Weiner’s World – June 2017

Gene Weiner, Weiner International Inc. | 07-03-2017

Editor’s note: This blog was originally published in June 2017 at http://www.weiner-intl.com/weiner-s-world/ and is being reprinted here with special permission from the author 

Please note: There will be no July 2017 Weiner’s World column.

On the way back from Hong Kong last week I had the good fortune of meeting an officer of Allegro Microsystems and enjoyed a wide ranging discussion with him. One of the "take home" items was concern about an expanding shortage of rare earth metals used to make ICs for the burgeoning automotive sensor market. The second was how important the roles of partnering and consortia are in the rapidly advancing autonomous automotive electronic field.

While in Asia this month a number of key EMS and PCB supply chain companies told me that sales and profits this year were better than last year—so far—even though operating margins were a bit "thinner."

The U.S. economy is expected to grow at a 4.0% annualized pace in the 2nd quarter based on the latest data on factory activity, construction and consumer spending released this week, the Atlanta Federal Reserve's GDP Now forecast model showed. Yet the year-on-year increase in wages remained at 2.5%. With the labor market expected to hit full employment this year, there is optimism that wage growth will accelerate.

Acquiring, training, and maintaining employees is still a hot topic

The Surface Mount Technology Association (SMTA) and Thayer School of Engineering at Dartmouth College announced the launch of a new collaboration to provide professional development training workshops through the SMTA organization.
 
The new partnership will serve the needs of individuals seeking certifications in the area of Lean Six Sigma, Leadership, and Quality training. In addition, the workshops will be made available directly to SMTA members, corporations and other organizations with the goal to enhance employee performance and provide management training. (I once arranged for an on-line MBA program to be offered to IPC members, but the IPC did not act on it.)
 
The partnership is designed to provide program participants access to internationally renowned, industry-oriented learning and certification from one of the most prestigious educational institutions in the world through “distance learning." Dr. Ron Lasky, director of Thayer School of Engineering at Dartmouth, said that professional development initiatives are applicable to building knowledge and developing the skills for career advancement that are essential, and distance learning programs provide a flexible path to do this. 

Further, President Donald Trump announced “Workforce Development Week.”  As such, President Trump even signed an executive order expanding apprenticeship programs. The Trump administration asked federal agencies to recommend new executive actions to promote apprenticeships and remove regulations that could be an obstacle to workforce development. Though Trump’s 2018 budget proposal cuts funding for job training programs by 40%, from $2.7 billion to $1.6 billion, the Administration hopes to foster “private-to-private partnerships” on job training through the executive order, “Expanding Apprenticeships in America."[1]

This order would virtually eliminate oversight of government-subsidized apprenticeship programs and shift certification of federally funded apprenticeship programs from the Labor Department to grant recipients. Additionally, the executive order responds to the desire of third-party groups to create more flexible apprenticeship programs and directs the Department of Labor (DOL) to allow companies, trade associations, and unions to develop their own “industry-recognized apprenticeship” guidelines, which the DOL will review for quality, and then approve. (Decades ago Dynachem, subsidiary of Thiokol, partnered with a junior college in Moss Point, Mississippi to develop a course and train technicians needed in a new chemical plant being built there—the program was highly successful and students received credits towards an Associates Degree.) The order also directs the DOL to use available funding to promote apprenticeships, especially in sectors where apprenticeships are not currently widespread.

Concurrently in Congress, a bipartisan Senate bill, The Apprenticeship and Jobs Training Act[2], was introduced by Susan Collins (R-ME) and Maria Cantwell (D-WA). This bill aims to use tax breaks to kick-start apprenticeship programs.

From Dominique Numakura of DKN Research[3]

The following is excerpted from his column:

This year’s JPCA show at Tokyo Big Sight was co-located with JIEP 2017 (31ST ADVANCED ELECTRONICS PACKAGING EXHIBITION), JISSO PROTEC 2017 (19th Jisso Process Technology Exhibition), Large Electronics Show 2017 and WIRE Japan Show 2017. The printed circuit industry in Japan continues to struggle. Event attendees hoped to discover the latest business trends for the Japanese circuit board industry.

The major assembling machine companies, YAMAHA, JUKI, Panasonic and Fuji Machine, did not showcase significant upgrades, but promoted a few small improvements such as higher speed and productivity, easier handling and higher reliabilities.  There were fewer drilling machine suppliers at the show than in previous years.  They featured new mechanical drilling systems with higher productivity and laser drilling machines for forming micro vias.

Equipment suppliers for the manufacture of flexible circuits did not exhibit any machines related to photolithography or pattern etching this year. Instead they featured product lines aimed at basic processes such as punching and stiffener bonding that provides higher productivity and an increase in accuracy with roll-to-roll processing.

Material suppliers also shifted their focus this year.  Laminate suppliers did not feature any Cu clad laminates this year.  Instead, they introduced nano-powders, nano-ink targeting companies with newer applications.

Circuit manufacturers featured new technologies aimed at the growing markets for wearable devices, automobile electronics and medical devices. The key words in these segments are stretchable (elastic) and transparent electronics.

In the IC world we see record investments and double digit chip sales increases this year before leveling off in 2018.

The latest update to the World Fab Forecast, published on May 31, 2017 by SEMI, reveals record spending for fab construction and fab equipment.

Korea, Taiwan, and China all see large investments. Spending in Europe will also increase significantly. In 2017, over $49 billion will be spent on equipment alone, a record for the semiconductor industry. Spending on new fab construction is projected to reach over $8 billion, the second largest year on record. Records will shatter again in 2018, when equipment spending will pass $54 billion, and new fab construction spending is forecast at an all-time high of $10 billion.

A new World Semiconductor Trade Statistics (WSTS) organization forecast projects annual global market growth of 11.5% in 2017 and 2.7% in 2018, followed by a slight decrease of 0.2% in 2019. Regionally, year-to-year sales increased in China 30.0% and 26.9% in the Americas.

A challenge to SEMI?

As China sets out on the Made in China 2025 plan with electronics and semiconductor technology as one of the Top 10 focus areas its new China High-end Integrated Circuit Alliance (CHICA) held its second meeting. The meeting purpose was to gather producers, institutions, research institutes and users to explore innovation, advance integrated circuit industry research, and build “architecture: - chip - software - machine - system - information service” to promote rapid development of the integrated circuit industry.

Its members include: Tsinghua Unigroup, Inspur, Sugon, CEC, State Grid Information & Telecommunication, Huawei, Lenovo, ZTE, Loongson, Tsinghua University, Shanghai Zhaoxin, Tianjin Phytium, Shanghai Huahong, Yangtze River Storage, SMIC, CS&S, China Standard Software, National Integrated Circuit Industry Investment Fund, Telecommunications Research Institute of Ministry of Industry & Information Technology, China Electronics Standardization Institute, Chinese Electronics Standardization Association, and the Fifth Electronic Research Institute of Ministry of Industry and Information Technology.

The four working focus areas of the Alliance are:

A long silence and lack of response has ended

When I got home from Asia I received notice of the Chapter 11 Bankruptcy Case of Earth One Circuit Technologies Corporation dba eSurface. They rose from "nowhere" just a few years ago with an expensive dramatic splash at the annual IPC APEX EXPO in California. They promised to change the way that printed ciruits were made. They had a fantastic promotional blitz. They were able to demonstrate an interesting method of applying copper to various substrates but were unable to provide substantiating data that met many of their own claims, IPC specs, repeatability, or solution maintenance and stability or process controls.

It takes more than standards

“The systematic (as opposed to technical) root cause of the material problems I faced as fab materials quality manager at Intel almost always came down to a problem in stability, where there was a change to the material the supplier didn’t think was important, a change in the processing that they didn’t catch, or a change in the incoming raw material that they didn’t detect. Material suppliers have to accept that the customers’ definition of quality becomes their definition of quality, and the main rule is to make sure that a material that’s working does not change at all. Consistency is the key for the end user, so it must be for us as well. A spec alone will not measure or ensure that. It takes robust change control, process control, and incoming raw material control.” – Jim Mulready, VP Global Quality Assurance, JSR Micro

Amen, Jim, Amen!

Credit Agricole says that momentum in China's economy is robust. Its first half of the year numbers gave evidence of stable momentum that gives policy makers room to continue defusing financial risks. The manufacturing purchasing managers index increased to 51.7 in June, beating all estimates compiled by a Bloomberg survey of economists, and the 51.2 reading in May. New export orders rose to 52.0, the highest level since April 2012.

Materials

Park Electrochemical announced the consolidation of its Nelco Products, Inc. electronics Business Unit located in Fullerton, California (“NPI”) and its Neltec, Inc. electronics Business Unit located in Tempe, Arizona (“Neltec”). When completed, all manufacturing operations at NPI will cease, except for the NPI treating operation, which will continue as part and under the supervision of the Neltec Business Unit. All manufacturing functions, including treating, lamination, prepreg paneling, finishing, inspection, quality lab and shipping and receiving, will continue at the Neltec Business Unit location in Tempe, Arizona. After the consolidation is complete, the Neltec Business Unit (including the continuing treating operation in California) is expected to have ongoing manufacturing capacity equal to approximately three times the current production levels of NPI and Neltec combined.

Shortages can help some

Taiwan’s Co-Tech Copper Foil could have profitable sales of more than$200 million 2017 due to a continuing significant increase in car-use copper foil demand particularly that from China, as well as rising prices of copper materials. The company returned to profitability last year with a nearly quintupling of margins following five years of losses.

Flexible PCB maker Ichia Technologies has reported consolidated revenues of $19.9 million for May, increasing 16.51% on month and 17.45% on year. May's revenues were the company's highest monthly figures in 20 months.

Flexible PCB manufacturer Flexium Interconnect is expected to see its July revenues rise substantially driven by robust demand for high-end smartphones. The company is reportedly among the FPCB suppliers for the upcoming iPhone series slated for launch in September 2017. Flexium’s revenues for all of 2017 are expected to register double-digit growth.

A monumental accomplishment, but…

The 2017 Roadmap from the International Electronics Manufacturing Initiative (iNEMI) is now on sale on the iNEMI website. With 28 chapters (the most ever published by iNEMI) and 2,300+ pages, this latest edition of the roadmap provides a comprehensive view of the electronics manufacturing supply chain's technology needs and challenges over the next 10 years.

Seven chapters anticipate the technology needs of key market segments by focusing on the market demands and functionality requirements of the following sectors: automotive, aerospace and defense, consumer and office systems, high-end systems, Internet of Things (IOT), medical, and portable and wireless.

The remaining 21 chapters identify technology trends, focusing on the key technology capabilities and developments anticipated and required within the electronics manufacturing supply chain to meet product needs over a 10-year horizon. The 2017 iNEMI Roadmap highlights several key technology trends impacting electronic manufacturing and its supply chain, including:

The roadmap is a global collaborative effort that involves many individuals who are leading experts in their respective fields and represent many perspectives on the electronics manufacturing supply chain. More than 500 individuals from at least 22 countries, and representing more than 350 corporations, consortia, government agencies and universities came together to create the 2017 Roadmap.

 References

  1. Presidential Executive Order Expanding Apprenticeships in America, released June 15, 2017.
  2. ”Apprenticeship and Jobs Training Act of 2017”, S.1352
  3. To read Numakura’s full column, click here.