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

When Chips are Down, Don’t Call the Bean Counter

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Methinks Paul Otellini is feeling the heat — and I don’t mean the kind from his company’s chips.

The first non-engineer to run Intel, Otellini complained this week that the US government isn’t doing enough to create jobs.

“I think this group does not understand what it takes to create jobs,” Otellini complained. “The next big thing will not be invented here. Jobs will not be created here.”

True that, as long as OEMs like Intel use domestically trained engineers to move all their design to lower-cost nations not for intellectual reasons but to save a few bucks. The inconvenient facts Otellini so casually ignores are that American companies are sitting on record cash reserves, and no one would claim the US government should be in the business of forcing them to spend their treasure.

Ideologies aside, this is a tired canard. One can’t logically complain government inherently is the problem and in the next breath say that government needs to solve their problems. One can’t complain government isn’t doing enough to protect their IP and in the next breath say the laws are too onerous. That’s just whining.

In fact, even Otellini doesn’t seem to believe his own words, having at a conference last fall credited China’s rebound in part to its stimulus package. Let’s get at what Otellini really wants: A government handout. He is oh-so-proud of having garnered what were effectively tax-free plants in China, without stopping to consider that such blatant corporate welfare places the burden on the individual taxpayer. (Keep in mind, however, what you and I pay in taxes is not his problem.)

Still, based on his comments, one could picture Otellini formulating the following financial strategy:

Taxpayers give money to the government, which gives it to companies, which invest it in Asia (or just sit on it).

I’m just not sure what problem that solves.

Does Otellini really think China is a long-term answer and that its intentions are benign? Has he not considered the possibility that China and other poor Southeast Asian nations are doing anything they can to attract wealthy businesses, and that once it has the supply chain monopoly in place, those businesses will be forced to pony up? Intel is a pawn in a much bigger game, and he is betting his bank that he can cash in his chips before the house calls.

With Intel’s stock trading at a 52-week low and new research reports — coincidentally, I’m sure — projecting Samsung to overtake Intel as the world’s largest semiconductor supplier in the next three years, my guess is Otellini’s comments come from his ego and his wallet, not his head. And maybe Intel’s problems stem from having a bean counter, not an engineer, at the helm.

Aug. 30 addendum: A-ha! Intel just announced it is lowering its third-quarter forecasts. Otellini’s comments are sounding more and more like sour grapes.

Parts Panic

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Industry sources are telling me that for the past three to four months, some OEMs have been issuing waivers on incoming parts, basically saying “we don’t care if they are fake, just build the product.”

Given what we know about the extent of counterfeit components, that’s a galling attitude. Have we not learned that you can only kick the can so far down the road before the road rises and the can comes back and hits you in the face?

Expect more on this as I keep digging.

Ike, Revisited

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What would Eisenhower do?

This commentary, from last week’s Boston Globe, correctly compares and illustrates the differences in viewpoints of the outgoing president (and former WWII general) and incoming president (and ex Navy hero) John F. Kennedy when it came to the nation’s military.

Dwight  Eisenhower famously warned America to “guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex.” His concern: those in position to inflate the need for military buildup inevitably would do so.

Kennedy, informed by the ongoing Cold War and the need to look strong in the face of a belligerent Kremlin, took an opposite approach, asserting the US would commit anything and everything to “assure the survival and the success of liberty.”

This debate is particularly relevant today because the staggering debt the US has incurred, much of it in the past decade, has renewed calls for budget cuts. And defense is an obvious target: military spending made up 24%, or $895 billion, of this year’s $3.7 trillion budget, and is forecast to rise 3.7% in fiscal 2011.

So even if the percentage of the defense spend over time has been fairly consistent with overall discretionary expenditures and, measured against the GDP (roughly 4%), consistent with its average of the past 20 years (not to mention 100 basis points lower  than the average over the past 40), it’s such a big number — almost matching the rest of the world’s defense spending combined and more than nine times larger than the military budget of China — it was inevitable someone would eventually take it on.

So we now stand with Defense Secretary Gates Robert Gates looking for cuts even among the most sacred of sacred cows, the military brass. That by itself isn’t troubling.

More worrisome would be cuts to blue sky research. And while I’ve opined my belief that the Obama Administration is cognizant of the need for military spending not just for the obvious reasons of defense but also the less-obvious need to compel next-generation research, the current reading of the tea leaves suggests some possibly big cuts are coming.

The truth is, much of the US PCB industry relies heavily on  hearty annual defense budget. One could argue, with the preponderance of evidence in support, that sans the US military, the domestic bare board industry would effectively cease to exist. Do we start weaning our spending on weapons even if it means putting people out of work?

This has strong echoes of 1961. As the Globe writes,  “Most distressing to [Eisenhower] was that Kennedy had gone into factory towns and proclaimed that Eisenhower’s stinginess on defense had cost American jobs.”

President Obama is lucky in the sense that Gates is not job climbing. His next job will be babysitting his grandkids — and that career will start in just a few months. He can, as journalists like to say, speak truth to power, without worrying about offending either his boss (Obama) or his subordinates (the entire US Armed Forces).

Secretary Gates sounds an awful lot like a modern day Eisenhower. Will his vision be realized? And will the potential cost be greater than the reward?

Ike, Revisited

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What would Eisenhower do?

This commentary, from last week’s Boston Globe, correctly compares and illustrates the differences in viewpoints of the outgoing president (and former WWII general) and incoming president (and ex Navy hero) John F. Kennedy when it came to the nation’s military.

Dwight Eisenhower famously warned America to “guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex.” His concern: those in position to inflate the need for military buildup inevitably would do so.

Kennedy, informed by the ongoing Cold War and the need to look strong in the face of a belligerent Kremlin, took an opposite approach, asserting the US would commit anything and everything to “assure the survival and the success of liberty.”

This debate is particularly relevant today because the staggering debt the US has incurred, much of it in the past decade, has renewed calls for budget cuts. And defense is an obvious target: military spending made up 24%, or $895 billion, of this year’s $3.7 trillion budget, and is forecast to rise 3.7% in fiscal 2011.

So even if the percentage of the defense spend over time has been fairly consistent with overall discretionary expenditures and, measured against the GDP (roughly 4%), consistent with its average of the past 20 years (not to mention 100 basis points lower than the average over the past 40), it’s such a big number — almost matching the rest of the world’s defense spending combined and more than nine times larger than the military budget of China — it was inevitable someone would eventually take it on.

So we now stand with Defense Secretary Gates Robert Gates looking for cuts even among the most sacred of sacred cows, the military brass. That by itself isn’t troubling.

More worrisome would be cuts to blue sky research. And while I’ve opined my belief that the Obama Administration is cognizant of the need for military spending not just for the obvious reasons of defense but also the less-obvious need to compel next-generation research, the current reading of the tea leaves suggests some possibly big cuts are coming.

The truth is, much of the US PCB industry relies heavily on hearty annual defense budget. One could argue, with the preponderance of evidence in support, that sans the US military, the domestic bare board industry would effectively cease to exist. Do we start weaning our spending on weapons even if it means putting people out of work?

This has strong echoes of 1961. As the Globe writes, “Most distressing to [Eisenhower] was that Kennedy had gone into factory towns and proclaimed that Eisenhower’s stinginess on defense had cost American jobs.”

President Obama is lucky in the sense that Gates is not job climbing. His next job will be babysitting his grandkids — and that career will start in just a few months. He can, as journalists like to say, speak truth to power, without worrying about offending either his boss (Obama) or his subordinates (the entire US Armed Forces).

Secretary Gates sounds an awful lot like a modern day Eisenhower. Will his vision be realized? And will the potential cost be greater than the reward?

Watch Me Now

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SMTA is sponsoring a contest  in which participants submit their self-produced videos in support of the SMTAI trade show and conference. Winners get free admission to certain sessions.

For info: www.smta.org/smtai/video_contest.cfm.

Embedded Down

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Schweizer Electronic has filed for a patent for producing an embedded component multilayer circuit board, becoming approximately the 4,381st company to do so.

Just kidding.

Sort of.

Embedding actual components — actives or passives — has been a technology that not only was conceived (and patented) years ago, but has been in production for years in high-reliability (read: missile) technology.

The literature is full of articles explaining how to design, fabricate and test such boards and devices.
Yes, there are slightly different processes for achieving the end-result, but none such I am aware of that at this point would qualify as truly novel.

Here’s a thought. Instead of creating even more potential barriers to entry by muddying the IP waters even further for this important technology, let’s all call a truce and set out to help build what the OEMs want: cheaper, faster, lighter products.

Twisted Realities

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The latest failed attempt to write off the spate of suicides at Foxconn comes courtesy of the Global Supply Chain Council.

First, consider the source. The GSSC is China based, and because of the relationship (read: censorship) of that nation’s government and domestic businesses, it calls into question the basic perspective any organization will have when it comes to critically examining the local landscape.

Second, by putting “crisis” in quotes, it seeks to diminish what reasonable people consider appalling: a host of suicides across multiple manufacturing campuses. Further, it calls the discussions of Foxconn and Apple “headline hype,” akin to the military phrase for civilian deaths, “collateral damage.” These are human lives at stake. If there is something more precious, I don’t know what it is.

Then there are minor factual liberties, such as the suggestion that a February 2010 CSR investigation into child labor practices was initiated by Apple, when indeed it was spurred by widely disseminated media reporting.

And then there’s this monstrous statement:

In any population of 300,000 young people in urban China, one should statistically expect at least as many suicides per year as seen at Foxconn recently. Factory workers are overwhelmingly younger than 25, and the suicide rate among Chinese youth (similar to youth everywhere) is higher than the overall average. Many U.S. universities would be ecstatic if their suicide rates fell to levels as low as those at Foxconn China.

Wrong, wrong, wrong. As we’ve noted before, the proper context for the suicides at Foxconn is not how they stack up against China (or US schools, for that matter) at large, but rather against other large industrial manufacturing operations within China.

To understand whether working at Foxconn decreases the suicide rate, as the GSSC argues, the suicide rates at operations like ECS must also be baselined. And if people are jumping off tall buildings at Honda in Shenzhen, I haven’t read about it.

What has taken place over the past year at Foxconn is nothing short of an unmitigated disaster. I’m not surprised a Chinese-based organization is defending its benefactors, but that doesn’t make them right.

http://www.hopkinschildrens.org/Depression-Lack-of-Social-Support-Trigger-Suicidal-Thoughts-in-College-Students.aspx

The Widening Revolt

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While the working class backlash in China remains the headline, other Southeast Asia states are finding the going equally rough.

Take, for example, Bangladesh. Though not the manufacturing haven of its neighbors, Bangladesh does have a large textiles industry, which of course was the precursor to electronics in Taiwan, China, India and elsewhere on the continent. According to the APF

At least 5,000 workers blocked highways, looted shops in Dhaka, and attacked factories on Friday, police said. Another 5,000 protested in a neighborhood known for housing several embassies and foreign aid groups.

It’s difficult to put into context the difference $25 a month — roughly the amount the workers are fighting for — would make to people in many parts of the world. Is this a sign of a spreading reallocation of wealth by the masses — a staple of macroeconomics since time immemorial (and a potential bright spot for higher wage nations) — or a brief uprising, to be followed by a long period of relative calm?