Aismalibar on Markets, Materials, and the Increase in Copper Prices

Estimated reading time: 15 minutes

Matties:

Benmayor: I think that the laminate will increase in the range of 25–30%. This is my personal guess, but a price increase not just because ofcopper but also the glass fabric. Raw materials like glass fabric, base chemiclas, and epoxy resins will also have an increase. These are the three main elements in the FR-4 or in CCL laminates. No doubt the price will grow.

Matties: Do you see any fabricators stockpiling at a lower price to save money? If you know you are going to buy the material and it is going to go up 20%, why not buy a year's worth? It’s free money and a competitive advantage a year from now?

Benmayor: Yeah, but that is not easy. You can see manufacturers that have the full integration of the copper, the glass, and the FR-4, all in a row, and they are keeping the prices there since they have all the extra capacity in their plants. We need to understand one thing: The price is increasing, but the capacity is not increasing. The volumes are still low.

The problem we are having in the FR-4 business is that the copper price has increased because of the battery segment, and the glass fiber plants have increased the price because they stopped some reactors and there is a shortage of deliveries. Then the price goes up but there is no extra demand on the laminates. That is the main reason for the price increase. We need to pay attention and be strategic with the price increase, because at this particular moment maybe it will grow up to 30% and we won’t see a drop down on price until possibly the middle half or end of next year. Nobody knows.

Matties: Where do you get your copper from?

Benmayor: We buy it from Europe and from Taiwan. They are our two main suppliers today because of the quality.

Matties: As they say, there are varying degrees of quality, right?

Benmayor: Yes, Aismalibar is extremely picky on quality, especially in the copper. We have a German supplier and a Taiwan supplier.

Matties: What do you think is the most important thing a PCB fabricator should know about material?

Benmayor: That is a very good question. In general, I think PCB fabricators should know more about the methods we use to control the laminates. IPC, ASTM, and UL have many different norms to evaluate laminates and the PCB engineering department should be aware of how all these tests are performed in order to compare at the same level. PCB manufacturers tend to accept a data sheet coming from a CCL manufacturer as real but you cannot imagine the number of CCL companies in China that declare nonsense values on their data sheets.

Matties: What should they know at that lower level? Do they need to know anything other than I order it from you and it shows up?

Benmayor: They should know when they have a quality claim, that they should really be able to point out the laminate and know why this is giving them trouble. It is not the same FR-4 coming from a low end Chinese player as from a high-end Chinese player or a Taiwanese player or a Japanese one. Everything is FR-4 but the technology to produce it is behind the resins, the coating technology,  or pressing technology and so on. Those are what will affect the final quality of the product, and customers should be able to appreciate the difference. It is not only a price-driven element.

Matties: Are you at all in the RF space?

Benmayor: No. We would like to be, but it is not an easy market to enter. We are aware of that.

Matties: Are you not in that market because of the capability in your factory or are you not in that market as a strategic decision?

Benmayor: We simply do not have the technology. We are learning from this technology and we are putting some effort there, but it is a long ride to get there.

Matties: Base material like the glass fiber is really important in the RF space sector and you mentioned the pricing going up on that. What is driving the pricing on that?

Benmayor: There is a less amount of glass fiber right now. It looks like the big players in the glass fiber industry stopped part of their capacity and made the price increase. This is what we have been informed of.

Matties: When will you be in the RF space?

Benmayor: That is another good question. Aismalibar has a very strong reputation in the market by doing really state-of-the-art laminates and if we penetrate this market we cannot fail when we get there. We need to be conscious and from the technical perspective do our proper R&D. We will need years.

Matties: How large is your factory?

Benmayor: The factory is around 5,000 square meters, or 50,000 square feet. We have  a capacity of half a million square meters and we are actually producing around 100,000 square meters of aluminum.

Matties: Is there anything that we haven't talked about that we should be talking about?

Benmayor: The market in Europe looks to be active and we are quite happy about this. We have been for five or six years in a very depressed scenario with the PCB makers in trouble, but we have seen reactivation in general in all of them. We see investment because the other part of our group develops machinery for the PCB industry and we’ve see activation in the investments, which is a good sign.

It means that companies have some financial resources for new investments and the investments are basically focused on the technology, not on increasing capacity. They are always focused on new developments, new projects, and new technologies that they are willing to achieve.

Matties: It has really been the automotive industry that ties in with the economy in electronics in Europe?

Benmayor: The automotive industry gives a lot of support to the local electronic industry. No doubt it is one of the strong markets for the domestic PCBs and PCBAs.

Matties: Now that Trump is our president-elect, do you think there will be any impact from your point of view?

Benmayor: I don't know. There is a lot of talk of this new president at the show because he has just been elected a couple of hours ago.  We will need to wait and see. A “protection of the USA” industry will always benefit EU as we will need to follow somehow.

Matties: What is your sense? Do you think it is going to be better for industry or not?

Benmayor: He is declaring that he wants to bring back the industry into the States, which is a good sign. I wish that some politicians in Europe did the same. The industries in North America and Europe cannot rely on China. We need our own industry and we need our own R&D centers to develop our own technology, even if it is higher in price. We have to work out what is the right price and the customers will need to pay for it at the end of the day. If the Far East really wants the technology coming from Europe or North America, they  should have to pay for it.

We have to get used to this. Not everything has to be price-driven. This is my approach. Looking back 20 years ago, there was no electronics in China at all. Today they are the leaders in the world and we showed them how to do it. We, I mean the Europeans and the Americans, taught them how to do the PCBs, and now they control a big part of the electronics industry in the world and we have very little capacity. I think that we should re-invest in our own capacities, in our own technologies, and then try to keep the production domestic. That is the only way.

Matties: I think you are right. Pete, do you have anything else to add?

Starkey: No, just that it has been a very interesting conversation to be part of and to listen to. Thank you, Eduardo.

Benmayor: Thank you very much.

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