Trade Show Regionalization

On the eve of Productronica, I am certain of one thing and becoming more sure of another.

First, I believe that this year’s show will be Dominated — capital D — by Europe. I believe that there will be few Americans and fewer (read: next to zero) Asians.

That leads me to No. 2: That the reason for the regionalization of trade show attendance has less to do with the economy and more to do with the fact that for the very most part, existing production technology can build even the latest and greatest products. No matter that new generations of end-products come out every six months (or less), processes are driven by component packaging, and while leading-edge package types have shrunk from 0402 to 0201 to 01005 during the past five years, most conventional equipment is so darn good that it can print, place, solder, inspect and test the latest package styles. Assemblers simply no longer need to chase the latest and greatest equipment around the globe in order to win or build the latest designs. And that obviates the need to run from show to show in search of the “next big thing.”

The Street Loves Chips

Some good news from TheStreet.com today, and it’s based not on recent activity but on data from 2008.

Semiconductor equipment sales will grow 20% in 2010 and 49% in 2011, the financial news site forecast today, citing (several times!) “proprietary leading indicators.”

In doing so, the site acknowledged recent announcements of sequential gains by semi gear makers. More interesting, however, was its reliance on data from three quarters ago, which show “turning points in semiconductor equipment sales.”

“Both our long and short indicators turned up in late 2008, pointing to a business recovery cycle and giving visibility that the days of the recession are numbered,” analyst Robert Castellano wrote.

Since chip sales are a leading indicator for electronics assembly, that’s certainly good to hear.

Tin Pest: A Forgotten Issue in Pb-Free Assembly?

Tin is a metal that is allotropic, meaning that it has different crystal structures under varying conditions of temperature and pressure. Tin has two allotropic forms. “Normal” or white beta tin has a stable tetragonal crystal structure with a density of 7.31g/cm3. Upon cooling below about 13.2°C, beta tin turns extremely slowly into alpha tin. “Gray” or alpha tin has a cubic structure and a density of only 5.77g/cm3. Alpha tin is also a semiconductor, not a metal. The expansion of tin from white to gray causes most tin objects to crumble.

The macro conversion of white to gray tin takes on the order of 18 months. The photo, likely the most famous modern photograph of tin pest, shows the phenomenon quite clearly.

”The


The photo at left is referenced from a paper by Y. Karlya, C. Gagg, and W.J. Plumbridge, “Tin Pest in Lead-Free Solders”, in Soldering and Surface Mount Technology, 13/1 [2000] 39-40.

This phenomenon has been known for centuries and there are many interesting, probably apocryphal, stories about tin pest. Perhaps the most famous is of the tin buttons on Napoleon’s soldiers’ coats disintegrating while on their retreat from Moscow. Since tin pest looks like the tin has become diseased, many in the middle-ages attributed it to Satan as many tin organ pipes in Northern European churches fell victim to the effect.

Initially, tin pest was called “tin disease” or “tin plague”. I believe that the name “tin pest” came from the German translation for the word “plague” (i.e., in German plague is “pest”).

To most people with a little knowledge of materials, the conversion of beta to alpha tin at colder temperatures seems counter intuitive. Usually materials shrink at colder temperatures, not expand. Although it appears that the mechanism is not completely understood, it is likely due to gray alpha tin having lower entropy than white beta tin. With the removal of heat at the lower temperatures a lower entropy state would likely be more stable.

Since the conversion to grey tin requires expansion, the tin pest will usually nucleate at an edge, corner, or surface. The nucleation can take 10s of months, but once it starts, the conversion can be rapid, causing structural failure within months.

Although tin pest can form at <13.2°C, most researchers believe that the kinetics are very sluggish at this temperature. There seems to be general agreement in the literature that the maximum rate of tin pest formation occurs at -30° to -40°C. How much of a worry is tin pest in practice? Probably not too much. Small amounts (0.01 to 0.1%) of some metals, most notably antimony and bismuth, inhibit the formation of tin pest, probably by solid solution strengthening. Because most tin will have such impurities, researchers have actually found it hard to produce tin pest in the lab. A concern, of course, is that these impurities are uncontrolled, leaving open the chance of tin pest showing up in some cold temperature applications. I have written a paper that discusses tin pest in more detail. If you are interested, send me a note and I will send it to you.

No Main Point

Check out this exchange from Jabil’s recent quarterly conference call:

Alexander Blanton (Ingalls & Snyder analyst): Okay, second question is you mentioned earlier the possibility that some manufacturers initially might decide to move some things in-house. Do you have any examples of that in your business?

Timothy L. Main (Jabil CEO): I think the one that’s been well-publicized is the Nokia announcement three, four months ago. … Other than that, we don’t have any significant customer accounts that [inaudible] that type of move.

Blanton: Because recently NCR announced that they would in-source some ATM manufacturing and as I can determine, the reason they are doing that is so they can get some tax incentives from the State of Georgia that require a certain number of jobs to be created in the State of Georgia. And it really has nothing to do with the economics actually of in-sourcing. But there was some comment accompanying that in some of the local press that oh, there’s a trend toward in-sourcing. But from what you can tell, is there any such thing?

Main: I don’t think there’s any such thing. I might have mentioned NCR but I’m glad you brought it up. I forgot that that was a public statement that they made, so — you know, these OEMs will have certain drivers, different personalities, and opportunities like NCR has to receive significant tax benefits for an activity that maybe they think can be supported domestically within their own site. [If you take] a couple of data points, a $1 trillion dollar industry and say that’s a trend, I don’t think so.

Blanton: Yes, well, there was a bill in the State of Georgia that if you can create 1800 jobs or more, you can get some tax incentives. Well, the only way they could do that was to in-source this ATM manufacturing because they didn’t have enough people coming from Dayton to meet the 1800 bogey. This is not the way the press presented it but it’s obviously the case, so it had really nothing to do with lowering costs or anything like that.

Main: Right, well, the politics that we are in today are going to really be very negative towards outsourcing and that type of thing. I mean, that’s — let’s just accept that but recognize that the trend to out-source and the cost benefit of out-sourcing are so compelling that these temporary political statements I think will impact the temporary and the broader economic force of what compels OEMs to do what they do will prevail.

Blanton: Well, you are absolutely right. The CEO of NCR bragged that oh, we’re bringing jobs back from overseas when in reality, they are coming from South Carolina.

Egged on by a so-called analyst, Main essentially discounted any trend toward insourcing. But both men completely ignored the recent decision by Alcatel-Lucent to insource an estimated $2 billion worth of assembly. And it misses Ericsson’s announced purchase of certain Elcoteq operations. Moreover, it dismisses the role governments play not just in convincing OEMs to locate operations in their jurisdictions, but EMS companies as well.

In fact, just last year, the state of Florida, along with various local governments, granted almost $35 million in tax incentives to keep Jabil in St. Petersburg. How, exactly, is that any different than what Georgia is doing for NCR?

If Main has a point, it must be hidden under his hat.

90K and Counting

During iSuppli’s EMS webinar yesterday, an interesting data point was revealed: 90,000.

That’s the number of workers the EMS/ODM sector has laid off during the current recession. That’s an astounding figure (and assuredly does not include the reported 100,000 Hon Hai purportedly was letting go).

Even scarier than the number itself is the unmeasurable amount of experience and brain power that has been drained away, much of it likely for good. Talented engineers and technicians don’t stay on the sidelines long; they find other jobs — often in other industries.

When all is said and done, that may be a legacy we as an industry will be coming to grips with long after the order books have filled again.

Capacity Constraints in a Recovery

My friend Dominique Numakura writes from Japan that consumer electronics is rebounding in Taiwan, Korea, China and Japan. But, that bit of good news is tempered, he says, by constrained capacity — so many companies cut inventories and took down production lines, they now face material, component and labor shortages, he says.

“Everyone’s warehouses are almost empty! Distributors and suppliers can’t feed the manufacturing houses fast enough. Manufacturing companies have secured large orders for products, but materials are back-ordered, and there are not enough workers to accommodate these new sales.

The result, he notes, is material price spikes.

In Southern China, he adds, things are more grim, with reportedly more than 200 area EMS companies unable to obtain sufficient materials for production, and caught between the higher materials prices and lower end-product margins. Many will close.

This is not unusual. Several case studies have shown as many companies exit an industry in recovery
as do leave during a downturn. They get caught in the cash flow trap, where the upfront costs and associated risk to running the business outweigh the margin.

Not unusual, but unfortunate nonetheless.

What a Waste

All sorts of nonsense is erupting in our industry’s corner of the environmental arena this past week. Let’s go to the tape:

  • On May 14, Rep. Michael Burgess (R-TX) introduced a bill that essentially codifies the EU RoHS Directive for the US as well. The bill proposes to prohibit the manufacture after July 1, 2010 of “electroindustry products” that contain lead, mercury, cadmium, hexavalent chromium, PBBs, and PBDEs above the maximum concentration levels specified in the European Union’s RoHS Directive.
  • Today, the Electronics TakeBack Coalition issued a statement opposing a toxic e-waste bill scheduled to be introduced in the House later this week. The bill, sponsored by Rep. Gene Green (D-TX) (how’s that for irony?), Rep. Mary Bono-Mack (R-CA) and Rep. Mike Thompson (D-CA), permits e-waste exports under a loophole under which any type of entity can export toxic e-waste to developing nations for reuse and refurbishment, the Coalition asserts.

    “By passing a law that only appears to restrict exports to developing countries without actually doing so, the bill would undermine those recycling companies which are in fact managing their e-waste responsibly, and providing jobs here at home. This bill fails in serious and even critical ways.”

  • And in between, IPC issued a press release boasting how 22 of its 2700-odd members managed to trek to Washington in support of a permanent R&D tax credit, something that just about every technology company operating in the US already supports anyway — and many of which are priming the lobbying pump to ensure it goes through.

    So in summary, we have a Republican from Texas trying to overlay (absurd) European laws onto US manufacturers, an industry environmental advocacy group trying to shoot down new proposed environmental regs, and the major US PCB trade association completely in the dark about all of it.

    Not too good.

  • Let the Data Be Your Driver

    I was recently asked to give a presentation and audit an assembly line regarding minimizing “tombstoning” of passives at a major electronics assembler. As my presentation brought out, tombstoning can be caused by many factors: the reflow profile, the solder metal composition (for lead-free applications, SAC 387 tends to tombstone more than SAC 305), off-center placement, nitrogen reflow atmosphere, buried vias, etc. After two hours of talking, I walked the line that “had a problem with tombstoning.”
    Tombstoned component
    As I started asking, it became clear that no one knew the magnitude of the problem.

    “How many passives are on each board?” I asked. No one knew.

    “How many DPMO (defects per million opportunities) for tombstones have you had recently?” Also unknown.

    As people scurried to get the data, it dawned on us that tombstoning might not be as big an issue as was thought. It was more of a local legend.

    Finally, we got some data. Each board had about 1000 passives, and the company had produced 100 boards with a total of two tombstones in the past two hours. Tombstones were the only defect. Hmmmmm, two bad boards out of 100 = 98% first-pass yield, not bad! From a DPMO perspective, they had two defects per 200,000 (two defect opportunities per passive) opportunities or 10 DPMO, which is beyond world-class. This level of DPMO would be very difficult to improve on without massive engineering investment. It is “in the noise” and it is likely caused by “common cause” variation.

    I then asked how much money it costs to repair a tombstone; as expected, no one knew. My guess was less than $2. This situation is the rare case where yields are so good, it may not pay to make engineering investment to improve them.

    This isn’t the point of the story, however. In a case like this, the response — whatever it is — must be data driven. Only with the proper failure rate data, plotted in a Pareto chart, and a complete understanding of all costs, can the appropriate action plan be developed.

    Always be data driven!

    Tin Pest: A Forgotten Concern in Pb-Free Assembly?

    If tin pest were a living thing it might complain, “I can’t get no respect.” Reason: Tin whiskers get so much attention, while tin pest is forgotten.

    Although my feeling is that tin whiskers are a greater concern, the number of recorded fails related to tin whiskers is less than 100. Compare this to the number of hard drive fails — about 100 million! With that in mind, let’s learn a little about tin pest.

    Tin is a metal that is allotropic, meaning that it has different crystal structures under varying conditions of temperature and pressure. Tin has two allotropic forms. “Normal” or white beta tin has a stable tetragonal crystal structure with a density of 7.31g/cm3. Upon cooling below about 13.2ºC, beta tin turns extremely slowly into alpha tin. “Gray” or alpha tin has a cubic structure and a density of only 5.77g/cm3. Alpha tin is also a semiconductor, not a metal. The expansion of tin from white to gray causes most tin objects, afflicted with tin pest, to crumble.

    The macro conversion of white to gray tin takes on the order of 18 months. The photo — likely the most famous modern photograph of tin pest — shows the phenomenon quite clearly.

    Tin pest (source: Karlya et al)
    This photo is titled “The Formation of Beta-Tin into Alpha-Tin in Sn-0.5Cu at T <10ºC" and is referenced from a paper by Y. Karlya, C. Gagg and W.J. Plumbridge, "Tin Pest in Lead-Free Solders," in Soldering and Surface Mount Technology, vol. 13 no. 1. 2000, 39-40.

    The tin pest phenomenon has been known for centuries and there are many interesting, probably apocryphal, stories about tin pest. Perhaps the most famous is of the tin buttons on Napoleon’s soldiers’ coats disintegrating on their retreat from Moscow. Since tin pest looks like the tin has become diseased, many in the middle-ages attributed it to Satan as many tin organ pipes in Northern European churches fell victim to the effect.

    Initially, tin pest was called “tin disease” or “tin plague.” I believe that the name “tin pest” came from the German translation for the word “plague” (i.e., in German plague is “pest”).

    To most people with a little knowledge of materials, the conversion of beta to alpha tin at colder temperatures seems counterintuitive. Usually materials shrink at colder temperatures, not expand. Although it appears that the mechanism is not completely understood, it is likely due to gray alpha tin having lower entropy than white beta tin. With the removal of heat at the lower temperatures a lower entropy state would likely be more stable.

    Because the conversion to gray tin requires expansion, the tin pest will usually nucleate at an edge, corner or surface. The nucleation can take scores of months, but once it starts, the conversion can be rapid, causing structural failure within months. The effect is also cumulative, so warming the sample will stop the growth, but it will continue once the sample is cold again.

    Although tin pest can form at <13.2ºC, most researchers believe that the kinetics are very sluggish at this temperature. There seems to be general agreement in the literature that the maximum rate of tin pest formation occurs at -30º to -40ºC. What is the real risk of tin pest in Pb-free electronics? Not great. Modern researchers have had trouble reproducing it, even in the lab. The reason for this is likely that test samples contain small amounts of metal "contaminates" (<0.1%), such as bismuth, antimony, lead and a few other metals. These trace metals solid solution strengthen the solder and inhibit the expansion needed to form tin pest. Unfortunately, copper and silver (the typical Pb-free metals added to tin), do not appear tin inhibit tin pest growth.

    Too Many Shows? Nah!

    With the Apex attendance numbers painting an ugly picture – trade show floor walkers dropped nearly 35% from last year and are down more than 50% from just a few years ago – expect the typical hue and cry over whether there are too many shows.

    Ignore it.

    Market forces will decide whether there are too many shows, and which ones will live and which will die.

    Rarely does a healthy show fail on its own. The exception: Surface Mount International, which its peak in the mid 1990s drew 5,000 attendees to the San Jose Convention Center each year. The assembly event was produced by a number of concerns, including Miller-Freeman, SMTA, IPC and EIA. Problem was, the latter three didn’t like the financial arrangement, under which Miller-Freeman kept the bulk of the proceeds from the lucrative exhibition, while all the partners split the conference revenue. So the partners forced Miller-Freeman out, and the show collapsed within two years. Which is what at least one the partners wanted all along, as getting SMI out of the way set the stage for the then-biggest prize of all: Nepcon West.

    But the sabotage that undermined SMI is the exception, not the rule. Nepcon East, Wescon, Electro and plenty of other once-vibrant events went away or were merged because the market stopped supporting them.

    So don’t get caught up in the “should they or shouldn’t they” talk about Apex. The market will work its magic on its own.