Joe Fama is an expert in electronics manufacturing services with more than 30 years helping OEMs and EMS companies, particularly in southeast Asia. Joe specializes in taking relatively unknown electronics companies and linking them with key OEMs. His career has taken him to Singapore, Malaysia, China, Mexico and the Philippines. He also writes an occasional column. He talks with Mike Buetow about setting up three-way program among a Western OEM and NPI EMS and a Southeast Asian volume EMS that can generate a recurring revenue stream for the US-based EMS.
Writing in Circuits Assembly this month, our longtime columnist Sue Mucha explains the forces that set the wheels in motion for Foxconn’s much-discussed deal to put a new campus in southeastern Wisconsin.
Some of the impetus starts, oddly enough, in Mexico, where a 2014 change in the status of flat-panel displays made them subject to that nation’s 16% value-added tax. The TV assembly industry crashed. Writes Sue: “In short, tax policy in Mexico appears to have contributed to a changed investment strategy in the TV assembly market. That didn’t just impact TV manufacturers; it also impacted the EMS companies they outsourced to.”
The gate swings both ways, according to a Reuters report today. The wire service says Amazon, Facebook and Oracle, among others are leading the way south, expanding operations and hiring engineers in Mexico, where the cost of living is lower, access to talent is rising, and US immigration laws (and attitudes) aren’t in play.
Could this be the tip of a coming iceberg?
After a hiatus, we have relaunched PCB Chat as a podcast.
Our first guest is Mike Konrad of Aqueous Technologies, who shares his experience with what happens when a contract manufacturer follows its customer’s instructions to the detriment of the product. The outcome: Product failures, blame, drama, and a really big lawsuit.
We apologize in advance for the imperfect audio; we are still getting up to speed on the editing tools. But we think you’ll enjoy this, the first in what will be a regular series of interviews and conversations.
Peak manufacturing season is upon us, stretching component and raw material lead times and supplies. Lead times for some passives are now more than a year! We also are hearing price increases are greater than usual, and fabricators are getting notices from raw material suppliers about possible shortages or even allocation.
Moreover, transportation costs tend to get higher this time of year and a new wave of environmental inspections in China have shuttered some factories there.
Supply chain sources indicate these situations will become worse over time this fall.
Sorry to be the bearer of bad news.
Were you as surprised as I was at Fabrinet’s choice of a new CEO?
During the 17 years of its existence, having been formed in 2000 when ex-Seagate exec Tom Mitchell took on the lease of his former employer’s plan in Chokchai, Thailand, there has been no EMS company so successful over the past two decades. That initial $21 million investment is now worth $1.35 billion in market value, not to mention the consistently most profitable business in the industry.
It would have been conventional, then, had Mitchell chosen longtime No. 2 Harpal Gill to assume the mantle. Dr. Gill has been Fabrinet’s chief operating officer since 2009 and president since 2011.
Instead, Mitchell went outside for Grady Seamus from rival Sanmina, where he headed the Mechanical Systems division.
Some analysts believe the move foreshadows a coming diversification from fiber optics into non-optical manufacturing. Writes Stifel Nicolaus’s Patrick Newton:
[W]e see Seamus as having extensive leadership experience with both optical manufacturing (background at Lucent; Mechanical Systems Division at Sanmina manufactures the cabinets/chassis/frames/racks/ and storage cabinets integrated with electronic components and sub-systems that optical components are supplied into) and non-optical manufacturing (focus Medical experience at Sanmina). We view this competency in both optical and non-optical manufacturing as likely to be an aid in helping the company move beyond its optical focus to a 50/50 optical/non-optical mix long-term. We emphasize that our recent conversations with Fabrinet’s management highlighted that Fabrinet was targeting its next CEO to have a combination of operational excellence, deep technical expertise, and strength with customers as they will have to be customer facing.
Mitchell set the bar so high, any successor would be challenged to maintain it. Seamus is widely seen as a talented executive. But will he attempt to write Fabrinet’s next chapter with — or without — the team Mitchell put in place?
Nvidia founder and CEO Jensen Huang is the latest tech luminary to call the end for Moore’s law.
There’s nothing new about this, of course. He joins the MIT Technology Review, Ars Technica writer Peter Bright, former Intel former chief architect Bob Colwell, and the International Technology Roadmap for Semiconductors.
(For the record, Gordon Moore himself disagrees.)
What do you think?
M&A specialists in the electronics industry seem to have caught a case of merger mania. In the process, they unfortunately have seem to have learned the worst traits of the buyout crowd.
A pair of unsolicited bids were announced this week. In one instance, a small EMS company announced its interest in a much larger competitor. In the other, a Chinese connector manufacturer made a play for a smallish Canadian EMS/ODM.
What makes these cases interesting are the details.
In the former, Cemtrex, a company with trailing four quarter revenues of $125 million and a market cap of $31 million, made a play for Key Tronic, a top 50 worldwide EMS that reported sales of $468 million for its just completed fiscal year. Key Tronic’s market cap is $74 million, so Cemtrex’s offer of a one-for-one stock swap was a huge discount to Key Tronic’s value.
Not only that, says Key Tronic, it wasn’t really even an offer: “Based on (Cemtrex’s) current SEC filings, Key Tronic understands that Cemtrex has not commenced a formal exchange offer and that any such offer would require additional SEC filings by (Cemtrex),” Key Tronic said.
In the latter, Shenzhen Kaizhong Precision Technology made a written offer for Pacific Insight Electronics. The wrinkle here is, not only was Pacific Insight taken by surprise, it is already under agreement to be purchased by Methode Electronics.
The ODM today confirmed receipt of a written buyout proposal from Chinese connector maker. However, Pacific Insight has already agreed to be acquired by Methode Electronics, whose offer Pacific Insight says is superior to Kaizhong’s. Pacific immediately urged shareholders to reject the unsolicited bid.
Publicly traded companies such as Key Tronic and Pacific Insight have a fiduciary responsibility to their shareholders. However, from time to time outsiders try to make waves or generate publicity by pulling stunts like these. I’m not saying the interest communicated by Cemtrex or Kaizhong is false, or even misplaced. But in both cases, I think the suitors are overplaying their hands.
Next week is the 26th annual PCB West, the preeminent trade show in the Silicon Valley for the electronics supply chain.
As those who have attended before know – and there are quite a few of you – PCB West focuses on the design and manufacture of PCBs, HDI, electronics assembly and printed circuit board test, and gives engineers, designers, fabricators, assemblers and managers an opportunity to improve skills, increase knowledge and network with peers, colleagues and experts. With an emphasis on training – half the presentations
are at least 2 hours in length – there is no place better to get real, practical, in-depth information.
Our three-day conference features:
• More than 70 presentations on the hottest topics, including noise control, flex circuits, and diagnosing assembly defects. This is our largest conference yet!
• More than 15 day-long tutorials or half-day seminars
• Sessions for all levels of experience and training, from novice designer and engineer to seasoned pro
• Speakers from Analog Devices, TTM Technologies, NXP Semiconductor and many more top companies
• The ever-popular Rick Hartley, Doug Brooks and Susy Webb
• An all new PCB/EMS Management track with special sessions aimed at helping executives make the capital investment and hiring decisions that shape their companies
• Three free day-long tracks on Sept. 13, with topics ranging from signal integrity and IoT PCBs to 3D printing technologies.
Also next week, a special 2.5-day IPC Designers Council Certification Program powered by EPTAC.
All conference attendees receive free admittance to the one-day exhibition Wednesday, Sept. 13, which includes a complimentary luncheon and evening reception, both on the show floor.
For more information or to register, click here.
Looking forward to seeing you at the show! And as always, please feel free to share your thoughts.
I know you are excited about the news Foxconn will build a high-end display manufacturing plant in your backyard. But don’t break out the brats and beer yet, cheeseheads: Foxconn has a long track record of pulling the football away right before you go to kick it.
The end is nigh for lead in solder, as our columnist Tim O’Neill writes this month in CIRCUITS ASSEMBLY.
Rules governing use of the materials — Directive 2015/863, aka RoHS 3 — are coming online and will be in full force by 2019.
Suppliers have until July 22, 2019 to meet the stricter provisions, which includes no more than 0.1% lead in medical devices, which are joining consumer, industrial and other electronics products on the effectively banned list.
The question Tim poses is, What comes next? Already, the future of commonplace unleaded alloys such as SAC is being questioned. As Tim writes, “It is even feasible SAC 305 will be dislodged by a new de facto alloy that better serves the needs of the market.”
A Norwegian scientist believes he may have the answer. As noted in Phys.org this week, Dr. Henrik Soensteby of the University of Oslo is working on an alternative alloy that contains nothing but common — and essentially benign — elements. In conjuring up his alloy, Soensteby is mixing sodium, potassium and oxygen with niobium, a very strong metal typically used in steel. While niobium dust is reported to cause eye and skin irritation, it reportedly is nontoxic, at least in the volumes used.
It’s not so clear yet how much niobium would be needed. Brazil is the biggest supplier of niobium, producing more than 85% of it each year. Other sources include Zaire, Russia, Nigeria and Canada. World production is relatively light: around 25,000 tonnes per year. Some scientists believe there are ample supplies still in the ground. There’d better be: Some 5 million tonnes a year of lead ores are mined each year, although obviously not all that goes into electronics.
Soensteby is optimistic he can use atomic layer deposition (ALD), a vapor phase method that uses gas at controlled temperatures to stimulate a reaction with the substrate; the output is thin films. It is an emerging technology in semiconductor manufacturing. There are many, many questions, of course. First and foremost, does the alloy actually, you know, work? Also, ALD typically involves higher temperatures than are used in electronics assembly: Would it work with today’s packaging? Will other technologies such as 3D printing or Joe Fjelstad’s solderless Occam process supplant the need for solder in any form?
Still, materials science is the most exciting area of electronics today. We may make fun of folks who walk around with smartphones seemingly permanently tethered to their ears, but we also have them to thank.
Register now for PCB West the Silicon Valley’s largest PCB industry trade show: pcbwest.com! Now with full-day electronics assembly tutorials!