Gene Weiner is president of Weiner International Associates and one of the most Knowledgeable people in the EMS industry. He’s the past president of a copper clad laminate company, vice president of a several specialty chemical companies and spent 25 years on the board of directors of one of Asia’s biggest SMT equipment distributors and a multi hundred million dollar EMS operation, WKK. He possesses a huge amount of global knowledge of the EMS industry, and he’s also an IPC Hall of Famer.
Welcome, Gene. Lovely to see you today. There’s an awful lot happening in the world at the moment. There’s a lot happening on the geopolitical stage as well as on the technology stage. Let’s start with the geopolitical stage with what’s happening between the companies that are manufacturing in China. They’ve suffered a lot in the last year with all these lockdowns etc. How’s it playing out over there?
Well, it’s playing out pretty bad. First of all, the government is concerned about the first drop in population growth in decades. Secondly, the economy has been pretty well shut down. We have two things coming up. We have both the decline in orders as the pipeline filled in the low end consumer products, orders dropped off as people started going to work. The cell phone order business dropped 25% in the last quar- ter, which is a major thing. The suppliers of advanced materials have cut them off, and they’re threatening to do the same. Printed circuit companies have found that their Christmas orders were filled and the orders are not coming back the same way for home computers or other things, other than broadcast. We also now have the Chinese New Year right now, which is an annual shutdown, which will cause even further delays in supplying materials.
Meanwhile, the chip situation, there’s another one where China’s trying to catch up. They have a lot of Taiwanese companies there that build very good things that are quickly moving to Thailand, Malaysia and elsewhere. As we know, almost weekly there’s news on that. But, on the other hand, their businesses have dropped off. I heard just last week that the organic substrate business for advanced chips, because of the shortage and the global situation, facilities are only running at 60-70% at the moment. Although they all claim by the second half of the year, they’re going to be overloaded again.
We have two different things. “The chips don’t float,” as they say in the PCBAA. They have to be packaged and they have to be mounted on a device to bring them to the outside world. All electronics depends on your chip, the substrate dependent circuit board and software. You need all three. If any one of those is in jeopardy, the whole thing falls apart. If there is any type of shutdown in one major supplier, it all falls apart.
Then, when you have certain things that drain all the facilities from medical or military because of the situation between Ukraine and Russia and other things going on there, then the power cuts off, and the factory situations also in Europe that are kind of crazy, it all comes to pieces. I don’t think there is anybody sitting here right now that can forecast the next six to nine months for their business accurately.
You’re absolutely right. There’s very limited visibility out there. I hear people talking about recession, some even talking about a crash. I mean, who knows? There has certainly been, as you said, a decline in a lot of the consumer-led products, the cell phone industry, computers and that type of thing. But who knows whether it’s going to come back at the end of the year?
Well, we have some shifts that will balance a lot of the things. For example, automotive. Right now, if you try to buy a particular Ford SUV, they’ll try to direct you to another one, because they don’t have the chips for it. They have orders more than 25,000 that they can’t deliver. People with orders in place are
being recommended, and they’re getting incentives to try and buy another model, because of chips.
A friend just bought a recent Japanese car, I won’t mention the brand, without two of the things, including the garage door opener, because they couldn’t get the chips.
He didn’t get chips that opens the garage door. But the low-end chips demand is filling because there are dif- ferent ways of filling it. It’s the high-end chips that are the problem, and even more so the packaging of the high-end chips.
Sure, we have TSMC planning to build a big facility here. Intel’s going to build a big one in Ohio. Europe is building one.
The Japanese are. Samsung is putting one into Texas. That’s all wonderful. But you still have to assemble them. You still have to package them.
And the OSATs here are maxed out.
Not maxed out. We just never had the capacity. Because it all goes back to Southeast Asia for packaging. People say, “Oh, we’re putting all this money in,” and the money is available to foreign companies that want build here. It’s not just American companies and to nearshoring such as Mexico with the new Canada-US- Mexico trade agreement. But people don’t know that these factories won’t be up and running for two or three years.
That’s true. We’re looking at the future. But when they’re running, they’re still going to have to be shipped back, because we still have to build the volume and produc- tion capability and skill sets in the US and in Europe and in Latin America to fill the void.
Well, that’s one of the other things that’s happening with all this change. With all the nearshoring and things following the US Chips Act and the European Chips Act, there are some companies using this opportunity to leapfrog some of the technologies.
Let’s talk about some of the new technologies you’re seeing coming out there.
Well, what we call new technologies may or may not be new. Some have been around for a few years, and are just now beginning to emerge, as they sort of stabilize.
One of them, of course, is the old-fashioned additive manufacturing, where you put a metal ink down or a deposit and build up using different types of exposure systems or bonding systems. We have Averatek, we have the homegrown system at Cicor in Switzerland, which uses a combination of thin film and printed circuit technology. We have the 3D additive, which is part additive, which deposits a resin or plastic and a metal in three-dimensional buildup without a substrate.
Then you have those that are hybrid where they take a substrate and they build up on top of that. And then we have Nanosystems, which is the second, third generation in Israel setting up. They bought several other companies that can build very small ceramic or metal parts down, and we’re talking in the 10 mil range by using additive techniques. They’re fairly slow, but if you’re doing small parts and you have a 12 by 12, and your parts are that big, you make 200 at a time. Then we have maybe 10 or 12 companies doing the 3D additively manufactured electronics, and there are no standards for this. We have to create standards. There will be a meeting here at APEX to talk about creating a committee to make standards for 3D additive manufactured electronics.
Standards always follow technologies. I mean, the additive technologies are still fairly new, but there’s also a lot of other technologies, suchas the AI-led technologies that are coming out. There’s no standards for these either.
Yeah, but, you also have to define what you mean by additive. Is the 3D totally additive? Is it partial? Is it being an addi- tive circuit on a substrate? Or just that with nothing and do plastic and metal at the same time? So, there’s a definition problem.
It’s different things. There’s also the company that you and I were talking about the other day, that Mechnano, which is bringing out the carbon nanotube technology that can change material properties.
Also, Fuji introduced a system in Europe just a couple of months ago, which is a similar system, but also has a component insertion attached to it. We look at that and we say, “Well, meanwhile to do HDI, now UHDI, ultra HDI, the small is getting tinier and tinier. How do you do that?” Well, there are no standards as yet for anything under 75 microns, three mils. So the IPC’s committee is doing that.
So then what happened in China, there was a call by the IPC’s committee there to form a committee to create standards for the UHDI and HDI. Over 90 companies showed up, including three Japanese and some Americans. Then they put out the call just this past week for the western world to join in, and that’ll be coming up. There’s a lot going on there.
But then you have to say, “All right, how do I make this?” You have to have trained people. You have to have the process. You need a facility that’s totally beyond that of the typical printed circuit board where you consider 4, 5, 6 mil line of space, fine line. That doesn’t cut it anymore.
We have to go down to 25 micron, and even less in some cases. That’s going to take equipment that’s far more expensive and facilities that are far more expensive. Added to that, you are going to need training, control, standards and more standards. You’re not going to find all the people, so you have to train and
upgrade your own people. You have to put in-house training in. You have to find the skillsets to do it. But, right now, the skillsets are mostly in Asia.
Well, they are, but I think things are changing fast.
It is changing fast. What caught my attention during the past 60 days are the number of companies operating in China, both Chinese and Taiwanese and other, moving to Malaysia. Setting up facilities, particularly in Thailand, which is a major source of automotive parts supplying circuits for India.
They’re also moving to Mexico. Some of them are moving to Mexico.
Mexico, there are two cities, primarily Guadalajara and one other about 160 miles northeast of Mexico, is the 10th largest EMS center in the world. And it’s growing. And more people there and there are
trained people. The two cities where they are have four or five universities. They now have got about 20, 30 years of skilled labor there. They know what they’re doing.
I hear they’re starting to move in some chip-related industries, as well, into the south of Mexico, because there’s a lot of water there.
Yeah. Well, the water is another favorite one of my topics. There are very few printed circuit shops in Mexico,
as we think of it. Maybe three or four that are operating properly. I was called by a major global supplier, one of the multi-hundred million dollar ones just a few weeks ago, and said, “What do you think of Mexico?” I said, “Well, if you get the cartels out of the way and go to one of the safe areas such as Guadalajara or else- where.” I was serious about this, because there are some safe areas. “I would con- sider it.” And they say, “Well, what about water?” I said, “Do you know that there are over 50 countries with over 18,000 water purification facilities from saltwater operating? You can get a license from Israel tomorrow, set up and have all the water you need. Plus, with demonstrated new waste treatment processes, such as those that installed by GreenSource Fabrication and beyond that, the GreenSource up in New Hampshire, you will use less water. You can purify it, it’s affordable and it’s available, so don’t say there’s no water. The ocean is not far away.”
Go out in a modern battleship or nuclear sub, where do they get their water? They purify it.
Right. Of course. Well, it’s fascinating talking to you, Gene. Thank you for talking to us today.
– TREVOR GALBRAITH