Comings and Goings

Big news: IBM will “sell” its chip operations to GlobalFoundries according to a joint statement by the companies. IBM will pay “the buyer,” owned by the government of Abu Dhabi, a reported $1.5 billion over the next three years to take the chip manufacturing business “off its hands.”

The world’s dozen or so leading chip foundries that account for more than 90% of global production (including IBM) will all be foreign-owned when this deal is completed.

Who benefits the most? Who will protect the innocent (chip users)? Is leaving America “foundry-less” good for the United States?

Back to the future. Lockheed is reported to have three captive PWB shops in the US. Northrup Grumman has an in-house board operation. Whelan is establishing a new highly automated in-house PWB operation. Intel is said to be planning a new captive board facility in Arizona and said to be offering a bounty for “successful” job referrals. Is it to develop new technology that independent shops cannot afford? Is it for secrecy? Is it to shorten supply lines? Is it to gain time to market or some other competitive advantage? Is it the start of a trend?

Is it still just the price? After visiting the Design-2-Part Show  (D2P) we revisited the concept of using value propositions to offset cheaper prices. We were astounded at the number of people that effectively stated that they would the cheapest system rather than the lowest cost equipment. Yes, there is a difference, and sometimes the added cost of using the cheapest system is substantial. We also found that those that bought the newer system with greater productivity, ease of use, updated software, and smaller footprint often ordered more of the units of the newer system after a short (several months) of running production along side of the “older” competitive models who tried to protect their business by simply lowering the price and promising future improvements.

Some things just never seem to change. When one visits some of the leading board makers making advanced substrates and assemblies in Asia today, one usually sees the latest production equipment. Then I thought of the New Jersey manufacturer that I met at D2P show, and wondered what I will see when I visit a new “highly automated” board maker in the U.S. next month.

Move over Amazon. Dragon Circuits in Texas announced that it successfully completed 14 test runs of delivery by drone of packages weighing up to several pounds. It did not state the range of the drones used in the test runs. Dragon has a drone division that builds a wide variety of these systems.

We need more industry participation and on campuses collaborations like the new Raytheon-UMass Lowell Research Institute (RURI). Plans for the center were announced in August. It officially opened on the campus on Oct. 10 in the school’s Mark and Elisia Saab Emerging Technologies and Innovation Center, the school’s new $80 million research center.

Kyle Homan, a doctoral student in electrical engineering, gave a presentation on printable electronics and nanotechnology at the opening. Raytheon has already embedded employees on site and plans to commit $3 to $5 million over 10 years to support the collaborative operation. It’s a great way to move critical technology forward while simultaneously training candidates for the company.*

Have you seen the TPCA’s (Taiwan Printed Circuit Association) first class promotional video on its interconnect industry? Take nine minutes and watch the video on the following link. ???????


*Raytheon currently employs about 1,000 UMass Lowell alumni.


Intel Inside: The Supply Side of CSR

At a Product Stewardship summit last week, Wood Turner from Stonyfield Farms sat on a panel.  He spoke about Stonyfield CSR tips and tricks.

Turner mentioned that his company links employee compensation with environmental reporting.

Turner said that linking salary with environmental performance engages all employees.  And that it makes sense for Stonyfield. After all, he said, Stonyfield is a company built on concepts of sustainability, responsibility and progressive environmental initiatives.

Well, it turns out that Intel— not set upon the greenest foundation of all time— has a similar compensation program. They also have a relatively sophisticated substance tracking system for raw materials.  Things like tungsten, tantalum and tin aren’t going to fly under the radar in their supply chain.

World’s largest semiconductor chip maker gets green
Intel’s summary of 2011 Corporate Responsibility published this week. In it, Intel says that since 2008 it has linked a portion of every employee’s variable compensation — from front-line employees to CEO — to the achievement of environmental sustainability metrics.

Intel, the world’s largest semiconductor chip maker, says it believes linking pay to green, as it were, helps the whole workforce focus on achieving environmental objectives.

Notably, Intel’s 2011 Corporate Responsibility report also links corporate responsibility performance and the creation of business value.

“At Intel, corporate responsibility is a crucial component to the overall growth of our business,” said Michael Jacobson, Intel’s director of corporate responsibility.

And, to our interest, the report also hones in on increased supplier assessments.

Intel inside: the supply side
In the lengthy Corporate Responsibility report, Intel says it is committed to operating with transparency.  This, it says, provides accountability and encourages two-way dialogue with employees and other stakeholders.

“Acting on stakeholder input,” says the company, “we also expanded our disclosure on our policies, approach, and management systems related to human rights in our operations, our supply chain, and the use of our products. Assessments and audits of suppliers help the company identify compliance gaps and develop system solutions and improvements.

Conflict minerals approach
In 2011, Intel says it completed or reviewed the results from 49 third-party audits of supplier facilities in nine countries, a five-fold increase over 2010. In 2011, they also continued to address concerns about minerals derived from unsavory mines, whose profits may be fueling human rights atrocities in the eastern region of the Democratic Republic of the Congo.

As of the end of 2011, we had mapped 92% of the tantalum, tin, tungsten, and gold supply lines supporting our core business, and had visited 48 smelters in nine countries.  Impressive?  Kind of.  If it’s not too greenwashed it’s really good work.

For the lurid details, see:

‘Dark Silicon’

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).


Faulty Intel

Former Intel exec Craig Barrett yesterday became the latest from the microprocessor company to pitch the dubious claim that the US tax policies are decimating the industry.

Just a month ago, Barrett’s successor and current CEO Paul Otellini criticized the US government for a range of what he called anti-business approaches. And Intel cofounder Andy Grove touched off the pressure with a piece in Business Week in July, in which he tackled the issues of growth with more political savvy than did his colleagues but equal conviction.

While Grove was sensible enough to couch his plea in terms that relying on startups to innovate the US back to the center of tech universe isn’t a panacea, each of the Intel execs put the onus on the US government to fix the industry’s woes.

To be sure, government policy should be designed to promote growth, job creation and innovation while at the same time not screwing over the little guy. In fact, however, conceptualizing and executing the perfect is far from easy.

There are certain contradictions in the Intel PR campaign. Barrett and Otellini want government to loosen the chains, while Grove asserts the US policy of a free market penalizes domestic companies. Further, Grove’s thesis centers around creating jobs in the US, while his colleagues seem more concerned with generating greater profits for Intel (and no, the two don’t necessarily go hand-in-hand). The troika agree, however, that tax policy must change, insisting that the US corporate tax rate is the highest in the world. What this omits, of course, is that more than 67% of American businesses pay no taxes (for the record, UP Media Group isn’t one of them. Perhaps we need better accountants.)

As Forbes pointed out in May, General Electric had an  2008 effective tax rate of 5.3%, and while its 2009 pretax income was $10.3 billion it not only paid no US tax, it recorded a tax benefit of $1.1 billion! Intel’s own tax rate was about 23% last year and in 2007, and 31% in 2008.

What Intel is suggesting is intellectually dishonest, and unbecoming one of the great American tech success stories. And, not to be too cynical, but it’s impossible not to note that while Intel’s stock price is listing, plenty of its competitors seem to be doing just fine.

It’s time Intel looked inward, and stopped blaming everyone else for problems that are largely self-created.

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

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.

The Hurdles of New Technology Adoption

Every so often a new electronics assembly technology comes along, and I am asked my opinion about it. The latest “new” technology for assembly is RF Activated “Green” Nano Solder.

My response when asked about this? I think Intel’s caveat in the article tells it all: “Intel cautioned, however, that several engineering refinements need to be made before the new RF soldering method can be used commercially.’

Interpretation: This puppy needs $20 million of R&D before it is ready.

Nano solders have been studied for years. They are interesting and have promise, but there are big hurdles. People will say they want an exciting new technology like this, until they find that the soldering material costs much more than their current one, they need new equipment, etc. All of a sudden, today’s process (disappointments included) don’t look so bad. It is hard to replace an incumbent process unless there is a strong need — and typically it must be at equal or lower cost. These will be challenges for this proposed process.

So my take is, it is interesting process science, but let’s wait to see more data, prototypes and cost estimates before we get too excited.

Any new technology process must be evaluated under the following criteria:

  • If “disruptive,” it must meet an overwhelming need. E.g.: If your process has a 95% first-pass yield and the 5% of the product that is repaired only cost a small amount, you would be unlikely to take a chance on a unproven technology when the time comes to invest money in it.
  • The new technology’s implementation must have a minimum of disruption, if implemented in a current process and the cost must be equal or less than today’s process. E.g.: You want to improve your process in #1; however, if the new process requires radically new equipment and/or materials, you would be hesitant to adopt.
  • The process will need several years to prove itself. You know the problems with today’s process, but what are the problems with the new process? You likely want yield and reliability data. These requirements take some time.
  • You must consider the improvements in the old process. Often a new process will aim at where the old process is today, not recognizing that the old process is often improving by the time the new process is implemented.

Using these criteria, let’s look at the implementation of SMT technology in the age of through-hole (TH), circa 1980. How did it measure up to these four criteria?:

1. SMT met an overwhelming need. One simply could not design a small, high performance personal product, like a mobile phone, with PTH.

2. SMT lines evolved from PTH lines, sometimes with radical changes, but the need overwhelmed any disruption.

3. Much work was performed on SMT products to demonstrate that reliability was acceptable.

4. The need for SMT was so great that PTH’s “future” was not an issue.

Contrast this to the SMT process discussed above (that has 95% first-pass yield) with the 5% fallout reworkable. It becomes difficult to envision making any “disruptive” change to a process like this .. it just won’t pay financially or in any other way.

Your comments?

Dr. Ron

Read more: