The dwindling number of large, all-in-one companies belies the abundance of blooming small ones.
The bigger we get, the smaller we become. A simple presentation at a recent local industry meeting hit home as I realized how demand for the products our industry develops and delivers is growing more than ever. The result, however, feels less like a bigger industry and more like various smaller ones.
The topic of the gathering happened to be solder. It could have been one of a multitude of technical topics, however. The growing fragmentation of processes and technological solutions, the “one size fits all” of days gone by, has morphed into many – and I mean many – different options tailored to specific end-applications or operating environments. Today, it is essential to pick your material, surface finishes, component and assembly methodology – and yes, supplier(s). You must be more specific than ever. What worked well in one case may not work for the next.
Solder used in assembly represents just one such decision tree. How ductile does it need to be? What temperature or number of thermal shocks will it be exposed to? Will those excursions occur only during assembly, or also in the field? What is the useful life of the item it will go in? What ambient environment will it be exposed in? So many questions to ask and answers to understand compared to the old days when tin-lead ruled.
The technology list goes on. Via fill: conductive or nonconductive? For function, or just to simplify assembly? And then there is surface finish. Tin? Silver? Gold? Something else? And laminate. High Tg? PTFE? Combination? The technology options are limitless. And when overlaid with other needs, such as supplier certifications and end-application requirements, selecting a supplier becomes staggering. Such decisions are changing electronics from a singular large industry to one characterized by many small, specialized segments. Some of that change is obvious, while other aspects are subtler.
We have heard the grousing about how the market, especially in North America, has been shrinking. The number of manufacturers has indeed decreased. Over the same period, the number in Asia has grown. Conventional wisdom says a lower-cost geographical region of the world has replaced a higher-cost one. But maybe something else is also going on. Maybe the profile of our industry is changing as well.
Not too many years ago the largest fabricators would offer all types of materials, technologies and lead-times within the same manufacturing facility. Those companies grew by building or buying other large facilities to add volume. It was “generic” volume, as the technological differences between “commodity” and “high tech” was minimal and could be produced on the same equipment. However, that was also when the options for, say, surface finish, were limited to tin-lead, gold or bare copper, and laminate was a pick of FR-4 or polyimide. The simpler the decision tree was, the more flexible a product offering a large facility could reasonably produce.
Technology has continued to advance, and not in a smooth, linear progression. Regulatory requirements such as RoHS and WEEE have required adaption to new combinations of chemistry that, while more environmentally friendly, come with new process parameters and have more narrow applicability. These replacements may be plug-and-play but not on as broad a scale. Decisions need to be made before many of the newer surface finishes or solder systems are used to ensure the laminate, components and end-application are best suited to their specific idiosyncrasies. Add to this new processes that enable improved performance, durability and capability, and the traditional manufacturing line morphs into a much more complex environment, with specific processes designed to match to very specific end-applications or materials.
As many of the new materials and technologies have been developed for lower-volume specialty applications, albeit critical ones, the new norm is for facilities (if not entire companies) providing mass-customization, focusing on an industry or specific technology. With some companies, this new norm can be achieved within one facility designed with areas dedicated to specific processes or materials. More often, smaller companies have become specialists in one or another technology or focused on a specific target market/application.
As Asia has replaced North America as the geographic market of choice for high-volume electronics, it is only natural those companies (or facilities within them) have shifted orientation to specific technologies and applications they can best produce at the most lucrative ROI. While the output of many facilities has decreased, and the number of facilities has shrunk, that does not mean the profitability of those facilities is necessarily less than it was, nor their future any less bright. And this is as true for EMS and component and material suppliers as it is for fabricators.
The electronics industry may be growing on the macro scale. When considering the printed circuit board industry, however, which encompasses “EMS” and “fabrication,” the dynamics caused by new less universal technology combined with new processes developed for very specific challenges may indeed be creating smaller niche suppliers that thrive better independently than combined within a larger company or within a massive manufacturing plant.
So, while the printed circuit board industry may or may not be growing, the opportunities are certainly increasing as new technologies and end-market requirements appear and challenge us. All companies are becoming mass-customization facilities. And as more specific, application-solving technologies are developed, it may well be the smaller ones that grow bigger the most.