Author Archives: Mike

About Mike

Mike Buetow is president of the Printed Circuit Engineering Association (pcea.net). He previously was 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 spent 21 years as vice president and editorial director of UP Media Group, for which he oversaw all editorial and production aspects. He has more than 30 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

Zollner Hits the ‘Valley’

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I’ve been anticipating for some time the influx of offshore EMS companies. There’s been the occasional deal, of course. Elcoteq jumped in, then out, then in again, then out again. IMI bought Saturn Engineering in 2005, and Asteel acquired FlashElectronics in 2008, but for the most part, the “outsiders” have stayed out.

It’s struck me as strange for many reasons, two big ones being the access to the lucrative US market (and the decision-makers at many of the world’s top OEMs), and the cost of acquisition, which with the depressed dollar means US firms could be bought relatively cheap.

Today, however, Thailand’s Cal-Comp, Singapore’s Venture Corp. and Japan’s SIIX are Top 10 EMS companies without US holdings.

But for Zollner Elektronik, No. 12 on the CIRCUITS ASSEMBLY Top 50, that’s no longer the case. Zollner has taken over and is remodeling a 52,000 sq. ft. site in Milpitas, a Silicon Valley town, where it will open its first wholly owned US factory. Zollner is Europe’s second-largest EMS company, although after this year it just might supplant Elcoteq for that honor.

Founded in 1965 by Manfred Zollner,  Zollner has become a leading supplier of industrial and automotive electronics. Today it has 13 plants in Europe and one each in China and Northern Africa. The company has more than 7,300 employees worldwide, and we estimate its annual sales at around $1.2 billion.

Zollner plans its new site to be a dedicated NPI center, which makes sense given the size of the US market today and the number of competitors (more than 250 alone in the Silicon Valley, according to the CIRCUITS ASSEMBLY Directory of EMS Companies).

Is Zollner’s move the first of many? Other major EMS companies abroad — Beyonics (which is made up of many former Flextronics executives), UMC and Sumitronics in Japan, GBM, 3CEMS and Nam Tai in China — generally do quite a bit of business with North American companies already. And US-based Fabrinet has all its plants in Thailand or China. A successful model does not mandate a US presence.

Still, growth in electronics outsourcing will be harder to come by. Most analysts believe all the low-hanging fruit is gone. Soon, EMS gains will be made primarily by grabbing market share, not tapping new markets. When that day comes, will those without a US facility find themselves shut out?

SEMI’s Loss is IPC’s Gain

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It didn’t take long for me to become wary of Denny McGuirk.

At the time he showed up as Thom Dammrich’s successor, I had worked at IPC for six years and had a fairly good sense of what kind of person it takes to run a successful trade association. McGuirk came in with a resume and life stories that would have put Forrest Gump to shame. Unfortunately, I couldn’t verify some of those tales, which as Director of Communications — and thus responsible for helping to shape his image — made me pretty uncomfortable. When my current boss, Pete Waddell, called to say he was in the market for an editor, I jumped not just at the new opportunity but also to get away from a person whom I felt I could not trust.

Next to marrying my wife, it was the best decision I’ve ever made.

McGuirk announced his resignation today, deciding to bolt IPC after 12 years for greener — literally — pastures. He is headed to SEMI, the trade group for the semiconductor materials and equipment industry. He stands to make a considerably higher amount of money, given that SEMI paid its head honcho more than $700,000 a year in 2009, while McGuirk took home “only” $368,000 in compensation that year.

This, I believe, will turn out to be the best thing that’s ever happened to IPC. SEMI and IPC appear to be competing for certain markets, including the high growth solar and photovoltaic segments. But McGuirk is not, and never will be, an industry maven. He’s a bureaucrat whose disinterest in the inner workings and details will likely undermine the cohesiveness and focus of those who actually know what’s going on. Over the years,  task group members and IPC staff have complained to me about the deleterious effects of McGuirk’s approach. When you head an organization made up of volunteers, it’s usually a good idea to make sure those volunteers stay happy and motivated. But inside IPC today, far more than 12 years ago, alienation abounds. And with the press, McGuirk has had a lot of trouble keeping his own stories straight, which has led some of us to essentially ignore anything he says. Given that trade associations generally don’t spend much on self-promotion and thus rely heavily on the business media for help, that’s not a good position to be in. No matter who succeeds him, I think IPC will be better off.

Then there’s the question of what he really accomplished. In October 1999, IPC was a Chicago based trade group with an interest (but no real footprint) in other regions and dependent on trade show revenue for the bulk of its operating profit. Today IPC is a Chicago based trade group with an interest (but no real footprint) in other regions and is even more dependent on trade show revenue for the bulk of its operating profit. While the trade group has opened an office in China, the shots are called from Bannockburn, IL, and it is unclear what impact the local operation has had, other than perhaps a marginal increase in membership. Trade shows and related conferences once made up 25% of IPC’s operating budget; today it’s closer to a third. After putting thousands of dollars in IPC’s coffers for certification, the printed circuit board design industry is no better off than it was 11 years ago. Despite professing to wanting to work with other associations, relations between IPC and SMTA hit an all-time low. On matters of  widespread industry import — such as the European Union’s banning of lead — IPC has shown little spine, choosing to capitulate without drawing its sword, even though the cost to its members is estimated to be in the billions.

Looking back, the one smart improvement was that IPC has effectively vacated the governmental lobbying business (although it does occasionally draft off others’ efforts in this area). And its bank account is in better shape, even if those of its members are not.

Speaking of finances, on McGuirk’s watch, IPC’s revenues have fluctuated a bit, but incremental gains have usually been met with subsequent losses. The trade group’s budget was a little over $10 million in 2000, the first full year McGuirk was the head. But despite the addition that year of the Apex trade show, which added at least $3 million a year to the coffers in the early 2000s, IPC’s revenues were just over $12 million in 2009, the last year public tax records are available. That suggests revenue from standards, certification and training programs has slipped during that time, despite IPC’s expansion into several foreign markets.

Still, IPC’s rather nominal growth has been better than that of many of its members, which has rankled some segments, especially North American board fabricators. On McGuirk’s watch, the US bare board industry shrank from about $10 billion in annual revenues and a neck-and-neck tie with Japan for the largest producing market to a little over $3 billion in domestic sales, well behind China, Taiwan, Japan and Korea. EMS has also taken a big hit: companies are less profitable than they were a decade ago, and the one region that has excelled — China — did so without IPC’s help.

It’s not the kind of thing you put on your resume.

Unless, of course, no one is really reading it.

Summer Doldrums

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Is it cyclicality, or … ?

Many reports, anecdotal and evidentiary, point to a general slowing in PCB production and sales over the past quarter.

Yet there are some reasons for optimism:

I am of the mindset that what we are seeing is a return to cyclicality after roughly two years of recession followed by a year-plus of bottled-up demand. Clearly there’s some market turbulence ahead, especially when we take the macro vectors into account. Some of the end-markets need a boost: Now that Windows 7 has taken over, PCs are stagnant, with new tablet demand offset by rather humdrum desktop/laptop interest coupled with some migration to smartphones. Nokia and RIM are skidding, and Apple can’t make up for everyone’s lack of flair. Autos are a big-ticket item and many consumers today need stronger feelings of job security before taking on new debt.

A forecast slowdown in US defense spending (the nation’s fiscal year starts in October) could be partially offset by new deliveries of jumbo passenger jets (Boeing last month announced a record single order and will ship its first Dreamliner next month).

The tea leaves are murky. We hope for the best.

China Inc. Hits a Snag

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DigiTimes is reporting that a new round of fees levied by China on MNCs doing business there has bankrupted hundreds of electronics companies, and threatens the solvency of thousands more. The fees, which underwrite worker medical and injury insurance, are on top of government-mandated salary hikes. China has quietly extended the structure from covering just workers during their actual time of employment to underwriting their post-employment coverage as well. (Employees contribute a portion, but the businesses cover by far a majority share.)

More than 300 firms are said to have gone under already, and a Hong Kong official forecasts some 2,500 to 3,000 firms face bankruptcy this year alone.

And they say the US is unfriendly toward business.

It’s a fascinating turnabout for China Inc. and its “if we build it, they will come” attitude toward business, manufacturing in particular.

Now, there are many ways to view this. One is that, given the dollar amounts involved are rather low, the companies affected probably lacked the resources to compete over time anyway. A second is that China is targeting Taiwanese companies as part of its long-term strategy to force the island nation further under its umbrella (although from the story, non-Taiwanese companies are also being hit hard). A third is that China sees this as easy money and a way to look out for its domestic citizenry much in the way, say, the US levies Social Security taxes on alien seasonal workers even if they return to their home countries each fall and will never draw upon that retirement fund. And a fourth is that China recognizes that growth alone won’t pay for the soon-to-be top-heavy population it faces as the 1 child per family policy changes the age-plot dimension from rectangular to an upside-down pyramid.

But coupled with the staggering increase in wages seen there over the past few years — with many more to come — and China’s long-term dominance of manufacturing no longer feels like a fait accompli.

 

Intelligent Design

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In my monthly column for PCD&F last month, I was ostensibly discussing standards and how they come to be. The first standard I worked on was IPC-D-350, one of the first of the would-be slayers of Gerber, the so-called unintelligent data format. Indeed, I’ve spent a good part of my life watching electronic data transfer formats come and go, and at the end of the day, Gerber, warts and all, has remained the one to beat. So I’m not prepared to rise up and shout to the heavens that IPC-2581, the latest iteration in 40 years’ worth of attempts at an “industry” standard, is at long last the answer.

But as we noted in “Around the World,” there are enough notable differences in the process this time around to make it newsworthy. First and foremost, there are real live CAD tool vendors not just showing up at the meetings, but actively participating (!).

To understand why this is significant, we must go back to my IPC-D-350 days. Digital Equipment and the late, great Harry Parkinson were instrumental in trying to revive interest, and we at IPC also had support from several smaller software folks like Dino Ditta at Router Solutions and Steve Klare at Intercept Technology. But we never managed to break through, and a big part of the problem was the major CAD vendors’ collective refusal to offer IPC-D-350 as an output (or input). The response always was, “We’ll do it if our customers ask us.” But what they were really saying was, “We don’t want to make it easy for our customers to migrate their designs to a competitor’s tools.”

In the meantime, AT&T offered up RS-274X (aka extended Gerber), which UCamco continues to support, and Valor developed ODB++, and (like Gerber) while it was originally conceived as much a machine language as a format for electronic design data, it was accepted by fabricators desperate for something, anything, more intelligent than Gerber.

Under the leadership of Dieter Bergman, IPC also continued the fight, enlisting the help of the National Institute of Standard and Technology (NIST) through not one but two (GenCAM, Offspring) successors to IPC-D-350. (For a short history of the standards, click here.) Yet even now, after decades of trying, no group has been able to dismount Gerber from its perch, and it’s long past time we did. Data transfer formats are not something anyone ever will make money from, but every day we go without a better one, everyone will lose some.

Curiously, just a few weeks ago, I was contacted by David Gerber, son of H. Joseph Gerber, who invented the photoplotter and the eponymously named de facto standard that ran it. Gerber’s genius cut across many industries, from electronics to apparel, and he was awarded the 1994 National Medal of Technology for his life’s work.

For such an esteemed inventor, Gerber’s backstory is even more interesting than his career. As a teenager in 1940, he fled Nazi Germany for America. As an aeronautical engineering student at Rensselaer Polytechnic Institute, he discovered a way to reduce the time-consuming nature of graphing calculus problems using (seriously) an “expandable ruler” created from the elastic waistband of his pajamas. And of course, he formed The Gerber Scientific Instrument Co. in 1948, which is still going strong today.

The younger Gerber is writing a book about his father’s exploits. I look forward to learning more about the life of one of our industry’s true unsung heroes. But at the same time, I’m going to do everything I can to help retire one of his legacies.

In our cover story this month, Hemant Shah and Keith Felton of Cadence explain a new consortium taking root. The consortium is backed by a Who’s Who of OEMs and EDA vendors, including Harris, Ericsson, Fujitsu, nVidia, Sanmina-SCI, Cadence, Zuken, Adiva and Downstream Technologies. Its goal is to accelerate the adoption of IPC-2581 as an open, neutrally maintained global standard to encourage innovation, improve efficiency and reduce costs. The members are committed to adopting IPC-2581, which as I noted gives this latest effort a big leg up on all previous attempts.

Where does UP Media Group stand on this? For 20 years, we have supported the development of an intelligent, robust format for electronics data transfer. As such, we fully support the consortium’s effort to ensure a viable, supported and independent data transfer format that is driven by user needs.

That new task group attempting to update IPC-2581 recognizes that design needs will at some point “break” Gerber. Many of the players are new to the game, and a lot of the old rivalries appear to have died off due to retirements and, well, death. That’s good, because the industry needs a better standard than Gerber. Thanks in part to his son, Joseph Gerber’s name and many contributions will hopefully never be forgotten. But it’s time his namesake data format is.

Change Time at Cadence?

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John Bruggeman, senior vice president and chief marketing officer of Cadence, is leaving the company after two years. This comes as something of a surprise to many industry watchers, given Bruggeman’s prominent role in reshaping the EDA vendor following its revenue drop and ill-advised play for Mentor Graphics in 2008.

In laying out his EDA360 vision, Bruggeman asserted software must help profitability as much as productivity, and that future designs will be app-driven, in which users would start with the applications and then overlay the optimized hardware/software.

In doing so, Bruggeman echoed hardware design industry guru Lee Ritchey, who famously said at a Printed Circuit Design-sponsored tech session that users buy the hardware to run the software.

Bruggeman’s departure has raised the question about Cadence’s executive succession plan, and whether he lost a battle to run the company in the future. Again, some analysts feel CEO Lip-Bu Tan plans to step down sooner rather than later, and that Bruggeman’s resignation paves the way for senior vice president of worldwide field operations Charlie Huang to ultimately ascend the throne.

Stay tuned.

‘Dark Silicon’

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Dark silicon refers to the underutilized transistors on a microprocessor. And those transistors are deliberately shut down during certain operations in order to contain the heat buildup that otherwise might fry the entire chip.

Some experts now say up to one-fifth of the of the transistors on the higher-performing chips will need to “go dark” to stem the chances of incorrect results at the least and a fried chip at the worst.

While users perpetually want faster devices, a group of US researchers have modeled expected microprocessor speeds and utilization and found that computing speeds will rise only 8 times their current pace over the next 15 years because of the limitations caused by potential overheating. They further argue that speeds would increase about 47 times if the problems of heat can be overcome.

The solution? While dual and quad core microprocessors have become mainstream today, more advanced chips could have between 100 and 1000 cores. Intel, for one, already uses multiple cores and next-gen chips will optimize those cores for different operations, helping to reduce the amount of power used (and thus heat generated).

 

One-Stop Shop

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If you are looking for a snapshot of the latest (or historical) market statistics, we’ve begun compiling all the data from a host of sources in one place on the PCD&F website.

Among the data we are posting include book-to-bills and sales and orders of:

  • EDA software
  • Semiconductors
  • Passive components
  • Printed circuit boards
  • Key end-markets such as PCs, servers, mobile devices, etc.
  • Wafer utilization.

Sources include EDAC, SIA, SEMI, Gartner, IDC, IPC, ZVEI and other research firms and associations. Check it out!

One-Stop Shop

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If you are looking for a snapshot of the latest (or historical) market statistics, we’ve begun compiling all the data from a host of sources in one place on the CIRCUITS ASSEMBLY website.

Among the data we are posting include book-to-bills and sales and orders of:

  • Semiconductors
  • Passive components
  • Printed circuit boards
  • Key end-markets such as PCs, servers, mobile devices, etc.
  • Wafer utilization.

Sources include SIA, SEMI, Gartner, IDC, IPC, ZVEI and other research firms and associations. Check it out!