Weiner’s World

Estimated reading time: 16 minutes

The U.S. Department of Commerce, Bureau of Industry and Security, Office of Technology Evaluation presented the preliminary results of its Defense Industrial Base Assessment "U.S. Bare Printed Circuit Board Manufacturers" at PCB West 2016. The study was initiated at the request of NAVSEA Crane, the Executive Agent for Defense printed circuit boards. The report provides a reasonable view of the industry based upon a large number of interviews. It does not mention the likelihood of losing another 20–25 domestic fabricators in the next year or so, but does anticipate that possibility over the next four years. It does not discuss the fragility of the domestic bare board supply chain, but does show that capacity utilization of small board shops is under 50%.

The DoC is reported to be engaging a consulting organization not familiar with the industry, rather than one familiar with it, to take the next step forward. It seems like the U.S. Government has made it to the 50-yard line and now is going back to the 5-yard line, despite a new Defense program of openness and cooperation—for instance the new Defense Innovation Units in San Jose, Boston, and coming to Austin. There still seems to be too much "stove-piping."

Challenging National Initiatives

With the announcement of "National Guideline for IC Industry Development" and “Made in China 2025” initiatives, the China government and industry are set to significantly improve self-sufficiency for integrated circuits (ICs) manufacturing in China by 2025. This stimulated recent China M&A activity across the semiconductor manufacturing supply chain (Spreadtrum, OmniVision, ISS, Mattson Technology, STATS ChipPAC), new investments by Chinese companies (SMIC, XMC, etc.), and investment in China factories by multinationals (Intel, Samsung, SK Hynix, TSMC, GlobalFoundries).

WL-FOP Rapidly Gaining Market Share

The 40+% gain in performance of Apple's A 10 processor, largely attributed to TSMC's use of this packaging technique, is spurring demand for this reduced-cost packaging approach. If demand continues to spread at this rate it will most certainly affect laminate suppliers (negatively) and boost wafer lever substrates suppliers.

Prices Going Up Again Even as Many Chinese Shops Struggle to Break Even while Avoiding Layoffs—this Sounds Sooooo Familiar

There has been a huge increase in activity by Chinese fabricators soliciting business in the U.S., with a number of companies are going direct and bypassing brokers. Some have already transferred employees here or are opening new offices. They will have a presence at IPC APEX EXPO in February.

Most PCB factories which had a materials price increase in March have received new price increase notifications from Guangdong Kingboard Laminates and Shengyi Technology, according to sources in China. This has raised widespread concern in the industry. CCL, prepreg (PP) and copper foil prices are going up 5−10%.  Shengyi's new plant in Changshu will start production this quarter, adding 11 million square meters of capacity. This will increase the company's output potential to more than 80 million square meters per year!

Copper foil price rises are said to be the primary causes of the current increases. Cu foil represents around 30% of the cost for 0.062"CCL, and 50% of 0.039"CCL.

Until recently, copper supply exceeded demand. Now copper shortages have significantly increased due to demand by the lithium battery market. Some shortages have appeared. Some suppliers of copper foil are said to have transferred some production from the PCB copper foil to lithium copper. However, lithium foil capacity expansion is lagging behind supply and demand. This has resulted in foil producers to collectively being unable to meet the CCL and PCB production demand. Result? Copper prices are increasing.

Currently raw material costs are about 40% of the PCB. In this case, some PCB factories may choose to absorb the increases by themselves, others may need to charge their customers more. The situation has caused hoarding of CCL. This, in turn, causes a longer lead time than usual. Normally 3−5 working days are needed to purchase raw materials. Now 5−10 working days, sometimes even longer periods are needed.

Dell Inc. completed its $60 billion deal to acquire EMC Corporation, the largest technology merger in history. The new company, to be named Dell Technologies, plans to be a one-stop shop for information technology sold to business. The company employs about 140,000 people globally and will maintain operations in Hopkinton, Massachusetts where EMC was located. With $74 billion in revenue, Dell Technologies will be the world’s largest privately controlled tech company.

Nan Ya Plastics will acquire the remainder of its ownership interests in its two PFG fiber glass joint ventures from PPG by year-end. Nan Ya and PPG each hold a 50% stake in the JVs. PFG manufactures yarn fibers for laminates and fiber-glass reinforcement materials for automotive applications. It has production facilities in Chia Yi, Taiwan, and Kunshan, China.

Ventec International Group has doubled its B-series insulated metal substrate (IMS) materials production capacity at its Jiangyin, China facility. The company invested $2 million to double its IMS materials production capacity.

According to Research and Markets in Dublin, sales of conformal coatings will increase to $12.3 billion by 2021 on demand for printed circuit boards and automotive products. "...the need for conformal coatings on PCBs for better performance in vulnerable environments have been the key drivers for the dominance of the electronic industry in the conformal coatings market," the research firm said.

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