The recognition and funds are good. But do they attack an underlying issue?
Reading Dr. Hayao Nakahara’s annual accounting of the printed circuit board market (which ran on this site last month), it’s hard to believe Taiwan was once dependent on Japan for PCB knowledge.
Years ago, however, it wasn’t Taiwan and China battling it out for market dominance; it was Japan and the US. Yet long before China emerged as a player, Taiwan had already identified PCBs as a key area for development.
Fulfilling that goal led to some interesting tactical moves. Nascent Taiwanese board shops, for instance, would entice Japan’s PCB engineers with huge financial incentives to moonlight in Taiwan on weekends. Planes would arrive to pick up workers on Fridays and return them to Japan on Sundays. It was lucrative for the engineers, while it aided Taiwan’s efforts to close the gap in technical knowledge.
A decade or so later, it was China’s turn. Western expats regularly filled the bars and restaurants in Shenzhen, Suzhou and Shanghai, boosting their paydays through overseas assignments teaching the latest PCB technologies to the Chinese. Then the bottom fell out of the Western markets, and when the dust settled, China’s market share was larger than that of the US and Europe combined.
Which brings me to the present-day United States. New legislation to boost the domestic PCB industry is making its way around Washington. Called the Supporting American Printed Circuit Boards Act of 2022 (SAPCB), the bill is modeled loosely on a similar statute designed to incent semiconductor manufacturers to raise their investments in the US. Known as the Chips Act, it was just passed by Congress and signed into law by President Biden.
SAPCB would provide approximately $3 billion in funding for American PCB facilities, equipment, and research and development. (An early provision for a 25% tax credit for the purchase of printed circuit boards manufactured in the US was recently removed from the bill. More on that in a moment.)
On one hand, such an act could help rebuild the once robust domestic PCB industry by lowering the cost of investment. And there’s no doubt the industry needs to improve its manufacturing capabilities and technologies.
Given that PCBs appear in every electronics device and are configure-to-order products, one could legitimately argue that a strong domestic industry is crucial to technological superiority.
Will dollars alone solve the problem? In other words, what thought has been given to how an industry transformation might happen? And what will the domestic industry look like afterward?
No legislation, of course, will lay out the roadmap goals in detail, leaving it to the pundits (including yours truly) to opine on what might happen next.
For some clues, we can look to recent comments by the president of the Printed Circuit Board Association of America (PCBAA), Travis Kelly. “National security” is a term that is often bandied about. Kelly, who is also president of Isola, astutely looks past the Pentagon, however, pointing to the severe supply chain issues experienced in many sectors that are key to the US economy, including medical, banking, and 5G infrastructure.
“From an industry standpoint,” he says, “when you look at defense spending, and what that means for our microelectronics industry, it is a relatively small portion of the overall sales within the US. As you know, the demand signal is volatile at best; it’s high-mix, low-volume, so it’s really looking at what can we do to supply certain critical components, as opposed to just looking at defense. Is there a potential way to aggregate that demand signal, so if you’re at a domestically located PCB or material supplier, you can actually have some stability with that demand signal, and a demand signal that’s big enough where you’re willing to invest those capex dollars?”
What this might not mean is an increase in the number of US board manufacturers. Indeed, Kelly has elsewhere suggested possible additional consolidation.
That does not necessarily mean a smaller manufacturing footprint overall, of course. But it leads back to the issue of why PCB buyers go offshore in the first place: in search of capacity or technological proficiency – or both.
You read that right. In my experience, this is not a pricing issue. I’ve found it very difficult to source domestically (bring back production) because of lack of capacity or technology. I’ve had customers who were more than willing to pay higher prices to have their boards made in the US. They simply cannot find a domestic manufacturer with the capacity and the right technology.
That brings me back to the past international relationships, and how that might play out today.
There’s no question federal recognition of critical technologies is a positive. And if the issue is technology and capacity, then government greasing the investment wheels just might help solve that. By placing onerous restrictions on outside investment (foreign companies had to partner with domestic ones) and constantly fiddling with its currency, China certainly did that in spades.
But what about the manpower? Lights-out factories might be the ideal answer to lingering issues of available manpower and operator variability, but we aren’t there yet. Not even close.
Where are we going to find the people? Even the most concerted of efforts will take a generation to rebuild the domestic expertise in sufficient numbers to meet the supply chain need. Will we take a page from the Southeast Asian playbooks and draw their experts to our shores? And if so, will China (no) or Taiwan (maybe) sit idly by?
I am eager to find out. •
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