IPC’s Phil Carmichael on Asia, New Standards, and the Future

Estimated reading time: 12 minutes

Carmichael: An update to that, we're using the same IPC worldwide approach on how to develop this standard, so it's going to balloting the second quarter of this year. We hope to be able to release it sometime before the end of the year.

Matties: Great, that's exciting.

Carmichael: We'll certainly let I-Connect007 know about it first.

Matties: Thank you.

Carmichael: It's getting ready to launch and it's actually been highly sought after by the Chinese government. There's going to be some associated attention given by the Chinese government about this because the idea came from China. That shows that China is actually progressing in their maturity.

Matties: A lot of rapid change is happening in the industry in China. Automation, obviously, is a key driving factor with labor rates.

Carmichael: It's clear that China is on a path that as they progress, entry level, low and touch labor is actually moving elsewhere. We've seen a number of factories move out of China into places like Vietnam and Indonesia, because the touch labor rate in those countries is about 25% an equivalent person in China. That's a fairly big delta if you've got hundreds of workers. What we also see is that China is moving up the knowledge ladder. They're doing more complicated things. They're doing more integrated activities and they're also more involved in the design instead of just the final production.

I see two things happening. I see people moving up the value chain, which will continue to see growth in China in revenue terms, but I do see some of the volume stuff going elsewhere. That's a natural progression, I think, that we followed here in the U.S., right? It's not a surprising trend.

Matties: One of the things that I'm hearing is there's interest from American companies to buy Chinese produced equipment. I think that's a testament to the level of quality that the Chinese have achieved in manufacturing processing equipment.

Carmichael: I think you see two strong pockets of equipment production. There's China and Taiwan. Both produce high-quality equipment and they've made equipment that's pretty much customized to the PCB industry. If you step back and say, “Okay, 40% of the world's production of printed circuits are made in China,” there's certainly an ancillary equipment need and equipment requirement to service that business. Yes, there are some really great pieces of equipment that are made in China that are being purchased by other people outside of China, including at the show. About half of our Chinese exhibitors who came to the show are actually equipment manufacturers. The other half are EMS companies.

Matties: I think this may be one of the largest contingents.

Carmichael: It's the largest group, Barry, since I've been involved. It's almost twice the number of people who came last year. There's a lot of interest in the show and a chance to have face-to-face communication with buyers and so forth. We've heard some pretty good things about the show's productivity already, just entering into the second day. We've heard some good things about yesterday. It looks like it's a positive for everybody.

There's another element that I would like to bring up which is that we also run an APEX show, as you know, in South China, in Shenzhen, in the first week of December. We're now seeing a few companies, and we hope to see a few more, that are going to be showing at both shows.

Matties: I think that's now the largest show in the world for this industry.

Carmichael: The IPC APEX HKPCA cooperative show is the largest in the industry. I just signed the permits for next year's show at just under 50,000 square meters, or 510,000 square feet—which is 4x APEX Las Vegas. It's a big show.

Matties: One of the things about that show that was so impressive to me last year was the amount of equipment on the show floor.

Carmichael: We could actually produce a printed circuit board there, for sure.

Matties: Because it's a lot of the multinationals bringing their equipment in. It's really a great venue to really go kick some tires, if you will.

Carmichael: It's a very good show for what we'll call a business show because our focus there is more on giving people access to people who buy things. Our metrics show that about 65% of the attendees, of which there's nearly 50,000, are either managing directors or directors who have the ability to buy something. That's pretty important to the guys who display.

Stephen Las Marias: While the show was big, I remember there being some difficulty promoting some of the companies on the far end of the hall. Will the IPC be devising some strategies so that people really visit those remote places?

Carmichael: They're not that remote. When a show expands, it's always a challenge on how best to direct traffic all the way to the back end, but we've got some ideas. We'll see some new things this year. Actually, one of the strongest draws in this show is the China national championship of the hand soldering competition, which we put in the back. It's like the retail idea. You had to walk all the way through the show to get to the back. We'll be implementing a few things like that, but it's a challenge.

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