Tariffs are Taxing the Supply Chain

The breaking tariff situation in the electronics industry is equal parts fascinating and chilling because of its lack of near-term precedence and unpredictability. We’ve spoken with several EMS companies (read the article here) to gauge the extent of the disarray and get a sense of how they are (attempting to) resolve the issue.

Our reporting is ongoing, so be sure to check back occasionally for updates.

 

 

Think Like the Owner (and One Day You Will Be!)

How to Maximize Your Value to the Boss

Jerry wasn’t your average engineer.

While his college classmates fascinated on academics, Jerry raced down the sidelines snagging sizzling passes for the Baylor Bears. Soon he scored a much sought after intern offer from NASA and bought an acoustic guitar to serenade the boot scooters. What could have been more thrilling than to see an inspired young man from Shreveport, LA reaching for the stars and achieving success?

But, ultimately talent is finite, youth is fleeting and good looks are quite common.

As he rose through the corporate ranks, the traits that made Jerry his company’s most valuable player year after year had little to do with his athletic prowess or his love for a catchy tune. Jerry’s secret formula was his priceless perspective. His worldview.

Jerry thought like a business leader. Every day. In every situation. And when the opportunity presented itself, Jerry overcame all the challenges of an economically distressed childhood to buy majority ownership in his company. Jerry thought like an owner and became one.

Could you do the same? Could you propel yourself into another universe by changing the way you approach your job. We believe you can. We hope you will. But, hope is not a strategy.

As it turns out, there is no average engineer. There are only engineers who think like employees and engineers who think “like a boss.” The daily choices you make are indicative of the path you’re on. So test yourself while there’s time to adjust and ramp up your game.

Here are 12 questions you can quietly ask yourself to predict your outcome.

True or False:

_____ I do what is right for my customer, company, and team regardless of personal sacrifice.

_____ I press forward with good ideas, even if they are unpopular.

_____ I aim for goals higher than any manager will set for me.

_____ I do not give in to group pressures simply to avoid confrontation.

_____ I consistently give truthful feedback to customers, superiors, and teammates.

_____ I adhere firmly to a code of business ethics and moral values.

_____ Change always brings opportunity. Stagnation limits opportunity.

_____ I practice a disciplined approach to self-improvement.

_____ I have a method for prioritizing my opportunities today.

_____ I successfully make others enthusiastic about opportunities that require extra effort.

_____ I transmit a sense of purpose about all that I do.

_____ I am accountable for my actions and accept responsibility for my mistakes.

If you answered true to nine or more of these statements, you are on the right road to wind up steering your own endeavor. If you answered false to three or more of these statements, you’ll likely always report to someone else. It’s all a matter of your objectives.

Jerry knew from early in life that he wanted to reach his full potential, whatever that might be. I have no doubt that if you asked him today, he’d tell you that he’s still in the relentless pursuit of excellence. In other words, he isn’t done! He’s still streaking for the goal line.

Baylor University recently built a stunning new stadium in Waco, TX, with world-class amenities. On any given Saturday night, you’ll find Jerry up in the stands. His heart is always in the game. And if you wander up to Jerry, ask him if you should aspire to own your own company. He will likely chuckle, wish you much success and suggest that you will have to make that decision for yourself. But regardless of your goals, Jerry will say, “be the best YOU that you can be.”

 

Keith Martino has a passion for helping engineering executives achieve stellar results. Martino authored the book Expect Leadership in Engineering. In addition, the team at Keith Martino has designed and launched Leadership Institutes at multiple engineering firms across the US. Martino is quoted in Young Upstarts, Entrepreneur Magazine, NewsMax Financial, the FedEx Worldwide Manager’s Pak, and several metropolitan business and industry trade journals. For more information visit keithmartino.com.

 

 

 

 

Soldering 101: II: The Miracle of Soldering

Folks,

Pity Ötzi, The Iceman, circa 3500 BC. It is believed that he was involved in copper smelting as both copper particles and arsenic, a trace element in some copper ores, were found in his hair. Not only was he being slowly poisoned by the arsenic, but to smelt the copper he had to achieve a wood fire temperature of about 1085ºC (1985ºF), as discussed in my last post. The arsenic in the copper did have a benefit, as it gave the copper a little more strength than if it were pure.

Shortly after Otzi’s time, metal workers discovered that adding 10% tin to the copper produced bronze. Bronze is not only markedly harder than copper, but it melts at almost 100ºC lower than pure copper, making metal working much easier. The Bronze Age had begun. This period coincided with what scholars would recognize as the beginning of modern civilizations, such as those in Egypt and Greece.

Since it melts at a lower temperature, bronze also fills molds better. This improved mold filling is evident in Figure 1. This photo shows a copper and bronze hatchet that I had made. The copper hatchet on the left shows evidence of poor mold filling.

Figure 1. Copper, on the left, and bronze hatchets that were made for Dr. Ron’s Dartmouth College course ENGS 3: Materials: The Substance of Civilization. Note that the copper hatchet shows poor mold filling due to copper’s higher melting temperature..

In my opinion, it is almost certain that the Bronze Age is related to the development of soldering. The first evidence of soldering was about 3000º BC where, arguably the first civilization, the Sumerians assembled their swords with high temperature solders. Since the base metal for most copper-to-copper soldering is tin, the early metal workers almost certainly learned that tin could be used to join copper or bronze pieces together at much lower temperatures than smelting.

Until the European Union’s restrictions on lead in solders in 2006, most electronics solders were tin-lead eutectic. Eutectic is a Greek word that roughly translates into “easy melting.” Figure 2 shows the tin-lead phase diagram. Note that the melting point of tin is 232ºC and that of lead is 327ºC, yet at the eutectic concentration of 63% tin/37% lead, the melting temperature drops to 183ºC. This concentration and temperature is known as the eutectic point.

Figure 2. The tin-lead phase diagram. Note the eutectic point at 183ºC.

After the EU’s lead restriction went into effect, most electronics solders are based on a tin-silver-copper alloy that melts in the 217-225ºC range. The most common of these alloys being SAC305 (Sn96.5Ag3.0Cu0.5, where the numbers are weight percentages.)

Although the eutectic point is an interesting and usually beneficial phenomenon due to its lower melting point, the true miracle of soldering is that two pieces of copper that melt at 1085ºC can be bonded together with a tin-based solder at less than 232ºC. The value of this benefit cannot be overstated. Nature has allowed us to mechanically and electrically bond two pieces of copper together at a low enough temperature that we can do this bonding in the presence of electrically insulating polymer materials. Without this feature of solder, we would not have the electronics industry! An added benefit is that the bonding is reworkable, so that if a component fails, it can be replaced without scrapping the entire electronics printed circuit board.

It is natural to ask how this bonding takes place. The tin in the solder forms intermetallics with the copper. Typically Cu6Sn5 forms near the tin and Cu3Sn forms near the copper (Figure 3).

Figure 3. Copper tin intermetallics from Roubaud et al, “Impact of IM Growth on the Mech. Strength of Pb-Free Assemblies,” APEX 2001.

So next time you use your smartphone, laptop, tablet, or other electronics device, don’t forget that without the miracle of soldering it wouldn’t exist.

Cheers,

Dr. Ron

Soldering 101: The First Copper Smelting

Folks,

Soldering is an ancient technology. It is estimated that soldering was first discovered as long ago as 4000 BC. So soldering was much more ancient to Julius Caesar  (100 BC – 44 BC) than Caesar is to us today. Before considering soldering, let’s discuss early copper smelting, as copper is usually the metal soldered to.

My Cornell colleague Steve Sass wrote a book, Materials: The Substance of Civilization, on which I based my course of the same name on. In his book, Sass points out that the importance of the firing of clay can’t be overstated as it is the first time humankind changed the nature of a material. Once clay is fired it forms ceramic, a material much stronger than dried clay. Artisans first performed this feat about 26,000 years ago in what is now the Czech Republic.

While I agree with Sass’s assessment, it could also be argued that the beginning of modern technology can be traced back to the first smelting of copper. The firing of clay is too simple a process to encourage much further experimentation, which is needed for technology growth. The process of smelting of copper, the first metal liberated from its ore, is quite complex and this complexity led to further experimentation that gave us iron and steel. Continued working with metals likely developed the scientific method, hence led up to all of the breakthroughs to this day.

Consider the novelty of the first smelting of copper. To smelt copper, our ancestors had to grind copper ore, malachite (Figure 1), into a powder, mix it with carbon, and heat it to greater than 1085ºC (1985ºF). By the way, you can estimate the Fahrenheit temperature by multiplying the Celsius temperature by a factor of two and will only be off by <10% from 100º-1700ºC.

Figure 1. Malachite (copper ore) is quite attractive. Perhaps this attractiveness brought it to our ancient ancestors’ attention as a candidate for smelting. (Copyright 2018, Ronald C. Lasky, Indium Corp.)

 

After I cook on my outdoor grill, I clean the grates by turning the propane to maximum to cook off the grease. Typically the grill’s thermometer will read about 600ºF during this process. The grill gives off so much heat that it is oppressive to approach it to turn it off. Needless to say, noting what 600ºF feels like suggested to me that it is very hard to achieve 1985ºF with a wood or charcoal fire.

Anyway, I recruited some graduate students to try and smelt copper as described above. They purchased many bags of charcoal, used a leaf blower to supply air and worked for two hours on two different attempts and failed both times. The next year some students built a tower with vents and put charcoal on the bottom with the copper ore and carbon in a crucible on top. Their tower was similar to a roman smelting furnace for iron (Figure 2). They were successful and produced a piece if copper about the size of a penny.

Figure 2. A Roman style furnace. Dr. Ron’s students built a similar tower from cinderblocks.

These two attempts demonstrate how amazing our distant ancestors were. How did they think to do it? There were certainly many failed attempts. How did they persevere? One thing is certain, they started the trend of discovery, in about 5000 BC, that led us to today. We owe them much.

Cheers,

Dr. Ron

 

 

What’s In a Brand? In EMS, Apparently Everything

The evolution of the EMS company as a “brand” is nearly complete.

Since a group of industry folks (including our columnist Sue Mucha) came up with the term at an industry meeting more than 25 years ago, the once common jargon of “board stuffers” has been vacated. In its place, the industry substituted CEM (contract electronics manufacturer) or EMS (electronics manufacturing services). Contract assembler, while still commonplace in conversation, is less preferred in writing, especially on corporate websites.

Now, the self-branding of EMS companies has taken over. No longer content with being grouped as an industry, EMS firms are taking matters into their own hands, outsourcing (get it?) their marketing to high-profile branding firms and adding a heavy dose of pizzazz along the way.

One well-known makeover is the company formerly known as Flextronics. Its style experts gave a haircut to its name (“Flex”), and added a sleek tagline: From Sketch to Scale.

Not to be outdone, Jabil is “A Trusted Product Solutions Partner+.” I’m not sure what the “+” means, exactly, but maybe it has something to do with Jabil’s alternate slogan: “Empowering Brands / Empowering the World.” That sounds exhausting.

Asia is getting in on the act. Wistron will serve you “Cradle to Cradle.” (That refers to the lifespan of electronics, but if my kids’ habits are any indicator, it could extend much further.)

Compal‘s catchphrase leans toward the esoteric: “From Vision to Reality.” If that’s too vague, the rest of it (“Innovation Empowered”) won’t help.

Taking its cue from the intelligent factory, Sanmina is now Sanmina 4.0. Plexus is “The Product Realization Company.”

Tier 2 companies are also jumping on the bandwagon. Neways is now “Your EMS Lifecycle Partner.”

Of course, not every firm has caught the branding wave. For instance, AsteelFlash is Electronics Manufacturing  Services, Mastered,” while NeoTech is taking a more traditional approach with its slogan, “Providing Electronics Manufacturing Services That Deliver Value.” Someone better clue them in, stat.

 

 

Top 5 Ways to Mitigate Component Availability Problems

Most of the electronics design world is by now aware that we’re in a very serious period of components shortages. Hardest hit seem to be ceramic capacitors, but other passives as well as a variety of connectors and silicon parts are also caught up in the shortage storm. Allocation and shortages hit every few years, but this one seems to be the worst in recent memory. It could be a problem until 2020, and the supply chain and world of components manufacturers will likely be a different animal coming out of it.

So, you might ask, isn’t that just a problem for high volume producers? No, I would answer. It affects anyone regardless of volume. The exact way that it hits you and what you can do about it may differ, but it has or soon will hit all of us.

Here’s five things you can do to minimize the effects. I’m going to go backwards and starting with the most important thing for people who need low volumes manufactured:

1. Check the availability of all of your parts immediately before sending us your bill of materials.

The. very. last. thing. before sending us your BoM. It’s not uncommon for a part to be in stock one day and out the next. We’ve even seen cases where the part’s in stock in the morning and out by the afternoon. If you’re having us quote and order your parts, verify they are in stock as the last thing you do before sending your files to us.

Almost every BoM we see these days has one or more parts that are out of stock. We send you an email about the parts being out of stock. We can’t do anything else until we hear back from you. We can’t build without parts and we don’t know your design like you do, so we can’t guess at substitutions. A last-minute check can save days of delay.

2. Put one or two alternate part numbers in your BoM, especially for passives.

As I said above, we don’t know your project so we can’t pick a sub for you. Give us some alternates. Put them on the same line as the original part, to the right. And be sure to tell us in the special instructions that you’ve put alternates in the BoM.

 

 

 

 

 

 

 

 

3. Consider your parts values carefully. You may be able to pick something with better availability.

The 0.01?F capacitor is the hardest hit component. It’s the most commonly used bypass capacitor. Some designs need exactly that value, but many don’t. It may be easier to find a 0.022?F, a 0.0047?F, or something else close enough. If that’s the case, choose a close enough value that has better supply, or put one in as an alternate.

4. You might need a slight redesign to use a smaller package.

Since smaller packages can be used in more applications, many suppliers will be allocating more of their foundry capacity to smaller form factors like 0402 and 0201 sizes. Some component manufacturers have said they’ll be permanently discontinuing anything bigger than 0402 parts except when absolutely necessary.

Stick with 0402 size passives. It may be easier to find the parts you need in that package, and those size parts will be the first ones to come back in stock.

5. If we send you a message about a part we can’t find, respond as quickly as possible.

We do our best to avoid any delays in this process, but we can only do so much. Help us out by getting back to us as soon as possible, and don’t be afraid to give us more than one part number to try.

This can be a pretty annoying problem and it can cause delays and other problems. The good news is we’re having this problem because the design world is booming and technology is advancing. It will get better, and following these five tips can help prevent delays. Don’t forget to check your parts for availability right before sending your BoM in to us. I mean it!

Duane Benson
Parts, parts everywhere, but not an 0805 to solder

‘Fake Parts’ Data as Perplexing as the Issue

Interesting report on counterfeit component trends, prepared by ERAI.  PLICs and microprocessors are the most commonly reported counterfeited parts.

One big takeaway: “Suspect/counterfeit parts that have not been previously reported are constantly entering the electronic supply chain and the threat of encountering one of these parts remains very high.”

All that said, the number of fake parts reported is minuscule — just 774 were reported to ERAI. As epidemiologists know, the best way to reduce risk and occurrence of negative outcomes is through research and communication.

Embedded Passives

I recently participated in an Altium podcast where I discussed the origins of Screaming Circuits, some DfM hints and a few other topics. I was discussing some of the challenges everyone is having these days in procuring components, and the host asked if we see many people using embedded passives as a way to mitigate supply difficulties.

I told her that I don’t think we’ve seen very many embedded passives come through our shop; too late realizing that given that embedded passives are — embedded — inside — the PCB, we wouldn’t actually see them.

Then, somewhat coincidentally, yesterday I was visiting our San Diego PCB Design division and that very subject came up. It seems that our SDPCB layout group does sometimes use embedded passives in some of the boards they lay out. I need to have a conversation with them about the layout and fab implications of embedding passives.

I’m kind of guessing here at what they look like, so don’t take this representation as literal fact.

Originally embedded passives were invented primarily for space savings. Now with 0201 and 01005 components available, that’s less of a need these days, but embeddeds can still be advantageous for reduction of parasitic effects or in areas where even 01005s are impractical, like termination of large numbers of transmission lines.

What I’m wondering, is if embedded passives could be a viable solution to some of the supply chain issues we’re seeing lately? If you need a few dozen 0.01 uF bypass capacitors on your PCB, but can’t find them*, would embedded capacitors be a practical solution?

*It’s important to note, that in most cases, the term “embedded passives” refers to the process of using various resistive and dielectric materials to create the components within the layers of the PCBs. I’m not talking about embedding the currently hard-to-find discrete resistor and capacitors within the bare board.

Duane Benson
Sorry. I have nothing snarky to say, and as you know, if you don’t have anything snarky to say, you shouldn’t say anything.

Nothing Doing on NAFTA

For all the chatter (rancor?) over various deals with Iran and China, left almost completely unnoticed is that the soft deadline to present any changes to NAFTA has come and gone with nothing to show for it.

US legislators had set a May 17 target to allow Congress the time needed to OK a new deal this year. That date wasn’t picked out of thin air. The US Constitution bestows Congress with the power to regulate commerce with foreign nations (the so-called Commerce Clause). As such, President Trump can’t circumvent Congress and sign a deal himself. Instead, he must give Congress 90 days’ notice before he signs any agreements.

Then, thanks to the Bipartisan Congressional Trade Priorities and
Accountability Act of 2015, the US International Trade Commission must submit two reports to the House Committee on Ways and Means and the Senate Committee on Finance on the economic impact of the pending agreements. Once those reports have been digested, Congress will be facing a countdown to the January swearing-in of new legislators, at which point all bets are off.

Compounding the situation, Mexico’s presidential election takes place July 1, and the leading candidate is expected to replace Mexico’s negotiating team when he takes office in December.

While President Trump campaigned on rewriting NAFTA, the rush to tender a new agreement has stalled as priorities have shifted. Of late, the three sides spent weeks debating how to carve up the lucrative automotive supply chain, without success.

One look at a 2106 US ITC report crystallizes the impact of NAFTA, in particular, the key auto supply chain. Per the report

from 1993 (the year before NAFTA entered into force) to 2014, Mexican motor vehicle production increased from 1.1 million units to 3.4 million. Mexico’s share of NAFTA vehicle production increased to 19% from 8% during the same period. At the same time, Mexico became a more important automotive parts producer for the North American market. Mexico’s share of value-added content in North American final demand for motor vehicles, trailers, and semi-trailers from 1995 to 2011 increased to 9% from 4%, while US content declined from 63% to 43%.

According to the US Census Bureau, the US exported $243 billion worth of goods to Mexico last year, while importing $314 billion. Both totals are the highest ever with the southern neighbor.

The US does even more business with Canada, exporting $282 billion worth of products last year and bringing back $300 billion. While China is our single largest trading partner, combined our abutters make up 29% of our overall trade, which is considerably more than China’s 16%.

This week Reuters quoted US Trade Representative Robert Lighthizer as saying a deal was “nowhere near close.” The finger-pointing is starting in earnest.

None of this is good for businesses, which must make long-range decisions on everything from equipment purchases to plant locations to staffing. Whatever problem we are trying to solve, let’s hope it doesn’t cause a bunch of new ones.

 

 

Just What Gets Counted in the CIRCUITS ASSEMBLY Top 50?

I received a note today from an EMS company that had revenues exceeding $400 million in 2017. Why, they asked, did they make the MMI Top 50 EMS list but not the recently released CIRCUITS ASSEMBLY Top 50?

It’s a fair question, and one that comes up each year. In short, MMI calculates its Top 50 differently than we do. While it states it uses calendar 2017 EMS sales, that is demonstrably incorrect.

Key Tronic, for example, which is No. 35 on the MMI list, had sales by quarter of

  • Q1 113.6 million
  • Q2 118.5 million
  • Q3 109.2 million
  • Q4 111.7 million

for a total of $453.1 million. MMI lists Key Tronic’s revenue at $467 million, which was actually the amount for its fiscal year ended July 1, 2017.

Another example: Ducommun. It is similar to many EMS/ODM companies in that it is part of a larger corporation that has other divisions unrelated to contract assembly. MMI has Ducommun listed as 32 on its ranking, yet its EMS sales were, by quarter

  • Q1 $78.7 million
  • Q2 $81.8 million
  • Q3 $79 million
  • Q4 $77.2 million

for a total of $316.7 million. The rest of its sales come from unrelated products such as motors, switches and other non-PCB components. The no. 50 company on the CIRCUITS ASSEMBLY Top 50 was Global Brands Manufacture, with EMS sales of $430.2 million in 2017. As such, in EMS only, Ducommun does not belong. (And again, MMI used the fiscal year, not calendar year, for the revenue total, even though its chart explicitly states otherwise.)

Another reason why the lists don’t match up is in the definition of “EMS.” CIRCUITS ASSEMBLY counts ODMs such as Foxconn, Quanta, Compal, Wistron, Pegatron, etc., because they design and assemble products for other companies. (We also take care to remove the revenue unrelated to direct design and manufacturing for third-party customers.) MMI includes some of these companies but not all. But MMI does include Alpha Networks, which is an OEM, selling almost all its products under its own name.

MMI also counts revenue from bare board fabrication (Flex, Sanmina, etc.), which we remove. Yet MMI does not include companies such as ZDT, Mektron and MFlex which perform vast amounts of contract assembly although their primary business is flex circuit fabrication. We do so because their respective assembly operations are huge – in the billions. If you buy components and assemble them onto circuit boards for external customers, you are an EMS. To not include such firms is a huge omission.

I will say, it’s not easy to align companies’ EMS/ODM revenues, especially when they use different fiscal years, accounting standards, and reporting methodologies. Throw in the fact that most of these firms have businesses unrelated to pure EMS, some are private, and several report in languages other than English, and the task becomes very exacting. This certainly should not read as a criticism of MMI (or anyone else’s) methods, because 1. I know how hard it is to get everything right and 2. I truly respect the data that MMI (and others) add to the industry domain.