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August 20, 2024 | Alex Stepinski, Stepinski GroupEstimated reading time: 1 minute
Editor’s note: Investing in a new printed circuit board fabrication startup is not for the faint of heart or the light of wallet. Standing up a new “high-tech” PCB fab facility capable of becoming qualified for aerospace and defense work typically takes a minimum investment of $50 million. However, Alex Stepinski says entering the defense and aerospace markets with a new PCB fabrication start-up facility far under this prohibitive cost benchmark is possible when good partnerships, innovation, and sound engineering design enter from the beginning. In this article, Alex Stepinski outlines just how this can be achieved.
While industrial policies will hopefully result in a more competitive landscape for defense procurement by copying established processes from East Asia, they do very little to promote actual value innovation (i.e., communism didn’t create Silicon Valley). The best we can hope for are products at a 3-10x premium over what East Asia can do because this is the achievable equilibrium of just taking overseas process equipment while not accepting the cultural and organizational aspects that drive cost efficiency there.
We have also found that investors are more focused on de-risking by copying rather than de-risking by innovating. This is largely because PCB fabrication is a low-innovation industry in general. Expectations are low, domain knowledge is scarce, and group-think dynamics around legacy solutions are high. Every project has consultants and experts who bring together all the best-established ideas. But where are the new ideas?
To address this deficiency, we have been developing a U.S.-centric business model that allows domestic investors to enter the defense and aerospace market with a much smaller and more efficient investment protocol. Instead of investing $40–$80 million upfront in a copy-paste fab facility, one can build a fab with similar capabilities to what is being done at the higher capital procurement levels for far less by focusing on more efficient process solutions.
To read the entire article, which originally appeared in the July 2024 PCB007 Magazine, click here.
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