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It all depends on where and what you produce

Apex 2003 in Anaheim/LA – more uncertainties slowing the recovery
It all depends on where and what you produce

For a brief moment, ten days before its opening, it looked like Apex 2003 in spring wouldn’t get off the ground. So pressing was the concern of prospective exhibitors and attendees alike under the triple whammy of the stalling industry recovery, the allies` war on Iraq and the SARS-induced fear of flying that the show management felt compelled to rush out a desperately reassuring e-mail statement: we are going ahead with the exhibition.

Going ahead even under the presumption that Apex would loose its international draw and, under the circumstances, shrink to a local event because nobody, especially from so-called “off-shore” regions, would dare to come and get infected with a deadly flu. Therefore the appeal: “the electronics industry is comprised of hearty, rugged individuals who routinely overcome obstacles to make the impossible possible.” Call it preaching to the chicken.

China express or where does business go?
Aside from the few thousands who really chickened out and stayed away, the event turned out to be – almost – its former self. Attendance was down by less than 20% according to Denny McGuirk, president of the show’s sponsor IPC. In terms of floor space, it was 160,000sqft, instead of the 200,000sqft intended. Close to 400 exhibiting companies made it to Anaheim/LA. Compared to other industry events, including those in Europe, the outcome was respectable.
It’s even more respectable in light of all other show goers‘ concerns: similar to the machine-tool industry of twenty years ago, the U.S. is now loosing its traditional electronics manufacturing base. Conclusion: there might not even be a need for an event of the type and size of Apex anymore on American soil. The ‚China express‘, as one long-time industry expert calls it, is heading towards – you guessed it probably – mainland China. And it has no coach class anymore; it is more like a run-away train.
So, here is the big news in regard to the still very young event: Apex itself will follow the outmigration of electronic manufacturing in its tracks. As soon as this coming September 17 to 19, there will be the International Printed Circuit and Electronics Assembly Fair taking place, and, where else? in China’s Southern province Guangdong. (One piece of good advice to all globally present product marketers, if you don’t mind: If you haven’t done so already, familiarize yourself with China’s industrial landscape and some bits of Mandarin. At least localize your table of contents, of whatever you publish for your future Chinese audience. And – do it pronto!) This board and assembly fair will take place in the large Guangzhou International Exhibition Center. So desperately quick came the announcement that there is no conference schedule yet, no exhibitor list, no official speakers. But the show is open to all comers. 400 exhibitors are expected along with 100,000 visitors. The event will be co-produced by the U.S.-based IPC and the just three-year-old Hong Kong Printed Circuit Association (HKPCA).
Now, is there another world-scale competition brewing in the board and assembly arena, such as between Semi and several other organizers such as the Munich Trade Fair’s Electronic China? Not according to Tony Hilvers of IPC. “Guangdong is so far away from Shanghai (the electronics quarter of China) and also from more software-driven” Beijing. Along with Hong Kong and Shenzhen, says Hilvers, Guangdong is the real Chinese assembly province. It’s home to more than 100 multinationals the likes of Flextronics, Celestica and Jabil, or Nokia and Samsung. And relating to the Munich endeavor, Hilvers plays it down further: “It’s a big country. And we are having our event in fall – they are having theirs in spring.”
Not enough with jumping on the China express: Next year, IPC will collocate its Apex with the International Printed Circuits Expo at the Anaheim Convention Center (February 24 to 26, 2004). This will save exhibitors and attendees an extra trip. Moreover, it might build an event that could rival, if not in scale but in scope, the well-entrenched Productronica, still firmly and succesfully anchored in Munich, Germany.
A next year of quiet desperation?
Enough of show logistics, on to a few observations and comments picked up on the floor. There it was again, the by now familiar and somewhat eerie disconnect between publicly professed optimism (in fact looking more like survivors‘ smiles) and the admitted pessimism in private – pointing to the fact that, in many cases, business is minuscule to nil. ´has been for more than two years, since the faint upswing of early 2002 was aborted last July. Instead, 2003 turns out to be another year of quiet desperation – or, at best, of rapid change and a new geopolitical and economic challenge.
Still, technology is advancing at its usual pace. Especially flip-chip bumping and wafer-level packaging, stacked die, microvias and complex substrates are moving ahead at breakneck speed, according to industry analyst Jan Vardaman (TechSearch), their market dynamics driven by performance and form factor in wireless consumer communication and entertainment. Ominously absent from the equation so far, is industrial investment in infrastructure and manufacturing. So, an age-old saying is seeing its revival: where is the beef?
Now wonder that the desperate search for a new killer application is pervading the talk of almost all industry analyst and market researchers. So far, there is none. Was the idea of the ‚killer app‘ just part of the previous bubble of internet hype? Is it time to forget about it and move on to sustainable, solid, if moderate, growth? This growth, for a while now, has been carried by robust consumer demand for new gadgets: entertainment, games, cell phones, cameras and camcorders, navigation devices, etc. On the professional side, automotive electronics also plays a role. However: this has been going on for years now without any major rush into capital spending on fab equipment or packaging capacity, as veteran analyst Jim Walker of Gartner Dataquest notes. If there is any return to industry growth at least shadowing that of 1998 to 2000, it will have to come from investment in the IT infrastructure and in a new round of manufacturing productivity increase.
If Walker has it right, worldwide spending on electronic equipment could be up by 6% this year. Moderate growth indeed. And, as Walker notes, all figures could be off again if the present uncertainty in geopolitics and the economy would materialize into real barriers to worldwide supply and logistics chains. If all goes well, semiconductor sales could be up 12% (middle value) or even 21%, he says. Or down by 9%, however geopolitics will play out over the rest of the year. In the same vein, according to Walker, backend equipment for chip manufacture could be up 25% this year, obeying the same dynamics. It would be nice after last year’s fall by 23%. Packaging, of course, is dependent on the growth (or non-growth) of all other segments in the industrial food chain. Another unresolved question: how much more inventory of components and equipment is left in the supply pipeline to be worked down by further price reductions or loosening of quality standards – especially in the hard-hit ATE segment?
Taking the next technological steps
The latest figures released just in time for all Apex visitors to see is that U.S. manufacturing has contracted in March (according to the Supply Management and the Consumer Confidence Indexes). Where the Euro Zone countries are close to recession (GDP growth 1.4% according to the World Bank), the economic engine of U.S. consumer expenditures threatens to stall out at just +2.5% GDP growth. (But be careful: regarding these figures alone under a black-or-white perception can be misleading.) If even Apex has gotten the drift, most exhibitors alike are talking of strategy shifts and new alignments with the wants and needs of U.S. markets. Fact is: in electronics, volume manufacturing is shipping out of God’s own country.
“We have an economic cycle that needs to be worked through,” says DEK president Richard Heimsch, “and we have an electronic manufacturing model that has to be changed. The geographical center of volume manufacturing has moved to low-cost areas, and there hasn’t been any new volume product to take its place.” More specific to DEK’s business. “The changes in packaging have always driven our product development: in the early 90s it was fine-pitch leadless devices. Now the move is transiting to area-array interconnect, and we need to drive down cost. That is requiring new processes. One guiding light is mass-market imaging. That is providing a lot of new enabling processes.” Heimsch’s take on the economy: “For better or worse – this is the recovery. We are in it. It’s going to take a different shape than recoveries used to have. The surviving companies will have completely different business models.”
Not quite a strategy change, but an adjustment to the conditions is the word at Siemens Dematic Electronics Assembly Systems (Siplace) of Atlanta/GA. The keyword is line integration. “We take the next logical step of opening our lines to other partners and integrating them into our solutions,” says Günter Lauber, recently named president after Pat Trippel went off to Henkel Loctite. In other words, no more branding, just flexible integration of partners‘ systems. Overarching software, says Lauber, will always offer customers an optimum solution. “We will come out of this recession as the winners,” Lauber foresees, “who the losers are, I don’t know…” A clear indication of Siemens Dematic’s shift into the future U.S. medium- and low-volume/high-mix placement market is the new Siplace models shown for the first time in the U.S., and in parallel to other important global industry regions.
Black-or-white scheme: not a solution
Familiar with the Asia-Pacific manufacturing scene, Kaz Nomoto, president of Juki in Morrisville/NC, offers a somewhat different picture of where the economy and the industry are heading. “I see some strong indications of recovery, depending on the geographical area and the application.” Of course tempered by a dose of caution: “Perhaps we need a bit more time, especially in North America and Europe. There are good indications of recovery in Taiwan, Japan and Korea,” he maintains. “China is really booming.” But here, too, he offers some cautioning: “I see some Japanese and U.S. companies that have pushed too hard into China.” Besides all the popular positives, Nomoto says, there are hidden problems of currency, language and logistics waiting. In terms of packaging technology, he sees the future as promoted by some Japanese companies, “for instance Murata, to sell the idea of 0.4 x 0.2mm chip packages.” In other words: this invention could be one of the next steps in packaging, but not so far. Right now, 0201-components start to slowly filter-in in regular manufacture. So far, not even 01005-component size is on the horizon. “In Japan, the U.S. and in Europe, we must define the new technologies to compete against China.”
One company to report an untypical expansion in otherwise depressed markets is Feinfocus, very small X-ray specialist from Germany (located just around Hannover as are the other X-ray firms). In 2002 it grew by 35% – due to orders from Asia and the U.S., and working with strategic partners such as Siemens Dematic, Palomar and Georgia Tech. Feinfocus demonstrated additions to their X-ray inspection systems with geometric magnification of up to 636x, and with a multi-focus tube of up to 2400x, feature recognition of 500nm. With beam-intensity fluctuations below 1%, tomographic analyses can be carried out of small objects up to 30mm in diameter, feeding measurement data directly into CAD systems, enabling 3D modeling. Another X-ray innovation is the Dage Xidat. “It’s an important advance of image acquisition,” says managing director Paul Walter, “it gives the customer the benefit of high-resolution imaging.” It resolves 1.3m pixels at more than 65,000 grayscale levels, at 25 frames/sec. At this point, it’s aimed at the high end, concedes Walter, “But we will push it into other territories.”
Continuing the trend to lower nitrogen consumption in reflow soldering (especially for regions such as Asia Pacific, where nitrogen cost is an issue), Vitronics Soltec showed off the XPM2 SMT reflow machine. Being suited for lead-free soldering, the system aims at no-lead conversation projects. On the other hand, Vitronics is shifting to more high-end applications, says president Jeroen Smits. “You loose some business on one end, but we win some good business on the other. It’s still a very healthy operation for us.” About the economic situation, he has his own analysis: “It’s not always black or white as in some media or in opinion. You have to focus, especially in Europe, on different styles of assembly. Practically all the contract manufacturers get their consumer boards assembled in Asia. But a lot of final assembly is done closer to the customer in the U.S. and Europe.” Talking about a general ‚recovery,‘ says Smits, is moot. “It all depends on where and what you produce.”
Werner Schulz/gbw
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