Another federal energy investment has gone South — no, make that West.

Lithium ion batteries have been in the news again following Boeing’s highly publicized Dreamliner battery difficulties. China’s Wanxiang Group has received clearance from the US Committee on Foreign Investment to acquire the assets of America’s battery maker A123 for $257 million. The bankrupt A123, which makes batteries for electric cars and grid storage, was the recipient of $130 million of clean energy federal grants. The Wanxiang Group is an auto parts conglomerate.

Shen Tsai-Sheng of one of the world’s largest PCB makers, Unimicron Technology, stated that utilization rates of Unimicron’s HDI board, PCB, and flexible PCB (FPCB) production will fall below 75% of capacity in the first quarter of 2013, down from 85% to 95% in the 4th quarter of 2012.

Huawei sold 10.8 million smart phones in the 4th quarter of 2012 to become the world’s 3rd largest seller. Samsung was first with 63.7 million and Apple was 2nd with 47.8 million. ZTE, another China maker, shipped 9.5 million units in the last quarter of 2012.

Will the “bounce” last? China’s economy has bounced back. A return to accelerating growth in the fourth quarter 2012 breaks seven straight quarters of declining growth and draws a line under concerns that the world’s second largest economy is heading for a hard landing.
To engineer the rebound, China’s government turned again to boosting credit and investment spending. But beneath the surface, there were also signs a rebalancing toward consumption may be underway.

ASL had its second best year in 2012 and forecasts sales at least as good in 2013. The number one IC lithograph projection printer supplier in the world, headquartered in Holland, has about 80% of the market for advanced exposure equipment (including for 300mm wafers).

An interesting note from the massive CES (Consumer Electronics Show) in Las Vegas this month was the seemingly widespread appearance of nanotechnology coatings to “moisture proof” just about anything.

Updated PWB charts showing use of build up boards and thin PWBs by application in Japan are now available. These have been created and maintained annually by Masamitsu (Matt) Aoki. Several have been published in the Printed Circuit Journal of Japan. Write to us if you would like a copy.

Back to the Future. The “Assembly Processes for Lead Free and Tin-Lead” free BUZZ session at the IPC Apex event in San Diego Feb. 19 chaired by Raymond E. Pritchard Hall of Fame member Don DuPriest has been renamed BZ2 Hall of Famers: Roundtable Discussion. It’s format will be an “open-end” panel discussion by Hall of Fame (HoF) members related to all aspects of the electronic interconnect industry.  The panel, including Bob Neves, Dan Feinberg, Jack Fisher, Vern Solberg, and myself will field questions from the audience ranging from technology, to business, to future changes and requirements, to reshoring. Chairman DuPriest will provide surprise gifts to audience members that ask questions.

New “Kid on the Block.” Taiwan’s MediaTek, which introduced its first chipset in 2011 in a Lenovo phone, has in 18 short months captured 50% of China’s market for smartphone chips. Its chipsets are reported to have greatly reduced the cost and time for manufacturers to introduce new phones to the marketplace.  As a result, the top five producers in China during the third quarter Coolpad, Huawei, Lenovo, Samsung and ZTE. Apple was 6th with just 8% of the market. MediaTek offers guidance on hot to build a phone with its chips. as a result its chips are showing up in new brands in emerging markets in Latin America and India.

Nissan will assemble its new Leaf electric motor in the USA this year for the 2013 Nissan LEAF car to be built in Smyrna, TN. Currently all of Nissan’s electric motors are put together in Japan.

The Size of Boeing’s Supply

Good news: Boeing will continue assuring a worldwide supply of C-17 aircraft, the giant behemoth aircraft with payload potential of over 85 US tons (pictured below). All this is possible via a $2 billion follow-on contract from the U.S. Department of Defense.

Reuters published a small story yesterday about Boeing. The piece mentioned inherent “difficulties in managing 325 suppliers building parts for the 787 at 5,000 factories worldwide.” [Related article, see: 10 Best Practices in Managing Suppliers]

Boeing supply chain size. According to a Boeing internal document, Boeing had reduced its sprawling supply base to 6,450 suppliers in more than 100 countries (see gray box “Suppliers by the numbers”) in 2005. The supplied parts are (or were) organized as depicted in the image below, which is interesting even if it’s dated material: here’s how a product supply chain can be blocked out:


Take a look at the more specific 787 supply chain, sourced from the APICS blog and copyright of Boeing:

The 787 supply chain consists of 325 suppliers for one airplane. And the supplier relationship model is different.  The model takes Boeing’s well-touted supplier-partner roles a step closer to a true partnership.

“There will be only a few dozen large suppliers [on the 787 program] and they will carry a greater responsibility than on previous commercial new airplane projects,” Walt Gillette has said. Gillette of course is the esteemed former 787 program vice president of Engineering, Manufacturing and Partner Alignment.

Suppliers on the 787 program were not just consulted on how to improve current systems or components they provided, they were sharing risk by participating early in the design-build process.

This model seems to have worked and is fuel for thought for the rest of us.

The Cost of Misunderstanding Standards

An article in the latest issue of Assembly magazine asserts that use of standards, specifically IPC-A-610 and J-STD-001, raises the cost for US manufacturers and has led to the widespread offshoring of assembly.

The premise of the article, authored by a Dr. James A. Smith of Electronics Manufacturing Services Inc., is that standards drive up costs. This is stunning in that it completely mischaracterizes a core reason standards exist: to ensure widespread uniformity to a predefined level of quality.

Indeed, as someone who has traveled extensively abroad — I have spent more nights in Shanghai than any city other than the ones I have actually lived in — I can unequivocally state that manufacturers in China, Taiwan, Malaysia and so forth use IPC-A-600 and IPC-A-610 almost exclusively. And the reason is, those are the standards that their Western customers demand. Southeast Asia might offer lower labor rates, but that has nothing to do with IPC-A-610. As they used to tell me in stats class, correlation isn’t causation. I’m surprised Dr. Smith’s grad school teachers didn’t drill that conceit into him.

In the article, Dr. Smith asserts that “cost-plus” contracts reward poor manufacturing by ensuring that the assembler gets paid a set margin even if low yields lead to high rework costs. Besides being expensive, rework, of course, can be detrimental to the long-term board quality. Says Dr. Smith:

Some types of heat damage—lifted pads, delaminated circuit boards, and melted component bodies to name a few—are easily recognized. However, soldering iron heat causes serious degradation inside components such as ICs where the damage can’t be seen. The most prominent example of such damage is accelerated growth of the intermetallic (“purple plague”) between the gold wire bond and the aluminum pad on the chip substrate. As the intermetallic grows, electrical resistance inside the connection increases and switching characteristics change; depending on the sensitivity of the circuit, this change alone can be fatal. Even worse, Kirkendall voids develop in place of the pad material and breaks develop around the edges of the pad.

Therein lies the problem: Dr. Smith gets the technical details right and yet extrapolates from them a complete fallacy, writing “touchup and rework are all about deceiving the customer who, unwittingly, receives product with higher probability of premature failure.”

I am a former member of the IPC technical staff responsible for IPC-A-610 and J-STD-001. Having spent many a weekend in J-STD-001 meetings, I can state from experience that many defense contractors pushed to ease certain requirements in order both to save money and improve reliability. In one instance that springs to mind, Boeing provided ample evidence that minimum hole fill could be reduced because, they found, although a higher percentage of hole fill was seen as more reliable, in practice inspectors would have the rework technicians hit nonconforming holes with the solder gun, and the additional temperature excursion *reduced* long-term reliability more so than the greater volume of solder in the hole could increase it. These types of discussions don’t show up in the final boxscore, but you can’t understand the outcome of the game without knowing them. If Dr. Smith hasn’t been able to “unearth the data” behind the standards, it is because he hasn’t attended the meetings.

He also takes aim at the American industry for ignoring the teaching of the great quality gurus. “Instead of the focus on results emphasized by Deming and Juran, industry has embraced paperwork bureaucracy.” In fact, Dr. Deming focused on process, with the idea being a perfect process would net perfect results, and his “knowledge of vriation” concept runs through J-STD-001. At its core, J-STD-001 is a process driven document; a company that doesn’t understand SPC and process deviations has no hope of properly instituting it.

This all indirectly raises a separate point, however, namely: that it is critical for the US to maintain control of the standards. As my old friend Dieter Bergman used to tell me, he who controls the minutes controls the meeting. By authoring the standards (and making sure that the key Western OEMs are active contributors), the US can ensure a place at the international table far superior to the one our depleted manufacturing base would otherwise allow.

Outsourced Out of a Future?

Alert! Self-serving Content Ahead!

I suppose I’m supposed to be self-serving now and then. I mean, I don’t personally design and build things for a living. I do that for fun and dim hopes of robot world domination. These days, I tell people about things for a living so that makes it my job to be mostly self-serving (“self” being defined as “my company”). But self-serving isn’t always bad. I couldn’t get gas for my car here in Oregon without being self-serving. I could get hamburgers though, so I’ll have to conclude that it’s a 50-50 proposition.

We understand outsourcing here at Screaming Circuits. That’s what we do — take people’s outsourced prototype and short-run production assembly work. Being located in Canby, Oregon, USA, we see both sides of the outsourcing discussion. As I said, on the one hand, we do assembly for other people. On the other hand, being a North American manufacturing company, we’ve seen a lot of work go offshore.

Not that I’m against things not in the US. I firmly believe that most of this country’s success is due to the fact that we’re from here, there and all over the world. But, I do want to have a job and I want my friends and family to have a job. We have to be worth something in this country and the rampant pace of off-shoring sometimes makes me wonder if we’re just deluding ourselves in that regard.

The prompt for this post is this article in the Los Angeles Times about Boeing’s outsourcing in the 787 Dreamliner program. The quick summary of the article is to speculate that Boeing went way too far in their outsourcing and have put at risk not only the financial success of the program, but also the company’s future engineering prowess.

Now, here’s the self-serving part. The article outlines how they went wrong by over-outsourcing, but it also points to the value of specialty companies like Screaming Circuits:

That’s not to say that outsourcing never makes sense — it’s a good way to make use of the precision skills of specialty manufacturers, which would be costly to duplicate.

That’s us. We specialize in prototypes and small volumes. We specialize in new and difficult component package sizes. We see such a variety of different types of designs here in our shop that we get good at things like QFNs and micro BGAs sooner than anyone else. (Hyperbole, perhaps, but I do believe it none the less). We’ve built things that go under water, up into space and everywhere in between. We don’t specialize in one or a few specific vertical markets, like medical or consumer, we specialize in the prototype phase of the development program across virtually all market categories.

So, outsourcing: I’m in favor of intelligent outsourcing. My advice to you: Outsource where it make sense. Don’t outsource where it doesn’t. Look at the true cost of such decisions, not just the surface image. Keep some value add in your company and don’t just become a marketing shell.

Duane Benson
Time to make my oatmeal.