse range of products, interfaces and processes that harness renewable materials and energy sources, and thereby reduce the use of natural resources, and cut or eliminate emissions and wastes. We have focused on renewable technologies such as wind power, solar power, tidal, wind and fuel cells (and the necessary inverters), and the demand by consumers to manufacture these products cost-effectively.

Our survey of the clean industry sector includes market leaders such as LDK Solar, First Solar, SunTech Power, Q-Cells, SunPower, Trina Solar, Canadian Solar, and Solar World, among many others. The size of the solar energy sector far exceeds the current market size of the wind, tidal and fuel cell sectors. Inverters naturally apply to all of these product sectors and remain the primary product application for outsourcing.

The Worldwide Industrial Electronics Assembly Markets—2012 Edition is based on an in-depth examination of the top 100 industrial OEM companies and their outsourcing partners. Our forecasts conform to the research described in our sister publication, The Worldwide Electronics Manufacturing Services Markets – 2012 Edition.

Randall Sherman is president and principal analyst of New Venture Research (newventureresearch.com), a market research and consulting firm specializing in the electronics manufacturing industry; rsherman@newventureresearch.com.

A March earthquake. September floods. Social unrest. Throughout 2011, upheaval was in the air.

Acquisitions, bankruptcies and Mother Nature were the name of the game in 2011, as topsy-turvy market conditions coupled with inexplicable environmental disasters and unprecedented social backlash led to what were in some cases previously inconceivable opportunities.

In what will remain a year for the books, an earthquake and subsequent tsunami hit northeastern Japan, wiping out scores of manufacturing plants and other business, and leaving painful images of the dead. But in what turned out to be Japan’s finest hour, the nation recovered quickly, with most multinational business back to normal within two quarters. Thailand wasn’t so fortunate. Plants there took such a drubbing that it could be a year before they are usable again. Worse, the repeat disasters had decision-makers rethinking their supply-chain plans.

Had it not been for the weather, the story of the year would have been Elcoteq. Once a top 5 EMS company, the onetime main supplier to Nokia found the competition from Foxconn too much to overcome. It saw sales and profits spiral down over a five-year span, then finally declared bankruptcy last fall, shuttering or selling all but four of its 13 manufacturing sites.

Watching, and perhaps learning from, Elcoteq’s mistakes, No. 2 Flextronics bailed from the price-sensitive PC assembly space in 2011. Having just formally entered the PC production business in 2008, Flextronics quickly grew that segment to $4 billion in annual revenue, only to see margin erosion threaten to wipe out the company’s profits. Competing in a commodity space works only for the largest player, it seems.

Speaking of the largest player, Foxconn (who else?) in 2011 continued its long reign at the top of the pile. It seems hard to imagine, but 10 years ago, Foxconn trailed Flextronics, Solectron, Sanmina-SCI and Celestica in annual revenues. Still, cracks in its formidable armor began to show. Dinged by government-mandated wage hikes, Foxconn has moved much of its reportedly 800,000-man workforce inland, leaving its Shenzhen campus to Apple (more on that in a moment). Worldwide social pressures shone an uncomfortable spotlight on Foxconn, where a blitzkrieg of worker suicides, plant explosions, inflammatory statements (and, perhaps, just a little bit of Apple fatigue) put the firm squarely in the crosshairs of the mainstream media, not to mention several workers’ rights NGOs. In response, Foxconn intimated plans to automate a number of its operations with robots.

Upheaval. An army of robots would have made no difference in Thailand, which was turned upside down when fall floods like none seen in the country in 50 years soaked the nation for the better part of two months. No EMS company was decimated more than Fabrinet, No. 19 on the 2010 list and headed for an even higher ranking. High waters breached two of its facilities, rendering one permanently closed and taking the other offline for months. Others that felt the impact in Thailand included No. 6 Cal-Comp, No. 7 Benchmark, No. 42 Hana Microelectronics and No. 47 SVI Public Co.

No. 14 Beyonics also was hit hard by the Thailand floods. Having seen sales fall about 15% over the past two years, and in the midst of five straight unprofitable quarters, the Singapore-based firm in October announced plans to go private. (The company should know something about going private; its founders came from Flextronics, which did the same thing in 1987 before relisting in 1991.)

[Ed.: To enlarge the table, right-click on it, then click View Image, then left-click on the table.)

In the aftermath of Japan and Thailand, certain OEMs and EMS companies are rethinking their supply chains. No. 3 Jabil already has made clear it wants to navigate away from the all-in-one industrial parks – where suppliers sit almost on top of each other – so characteristic of the Pacific Rim. Moreover, as companies become more aware of time-to-market and the amounts of capital tied up in product in transit from distant lands, a trend is emerging toward positioning production closer to the point of end-use, a phenomenon known in the US as “reshoring.” Social pressures, accented by the long and loud protests over alleged worker exploitation that have landed Foxconn (and its leading customer, Apple) on the front page of The Wall Street Journal for all the wrong reasons, are also leading assemblers to contemplate not just higher but politically safer ground.

As usual, major mergers and acquisitions changed the face of the CIRCUITS ASSEMBLY Top 50 list. No. 21 OnCore Manufacturing, a major defense and aerospace supplier, acquired Victron in what was essentially a merger of financial equals. No. 31 Ducommun made the biggest splash in its 157-year history, acquiring LaBarge in June to form a defense electronics powerhouse. No. 16 AsteelFlash bought Catalyst EMS. (Just after the year ended, No. 8 Plexus announced a deal to acquire Kontron Design Manufacturing Services in Penang.)

Falling off the list was EPIQ, which sold a total of five plants in Bulgaria, Czech Republic and Mexico to No. 25 Integrated Microelectronics Inc. Also departing was Surface Mount Technology Holdings (No. 45 in 2010), the Hong Kong-based EMS firm that endured a painful reorganization in 2011. Revenue plunged 38% year-over-year to about $177.6 million. Suffering a similar fate is former Top 50 mainstay Simclar, which has seen sales fall from a high of $400 million in 2006.
Joining the list were several large flex circuit companies whose EMS revenues were previously not properly accounted for. Most flex PCB fabricators also perform assembly, and it is difficult to get an accurate reading of the value of the bare board from the finished assembly. However, based on data from IPC and others, bare flex circuits comprise roughly 40% of the shipment value. Based on such estimates, No. 12 Nippon Mektron (which has at least 11 plants that perform SMT assembly) and No. 28 MFLEX are now represented in the Top 50.

Whither Kaifa? Not making the list: Sichuan Changhong Electric, a huge Chinese entity (35,000 employees) that makes TVs, white goods and other components. While it builds product for several brand name Japanese OEMs, it was impossible to determine just what its EMS/ODM sales were in 2011. Same goes for Aeroflex. We also left off ODMs such as Qisda, Compal, Wistron, BenQ, and others that are essentially OEMs.

Should Shenzhen Kaifa Technology be included in EMS rankings? It’s not an easy question to answer. On revenue alone, perhaps: Kaifa, as the company is known, had sales of over $4 billion last year. Using that gross number would place it squarely between Sanmina-SCI and Cal-Comp in the Top 10.

But there’s more to it than that. Kaifa generates an extraordinary amount of its revenue from making and selling hard disk drives to Seagate. In fact, under most classifications, Kaifa would rank as an ODM, and not just of printed circuit board assemblies.

Then there’s the confusion of what, exactly, “Kaifa” is. The company, which is supposedly traded under the ticker symbol 00021 on the Shenzhen Exchange, has no current listing. However, it is also apparently a subsidiary of China Electronics Corp.

CEC is giant. The conglomerate says its annual revenues topped $8 billion back in 2006, and it employs more than 70,000 workers across some 61 subsidiaries, including 13 listed holding companies. Among them are cellphone and datacom OEM Panda Electronics, computer and TV manufacturer Greatwall Technology, and yes, Kaifa.

It also is state-owned, and operates directly under the administration of China’s central government. Forget, for the moment, how strange it is for what is essentially a government entity to be publicly traded. Consider instead whether a government business can be considered a contract manufacturer, especially in China, where the Communist Party still holds sway over most economic policy and can pick the winners and losers at the drop of a hat.  Want to get a government contract? Use a government provider. It becomes hard to distinguish between what is competitive bidding and what is political.

Then there’s the matter of CEC’s financials. They are dense, to be sure. It’s hard to tell what revenue comes from external customers and what is just “padding” from its own pyramid. Among those that can be discerned, Greatwall alone made up $1.6 billion in revenue in 2010. Read the fine print and you’ll see the company has several “deals” in place to buy components and services from other CEC subsidiaries.

So should Kaifa be listed on the CIRCUITS ASSEMBLY Top 50? Because it is next to impossible to know what its true revenue from EMS-related activities is, we say no, while respecting the decision of others to disagree.

EMS is a lopsided business. The CIRCUITS ASSEMBLY Top 50 make up about 87% of the total revenues of the entire electronics outsourcing industry, although that figure admittedly includes a fair percentage of revenue that would properly be classified as ODM work. The industry as a whole reached about $205 billion in sales last year, according to IHS iSuppli.¹ (The research firm predicts industry revenue to be flat in 2012.)

The US continues to dominate the Top 10 list, with five of the top eight entries, although we are seeing some minor shifts take place (Table 3). Regionally, the Top 50 remain intact, led by Southeast Asia (16 entries), North America (15) and Europe (12). Japan gained two entries, a reflection of heretofore unacknowledged EMS work. Notable for its lack of entries is Russia, which almost certainly has domestic firms that would qualify, and whose electronics assembly industry was forecast to reach $14 billion in 2010 (55% of which was industrial or military).² While changes in the rankings have been most common in the middle to lower half of the list, a few firms are threatening to shake up the top. Given their organic growth and acquisition strategy, respectively, Zollner and AsteelFlash look like good bets to break into the Top 10, should any of the current leaders falter.

References

1. Mike Buetow, "iSuppli: EMS in for Flat Year," circuitsassembly.com, Feb. 7, 2012.

2. Ivan Pokrovsky, "Electronics Manufacturing in Russia," New Russian Electronics, Business Industry Yearbook, 2008.

Mike Buetow is editor in chief of CIRCUITS ASSEMBLY; mbuetow@upmediagroup.com.

Ed: For the 2010 Top 50, click here.

For the 2009 Top 50, click here.

OSATs are facing off with foundries over next-gen packages.

Two poker games occurred at the IMAPS Global Business Council and International Device Packaging Conference held in Ft. McDowell, AZ,  in early March. One was a game of Texas Hold’em for attendees; the other had much bigger stakes.

Time was, companies were vertically integrated, and large semiconductor companies established and maintained assembly operations to produce packages. While a few companies, including IBM, Intel, Samsung, Texas Instruments and others, maintain strategic assembly operations, many companies shifted to the “asset light” model, and the era of the fabless semiconductor emerged. The industry is potentially entering a new stage with the move to 2.5D (chips mounted on silicon interposers) and 3D with through silicon vias (TSVs). Will the fabless model still produce the high margins of the past? Is the industry moving back to its past with a new vertical integration infrastructure?

TSMC has announced that it plans to cut the outsource service assembly and test (OSAT) suppliers out of the assembly of silicon interposers it produces – and eventually 3D TSV assembly. The growing concern over that infrastructure model was evident at one panel session. The panel included representatives from TSMC, GlobalFoundries, UMC, Qualcomm, Hynix, Amkor and ASE. The argument is that the thin, delicate wafers cannot be shipped from the foundry to the OSAT for assembly without potential damage, and that responsibility for a defective finished product would be difficult to determine. TSMC describes the 3D TSV process as extremely complex, and says it should handle an assembly process with equal complexity, including everything from substrate design to dicing the micro-bumped wafers and assembling the finished stack into the package. TSMC already provides bumping and wafer level packaging services, but the new proposal is a step into territory typically reserved for the OSATs. This play would cut OSATs out of the high-value segment of the market. (Of course, TSMC will leave assembly of the lower value package types to OSATs.) With IBM, and now Intel, offering foundry services, as well as having internal assembly operations, the stakes are high in the game to dominate the market. Samsung, a vertically integrated OEM that also offers foundry services, is maintaining a low profile and not showing its hand. Other foundry service providers such as GlobalFoundries have announced they will not provide assembly services and will work in conjunction with OSAT partners. UMC will make silicon interposers and supply them for use by OSATs.  The silver lining, as ASE notes, may be if the foundries get into the assembly business, margins for packaging – and assembly may increase.

Commercialization of 2.5D and 3D technology will be enabled by continued process improvements. Papers and panel sessions at the conference highlighted areas in the 3D TSV process that would benefit from new developments. The materials panel highlighted many new developments in underfills, dielectrics and materials for wafer bond/debond. The panel  indicated materials for the bond/debond process used in wafer thinning for the 3D TSV process are an area that could use the most improvement. Equipment makers EV Group and Suss Microtec described new system developments. Much progress has been made by individual
companies and consortia to improve the debonding process.

While technical issues still need to be resolved, supply chain and business issues are of increasing concern. With supply chain disruptions such as the earthquake and tsunami in Japan and flooding in Thailand in 2011, some companies are not happy with the model that does not permit second sources for interposers and assembly.
The complexity of silicon interposers and 3D TSV assembly is not being debated. The difficulty of dicing thin wafers fabricated with ultra low-k dielectrics, and bonding the die with micro bumps using new materials and processes, is not in question. Stresses during the assembly process must be carefully managed to prevent delamination of the silicon itself. Selecting materials, developing the assembly process, and executing the turnkey operation to produce a finished package with high yield will be challenging, and it is not clear to everyone which group has all the necessary skills. TSMC has clearly demonstrated successful completion of various 3D TSV process steps. However, the first product samples of die assembly on interposers were a joint effort involving die design by Xilinx, fabricated by TSMC, with Amkor providing assembly on an organic substrate manufactured by Ibiden.

Which strategy will provide the best results and move these new technologies into high-volume manufacturing is an open question. With all players holding their cards close to their vests, the industry is moving into a new era with ramifications for the future infrastructure.

[Sidebar] What’s a Silicon Interposer with TSVs?
A silicon interposer acts as a transposer between the silicon die and package substrate. Communication between the die are possible by routing signals down through the interposer and up to the next chip. The advantages of silicon substrates result from the combination of the silicon material properties and multichip packaging, including:

• High wiring density due to the very flat substrate.
• TCE matched to the silicon die.
• Excellent electrical and thermal performance.
• Lower laminate substrate cost due to reduced wiring density.
• Lower cost of active devices due to partitioning large die with minimal effect on performance.
• Lower cost of active devices due to smaller flip-chip bump pitch.
• Lower power requirements than equivalent single-chip packages due to multiple chips combined on one substrate.
• Possibility of integrating passives into the substrate.

E. Jan Vardaman is president of TechSearch International (techsearchinc.com); jan@techsearchinc.com. Her column appears bimonthly.