About Mike

Mike Buetow is editor-in-chief of Circuits Assembly magazine, the leading publication for electronics manufacturing, and PCD&F, the leading publication for printed circuit design and fabrication. He is also vice president and editorial director of UP Media Group, for which he oversees all editorial and production aspects. He has more than 20 years' experience in the electronics industry, including six years at IPC, an electronics trade association, at which he was a technical projects manager and communications director. He has also held editorial positions at SMT Magazine, community newspapers and in book publishing. He is a graduate of the University of Illinois. Follow Mike on Twitter: @mikebuetow

When 2 is Better Than 5

Before we get too excited over TMSC’s 5nm chip foundry in Arizona — which, keep in mind, is only on the drawing board at this point — we are reminded the chip maker is working on a 2nm factory in Taiwan.

In fact, it could have 2 and 3nm processes online abroad before it even breaks ground in America.

The US needs to get in gear if it wants to be a leader in wafer production.

Reshoring, with a Catch

A trio of recent posts on manufacturing reshoring — or not — caught my eye.

It’s not happening. Writing in Forbes, Workbench chief executive Prince Ghosh points out that the US lacks the human capacity to fully actionize a return of mass production: “US manufacturing still suffers from problems of labor skills and wage costs. Tariffs have succeeded in lowering global dependency on Chinese manufacturing, but they have failed in driving manufacturing back to the US.” He has a point: It took China 20 years to build up the workforce needed to become the World’s Factory, and that’s even with a roughly 800 million or more citizen advantage over every nation but India.

And there’s no assumption investment in the US will go toward the truly leading edge technologies. To wit: If TMSC builds a 5nm semiconductor wafer fab plant in Arizona, as promised, it will still be behind the state-of-the-art 3nm node process expected to be available in 2022.

It’s happening. A more optimistic view comes from Nick Stonnington, a Forbes Councils Member,* says the US “has the potential to be one of the few countries in the world that is essentially self-contained from a manufacturing standpoint.” 

“Reshoring US manufacturing,” he adds, “would not only save enormous transportation costs; it would tie up less capital for less time. When you manufacture your product 5,000 miles away, you must spend extra time specializing your process to each market. In contrast, localized production facilitates just-in-time manufacturing, which optimizes workflow to more quickly produce a more specialized product for less capital investment. 

It’s happening, but not how you think. In Footprint 2020: Expansion and Optimization Approaches for US Manufacturers, consulting giant Deloitte says “the next shift in manufacturing locations is imminent,” but adds “some 98% of companies surveyed plan to either expand existing sites, or open new facilities, in countries with existing operations. This trend is true for virtually all types of facilities, from production to assembly to R&D. China and the US are anticipated to receive the highest number of existing country expansions.”

One topic, three views. Which do you agree with? And why?

*For the uninitiated, the Forbes Council is basically a network of bloggers who pay Forbes to publish their work. So take that for what it’s worth.

Heavenly Circuits

Jerry Falwell Jr. is in the news again, for salacious reasons that have nothing to do with electronics (I hope).

It seems like he’s having a bad week, and I’m certainly not going to pile on.

But mention of his name reminds me of the time I spoke with the son of the famous evangelist, and it was in my professional capacity as an editor, no less.

As I recall, I answered the phone one day — I can’t remember which year it was, but it would have been sometime around 2004 — to find a very professional voice on the line.

“Mr. Buetow?”

Yes.

“Would you have time to speak with Mr. Jerry Falwell Jr.?”

Umm, sure.

When JFJ came on, he was very polite and to the point. A gentleman in our industry — a printed circuit designer — had developed a concept for putting identical components on opposite sides of a board and running vias through to shorten the length of the connections. The designer, with whom I had spoken from time to time over the years, had offered the concept to Liberty University, where Falwell was vice chancellor. Mr. Falwell Jr. wanted my thoughts on whether Liberty should invest the monies to patent the idea.

I don’t recall what I told him, but a check of the USPTO shows that Liberty did follow through. A colleague reminded me representatives from Liberty actually attended PCB West one year as well to promote the mirror pinout concept. Still, I doubt they made much money off the idea, which has been overcome by other advances in component packaging anyway.

Whatever my advice to Mr. Falwell Jr. was, I hope it didn’t put him in a bad position with his trustees. I’m fairly confident it has nothing to do with the predicament he finds himself in now.

And if he calls me again, I’ll still be happy to talk. Provided we stick to electronics.

Autonomous Vehicles Even Farther Out in Time

Folks,

Readers of this blog will remember that I have been a skeptic of self-driving cars emerging in the near term. I am even less sanguine today. A recent article supports my perspective. Humans just do so many things effortlessly that sensors and computers cannot duplicate.

As an example, suppose there are five people at a street corner. These individuals non-verbally communicate intent that other humans easily pick-up on. If they are talking to each other and not facing the road, a human rightly concludes they are not planning on crossing. If they are facing the road and looking at the traffic, a human expects they plan to cross. This intuition is well beyond any AI’s ability to interpret and will be for decades to come.

Figure 1. A human recognizes that these students aren’t planning on crossing the street.

Autonomous vehicles are typically over designed to not cause accidents. Therefore, in some cases, if a pedestrian sticks their hand out into a road to wave at a self-driving car, it will stop. Whereas a human would recognize that the person is just goofing-off or being friendly.

All of this new information makes Elon Musk’s claim that Tesla will have a car on the road in 2022 without a steering wheel hard to accept.

To be fair, self-driving cars in controlled conditions, such as low traffic, well-marked routes, in good weather, will become more common in the decade ahead. However, an autonomous vehicle that can pick me up from my poorly marked 200 foot driveway, off an unmarked country road in Vermont, and then drive me to terminal C at Boston’s Logan airport is many decades away.

So, if you know someone who wants to be a truck driver, I feel that that will continue to be a fruitful career for a long time. In addition, those of us who manufacture electronics can take comfort in the fact that autonomous vehicles will need much more electronics than originally thought.

Cheers,

Dr. Ron

Whither Hong Kong?

The dispute between China and the US over trade, IP protection, human rights, and basically everything else ratcheted up a notch today as President Donald Trump announced the start of the process to revoke Hong Kong’s favored trade status with the US.

“I am directing my administration to begin the process of eliminating policy exemptions that give Hong Kong different and special treatment,” Trump said in a statement.

“My announcement today will affect the full range of agreements that we have with Hong Kong, from our extradition treaty, to our export controls and technologies. We will take action to revoke Hong Kong’s preferential treatment as a separate customs and travel territory from the rest of China.”

Hong Kong is not a major landing spot for manufacturers anymore. There are roughly 30 EMS companies of any size with operations there, per the CIRCUITS ASSEMBLY Directory of EMS Companies. VTech and Wong’s are the only Top 50 EMS companies based there. There are no bare board fabrication operations of any major size.

According to one source of mine, some companies use Hong Kong as a legal way to finish assembly to bypass tariffs on Chinese made goods from the mainland. If so, the president’s action will render that moot.

My question is, what will this mean for the scores of electronics companies that have sourcing operations in Hong Kong? While most of their business is done across borders, Hong Kong offers a more Western feel (and rules) for ex-pats. With the Beijing taking an ever greater interest in the city-state, that is almost certain to change.

I could see companies moving their program management staff elsewhere, if for no other reason than Hong Kong is expensive — maybe the most expensive place in the world for ex-pats. But if so, where would they go? And what will happen to Hong Kong if other industries follow suit?

‘The Era of Offshoring US Jobs Is Over’ … or Is It?

That’s what the US Trade Representative says in an editorial in the New York Times today. And he gets the drivers right, mostly. But the results? “The United States lost five million manufacturing jobs. That, in turn, devastated towns and contributed to the breakdown of families, an opioid epidemic and despair.”

That’s just a crazy extrapolation. The US was at 3.1% unemployment prior to Covid-19.

Repeat after me: There. Were. More. Jobs. Than. Qualified. Workers.

For two decades, the no. 1 complaint I’ve heard from US business owners is the lack of manufacturing talent. Even in times of higher unemployment rates (the last two months notwithstanding), managers consistently noted the lack of basic communication and math skills among the workers available.

In his op-ed, USTR Robert Lighthizer adds, “If you want certainty, bring your plants back to America.”

It’s not that simple. You need the whole supply chain. And you need an end-market. The US, at 327 million people, isn’t big enough to sustain a company of any real size; those firms must be able to sell into other (larger) markets too.

And all those other big markets (China, Brazil, EU, etc.) have their own “make local” requirements and incentives.

I wish Lighthizer were right. But I’ll say it again: The US does not have enough worker talent to handle manufacturing at the cost necessary to satisfy the US market.

Make in India?

A colleague asks whether companies are looking at India as a country they can source electronics goods.

Good question. I would say that right now it’s not high on the list. It has a long way to go to develop the infrastructure and mass of supply chain companies dedicated to electronics (component manufacturers, laminate suppliers, chemistry suppliers, etc.). 

But … the bloom is way, way off the rose in China. China is less attractive from a labor rate perspective, and coupled with the tariffs, firms were already looking at alternatives even prior to Covid. See below for the year-over-year changes in electronics imports to the US from certain nations:

US electronics imports from selected nations, 2017-19

India’s electronics imports to the US grew 20%+ year-over-year in back-to-back years. Granted, it was starting from a low base: imports in 2016 (the base year) were just $754 million, and so even with the increase the total is just over $1.1 billion. Vietnam, another big gainer, is at now at $22.7 billion. China, even with the dip in 2019, was at $170 billion.

I do think US companies will to a greater degree be looking at nations outside China as potential manufacturing centers. India’s massive population continues to make it attractive of course. Now it needs to attract a few more assembly companies, which in turn will drive the suppliers to locate there.

Post-Covid, Will Connections Be Scarcer?

A friend writes to say he’s been about the effects of “social distancing” policies. Will they have a permanent effect on our lives, he wondered. And will they impact events such as trade shows?

It wasn’t the first time I have been asked that of late. The subject also came up on a couple of podcasts I’ve had the good fortune to do, one with Judy Warner of Altium and the other with Mike Konrad of Aqueous Technologies.

My short answer is, I think there will be an impact, but it will swing toward more contact, not less. Indeed, after being cooped up for so long, I think people will crave human connections. Moreover, I don’t think it will have an effect on trade shows. In fact, I think this will reveal lots of holes/flaws in inter-/intra-company digital communications, which gives us all something to work on for the next quarantine (heaven forbid). 

We aren’t the only ones contemplating what happens next. The Boston Globe this week published a piece in which several self-styled business futurists and science-fiction writers expect the world will look like next fall/winter.

I can’t say I’m impressed with most of their responses, which if anything feel exaggerated for effect. But see for yourself.

UP Media Statement on Covid-19

Like all the companies we serve in the electronics design and manufacturing industry, we are closely watching the world’s response to Covid-19.

All UP MEDIA GROUP staff work remotely, and our operations should continue as normal. As of this notice, our websites, magazine issues, podcast and newsletter will be updated and published per the schedule in our 2020 Media Kit.

We currently intend to hold the PCB2Day workshops scheduled for June in Austin, TX. We will provide regular updates to all sponsors, speakers and registrants as the situation on the ground becomes clearer.

PCB West 2020 at the Santa Clara (CA) Convention Center remains on track to take place in September. Confirmation letters to speakers are being sent this week, and our conference program and registration will be available by early May.

The health of our employees, contributors and customers is paramount. We will take any measures to ensure we do not subject any staff, contributors or customers to unnecessary risks due to the coronavirus.

We are open and ready to serve you during these difficult times. Please contact Mike Buetow (mbuetow@upmediagroup.com) for editorial, Frances Stewart (fstewart@upmediagroup.com) for shows, and Brooke Anglin (banglin@upmediagroup.com) for advertising.

Sincerely,

UP MEDIA GROUP staff