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2003 Industry Vision Forcast
December 31, 1969 |Estimated reading time: 22 minutes
As 2003 quickly approaches, the surface mount process has, in many ways, come full circle. On one hand, it is such a mature technological process that many manufacturers are now focusing almost exclusively on the "big picture," i.e., process control, outsourcing vs. in-house manufacturing, design for manufacture/test, etc. But with electronics manufacturing moving to an exclusively lead-free process in the near future, others are re-evaluating the impact this will have on their "core competencies," i.e., component placement, soldering, reflow, etc. These topics, and more, are discussed in our 2003 Industry Vision Forecast.
SMT Magazine called upon a select group of industry representatives to give their predictions for the surface mount industry in the upcoming year. They were asked to foresee the major developments and issues both within their product area and for the surface mount industry as a whole, as well as comment on environmental issues facing the electronics assembly process. Featured on the following pages, the responses provide a broad range of viewpoints, a look at the innovations spawned from manufacturing challenges, and suggestions on how to handle the industry's changing landscape.
1 How do you perceive market expansion in relation to surface mount technology (SMT) affecting your product or service area in 2003?
Bjorn Dahle, KIC
SMT is accelerating the move to low-cost countries such as China. It is, however, ..important to note that both American and European manufacturers are fighting back by investing in new productivity and quality technologies. This year KIC has opened new offices in China and Europe to provide leading-edge products and support.
John Toms, EMS Solutions
In the contract manufacturing (CM) field, customers are looking for partnerships for both production capabilities and advanced technologies. It also is critical to provide customers with the latest IT tools to keep pace with the increasing need for real-time information. In the mid-tier CM market, the projections through 2005 look very optimistic, our targeted market shows key signs of recovery beginning 2003 and going forward. We have put in place the infrastructure, capital and personnel to take advantage of this growth.
Mike Bixenman, Kyzen Corp.
The market trend continues to evolve toward no-clean technology. Key areas that challenge the no-clean approach are lead-free, microelectronics, high reliability and radio frequency (RF) technology. Sn/Ag/Cu is the leading lead-free alloy of choice. Higher tin alloys do not wet as well as eutectic ..tin/lead. The flux composition will be a higher percentage of the solder cream and the activators will be more active. This has brought renewed interest in cleaning, especially in the area of microelectronics. Flux residue impedes the circuit integrity of RF circuits. As this technology grows, cleaning requirements will rise.
Joe Vilella, Vectron Inc.
Our automated optical inspection (AOI) technology has been well received in the industry and we see that trend escalating in 2003. The need for the implementation of AOI equipment to support the placement of next-generation SMT components is critical and will remain as such moving into the future.
Steven Hall, EKRA America
With the recovery of the market looking like it will be delayed until well into 2003, the ..increasing pressure to provide products that are more cost efficient will continue. This does not mean just lower price. It means that the overall cost of ownership of equipment needs to decrease. Decreased training times, decreased maintenance times and increased reliability are a few of the main areas.
Marc Peo, Heller Industries
We see customers focusing on reduced cost of ownership as a main decision driver. In some cases, the cost to run certain pieces of SMT equipment can be higher than the depreciation. Additionally, self cleaning/no-maintenance features are becoming more popular because they not only save manpower but also increase equipment use/uptime and can create more revenue as a result.
Mark Norris, ViTechnology LLC
Over the next two to three years, I do not foresee any major SMT expansion, but rather a slow and well-defined consolidation either by choice or force. Many companies unfortunately will not survive the coming 18 months as consolidation occurs not only with equipment suppliers but the industry as a whole. The euphoric expansion at all levels within our industry in ..1999 and 2000 has given way to a reality of the bubble bursting in 2002 and 2003. This consolidation will be felt in the industry by a requirement to not only produce more but to produce less with better quality. The number of cell phones and computers manufactured will stagnate and companies will concentrate on manufacturing costs and quality, enhancing and accelerating AOI and X-ray use as well as all types of quality control software.
William Scheu, A.P.E. South Inc.
I do not see any expansion for 2003 in the SMT area. I do see ball grid array (BGA) technology expanding. We expect to add additional sales and production staff and currently are doing so. We see the need for some new BGA rework systems and will introduce two new models at APEX in March. We have had all our field engineers and sales staff IPC instructor certified to increase our ability to give the customer qualified, competent and meaningful service. We feel that focusing on customer needs will address the expanding market.
Jeff Timms, Siemens Dematic
I see no market expansion in the coming year. As such, 2003 will become a year of getting back to basics and customers will begin seeing the differences in the behavior of the long-term global players in this industry vs. that of the more financially constrained or less established pick-and-place manufacturers. Be careful in whom you ..invest your future— make sure that whoever you choose as a partner is a stable, long-term player with the resources to successfully carry your business forward.
François Monette, Cogiscan Inc.
The market will expand over time in both application complexity and manufacturing volume. With the continued trend toward higher I/O count and a proliferation of moisture-sensitive devices (MSD) in electronics assemblies, the need to track exposure times of costly components to ambient conditions is becoming critical. An increase in the volume of electronics manufacturing next year and the years after has the potential of making the moisture control problem more pervasive.
Jason Spera, Aegis Industrial Software Corp.
Expanding markets demand increased capacity, while challenging economies require efficiency improvement. Manufacturing software supports both goals. Therefore, software continues its growth even in these challenging times, as it enables OEMs and CMs to operate successfully with reduced labor and capital resources.
Lance Scott, FeinFocus USA
The prolonged market downturn has created an increasingly competitive environment, which actually has expedited the introduction of certain new technologies while placing a much higher demand on improved yields and associated product reliability. Consequently, there is a vital need for sophisticated process verification and yield enhancement tools such as high-resolution X-ray inspection equipment.
Gene Heiser, Universal Instruments Corp.
In principal, we do not foresee market "expansion" over the next six to 12 months. ..However, there is extreme activity in China fueled by Taiwanese investment and growth of localized CMs. While the European market generally is dull, the U.S. market is replacement focused. Domestic-based CMs have nearly finished optimizing their facilities, and capacity still exists.
Vikram Butani, V.J. ElectroniX
In light of the continuing trend toward production globalization, all SMT interfaces must be smoothed across geographic and cultural boundaries. X-ray inspection and analysis depends heavily on the operator's ability to capture an image and analyze it. Varying inspection and analytical skills result in inconsistent interpretations for identical scenarios.
Bob Reback, Cimetrix Inc.
Expansion, what expansion? We continue to see declines in capital equipment spending ..and overall contraction within the industry. However, we are providing the motion control capability for several new machine designs, which increase performance in printed circuit board (PCB) manufacturing. We believe that these downturn innovations will drive the economic recovery in 2003.
David Suraski, AIM
As industry consolidations and geographic shifts continue, electronics manufacturers look to their solder suppliers for increased levels of service, technical support and cooperation. Suppliers must be equipped to act as a direct extension of OEM's and electronics manufacturing services' (EMS) materials management and manufacturing departments. Quality solder products are necessary for efficient manufacturing, but so too is a vendor willing to support these products throughout the world.
Frank Murch, Asymtek
The electronics market has experienced its worst downturn ever. There are two big trends in 2002 that will continue into 2003: 1) The U.S. attitude toward the world environment changed with "9/11." Threats cause ..people to be conservative and withdrawn, which could continue to dampen demand, SMT and the industry; 2) The shift to China continues. China is the only geographic area experiencing significant growth. China has more people and "heft" (area, size, money, etc.) than the other countries, and so this trend will probably last for a number of years. In 2003, dispensing will see the wide-scale use of dynamic dispensing control, a technique that gets more control and precision out of the dispensing process, resulting in better, cheaper assemblies. The economic advantages fit the environment.
Robert Kent, Tyco Electronics Corp.
There continues to be a shift from very high-volume/low-mix lines to low- to medium-volume/high-mix production lines. Additionally, companies are focusing on improving quality and efficiencies, as well as doing more with fewer resources. At Tyco Electronics, we continue bringing new technology and systems to the market that will enable customers to meet those objectives, and are excited about the release of several new machines this year.
Eelco Fokkens, Vitronics Soltec BBV
The volume-driven surface mount device (SMD) assembly equipment market will be flat going into 2003. But there will continue to be attractive niches in the market, such as further automation in the form of selective soldering. This will remain competitive in the higher labor rate regions, but even more so because hand soldering is believed to be a noncontrollable soldering process, prone to poor joint quality. Furthermore, the accelerated adoption of lead-free soldering will force companies to replace existing wave and reflow soldering systems because of its greatly reduced process window.
Sammy Yi, Flextronics
We see more activities in the consumer electronics sectors.
Craig Mitchell, Tessera
We believe SMT will continue having a profound effect on advanced semiconductor ..packaging in 2003. To meet continuing demand for smaller, faster and lighter electronic products, semiconductor manufacturers are scrambling to develop package solutions that allow for the combination of memory, logic, processors and other device types within a single, miniature footprint.
Tony Longo, Northrop Grumman Component Technologies — Kester
Technology drivers from the separate segments of the electronics industry will necessitate the advancement of interconnect products that meet unique requirements of each market segment. For example, automotive industry assemblers may require different material characteristics than those in consumer electronics. To support these varying needs, materials suppliers must design next-generation products that meet the needs of each market.
Paul Walter, Dage Precision Industries
Next-generation products will fuel market expansion. As always, the requirements for ..these products will be smaller, lower cost and more power. Delivery of these benefits will be through new array and chip scale packages (CSP). The increasing use of these devices will require more manufacturers to invest in technologies, such as X-ray, to facilitate inspection of hidden solder joints.
Howard Kamens, Cookson Electronics Equipment
SMT continues evolving in sophistication as component density requirements are driven by end user form factor and functionality demands. Opportunities abound for us as we have new solutions in selective wave, dispensing and reflow that will provide state-of-the art capability with low cost of ownership.
Art Burkhart, Henkel Loctite
We are seeing more SMT expansion in China. Unfortunately, some of this is business being transferred from Mexico, and it raises questions about the long-term viability of high-volume elec-tronics manufactur-ing in Mexico. We are increasing our investment in China to provide the appropriate level of local support.
Bill Rooney, Panasonic Factory Automation
There will be less high-volume/low-mix type manufacturing operations and more low-volume/high-mix operations. Also expect new processes, products and components. Using a single, flexible platform to handle a wide range of components will help maintain efficiency and productivity. Software packages that reconfigure assembly lines will improve productivity as well.
Tim Gillis, BTU International
Overcapacity will inhibit short-term growth at the large EMS houses, but we will see some activity with mid-tier and smaller players. The highest growth potential will be in the Asian market and China in particular, where production infrastructure is increasing rapidly. We will continue seeing a migration by manufacturers into China as they try to minimize operating costs.
Craig Hunter, AVX Corp.
Surface mount products continue growing as a market share and this will continue looking ahead. Geographic market splits will continue to favor Asia for the immediate future. There is also likely to be a further shift by OEMs from in-house to more outsourced production. The lead-free issue also is heating up (excuse the pun) and this will mean a shift in technology for some OEMs and CMs.
Paul Ramsay, X-Tek Systems
Although I think that U.S. and European markets will be relatively flat, I predict strong continued market expansion in the Far East through 2003 and certainly at least as far out as 2Q04. This expansion will be driven by the development of consumer products incorporating Bluetooth, 802.11 WiFi technology. Without doubt, the nature of these new products is going to be size driven, so the package will be a BGA or microBGA.
Bjorn Dahle, KIC
Manufacturers are now forced to produce better quality with less cost. Year 2003 will see wonderful new software products from KIC and other companies that enable manufacturers to achieve such goals through a higher degree of automation, real-time process information, interactive operator training and networked global "virtual factories."
John Toms, EMS Solutions
Over the last few years, much has been written about 0201 and some of the more ..demanding devices and emerging technologies. We see these becoming a part of our everyday production requirements in 2003. Our equipment set coupled with experienced personnel are trained and ready to go. Potential customers do not want to be guinea pigs; they require first class service in all aspects of outsourcing.
Joe Vilella, Vectron Inc.
My sense is that the industry will move aggressively toward 0201 component placement in many of the SMT lines that today are shooting 0402 components. That has become fundamental to the introduction of new electronics devices and it will keep the attention of the SMT manufacturers for quite a while. In tandem, AOI capabilities must continue evolving to keep pace with the component ..placement challenge. The current state of the economy has shifted the focus of SMT manufacturing to specific regions of the world where the cost of quality is lower, but it has not affected the need for a higher level of sophistication in electronics devices. This economic downturn has made it clear that SMT improvements are critical for SMT manufacturers to be capable of competing on a global scale.
Mike Bixenman, Kyzen Corp.
Engineer cleaning fluids that have a wide performance range on the evolving flux technologies is both a need and a challenge. Traditional rosin-based flux technologies were removed easily with saponification technology. As the low solids flux technologies evolve, the cleaning fluids must likewise evolve since the material subset is dramatically different. Environmental challenges further complicate the design matrix.
Steven Hall, EKRA America
The current state of the economy definitely will have an effect on the SMT industry. The market will be driven the next couple of years by companies that find creative ways to provide solutions to customers and then support those solutions to the fullest. The newest technology for 2003 will be companies that excel through strong relationships with their customers.
Mark Norris, ViTechnology LLC
The drive for quality and not quantity over the next few years will force equipment suppliers to supply not only the hardware to produce SMD technology but the software and closed-loop quality control tools required to ensure it is done right the first time. Screen printer and pick-and-place companies will work hand in hand with AOI suppliers to close the loop with the paste printing and component placement processes to ensure a high first pass yield both pre- and post-reflow. The drive from the customers will be "quality and process control;" the answer from the suppliers will be "zero-defect line." Customers will want to be proactive in controlling the process and will want to reduce rework considerably, no longer willing to spend huge amounts on reworking boards after reflow or in-circuit test.
Paul Walter, Dage Precision Industries
Packaging technology is undergoing continual change. New packages in the form of CSPs, stacked wafers and bumped wafers (DCA) will offer solutions and capabilities not offered today. Current economic conditions will affect traditional SMT and packaging. It is new designs that will offer a way forward. I believe the investment of these designs will increase, and manufacturers will begin bringing new and needed products to the marketplace.
William Scheu, A.P.E. South Inc.
I think the use of flex circuits will expand in the telecom industry. I also think CSP and flip chips will increase as fast as the engineering of new products can use them. The state of the economy will drive companies to take each other's market share. The music has stopped and we will soon see who has grabbed a chair.
Robert Kent, Tyco Electronics Corp.
There is nothing revolutionary in SMT that will be rolled out in 2003, as the focus will ..continue to be on flexibility, quality and efficiencies. Some companies may choose to implement 0201 or flip chips into designs and work to refine that process. Others will work on design and process issues such as lead-free implementation. The current state of the economy certainly is affecting the direction of the industry. Companies are keenly focusing on return on investment (ROI) and need to spend monies wisely. With many customers having reduced personnel, it is imperative that suppliers build equipment that is easy to program and use, very reliable, and focuses on world-class service and support.
Eelco Fokkens, Vitronics Soltec BBV
Believing that the market will not structurally improve in 2003, we foresee a further consolidation, both at customer levels and with competition. The organized equipment suppliers with a competitive advantage in the form of technology, a global footprint and solid financial background will survive, others will have to exit the market. We suggest that companies looking into equipment investment include an assessment of its potential suppliers' financial status. With such tight margins, only those companies able to provide the highest yields and flexibility will be successful, and for this, their equipment must have the most advanced process capability and control.
Rick Short, Indium Corp. of America
The current state of the economy definitely affects SMT trends and direction. Reduced ..enthusiasm for telecom and computing products also plays a role. The economic uncertainty that many are feeling typically manifests itself as consumers take a conservative "wait and see" approach to spending. The resulting slowed demand chokes the flagging economy and we find ourselves in a classic case of spiraling demand. This effect varies regionally across the globe. The surface mount industry is in strong need of exciting products that appeal to the mass consumer market. Perhaps the root cause lies with the product technologist/designer. The strong demand for an exciting and meaningful product has the power to re-energize the global economy. A "killer ap" would be very much appreciated at this time.
Sammy Yi, Flextronics
We expect to see more lead-free products in production. System-in-package will remain the solution for lower cost and higher densities in handheld products.
Technologies — Kester
With less expenditures on research and development (R&D) due to the economic state, the trend will be to concentrate more on current products and processes instead of moving on to the next level. Newer technologies such as 0201 components and lead-free soldering will move to the back burner as more emphasis will be put on the bottom line.
Frank Murch, Asymtek
To be successful, new technologies will have to be cost-sensitive. The downturn took huge amounts of R&D away from the industry. The excess supply of materials, equipment, factory space and capacity made cheaper methods more desirable. As the industry regains momentum in 2003, new technologies may again focus on advancing the state-of-the-art vs. getting it done as cheaply as possible.
Craig Mitchell, Tessera
In many ways the current downturn favors SMT. In tough financial times, OEMs are looking for innovative, commercially appealing products they can bring to market quickly. We believe that 0.5 mm (ball pitch) devices will become the standard, instead of the exception. Some technologies we expect to see refined include stencil printing, inspection, and pick-and-place inspection equipment needed to handle finer-pitch devices at higher throughputs and yields.
Lance Scott, FeinFocus USA
The smaller features and increased board densities enabled by component technologies are presenting formidable challenges for the SMT ..production environment. Innovative new technologies related to microelectromechanical systems (MEMS) already are emerging as new production assembly challenges. The resultant demand for improved yield enhancement will force manufacturers to ensure robust processes prior to production release. The trend toward outsourcing undoubtedly will continue, but increased product reliability expectations will dictate that technology leaders gain increasing market share.
Vikram Butani, V.J. ElectroniX
The current state of the economy coupled with the push toward globalization has ..resulted in a focus on lean, high-yield-oriented production. One major technological breakthrough for the X-ray industry has been the introduction and development of advanced defect recognition technology. This provides filters that reduce the level of operator subjectivity, and make the entire X-ray inspection and analysis process operator-independent.
Gene Heiser, Universal Instruments Corp.
Automotive, medical and niche high-end products currently are leading the way for new technologies. From an SMT equipment supplier perspective, customers on a worldwide basis are focusing less on speed and tact-time and more on quick changeover, smaller lot sizes and cost per sq. m. metrics.
Bob Reback, Cimetrix Inc.
Capital equipment makers are streamlining operations to effectively compete in global markets, including China. Through the use of leading-edge software techniques, we can provide several equipment makers with the software technology needed to reduce overall hardware cost. The economy is dictating a trend of cost-reducing innovations.
David Suraski, AIM
The continued push toward smaller, faster, more reliable hardware will require ongoing ..improvements in product and performance from all suppliers. The current state of the economy has made an extremely competitive industry even more so. To be successful today and in the future, SMT suppliers must be regarded as a resource to their customers, easy to do business with and as having a positive influence on manufacturers' bottom lines.
Marc Peo, Heller Industries
The current state of the economy has dramatically impacted new development. Companies must reduce costs and the engineering R&D budget is a quick and easy place to find big reductions. However, we see this environment as an opportunity and have implemented a policy of investing through the downturn. By keeping the designs fresh and continuing to drive the technology, we have been able to expand on certain competitive advantages and further distance ourselves from our competition. In this way, when the turnaround finally arrives, we will emerge faster with no ramp-up curve.
Howard Kamens, Cookson Electronics Equipment
We see increased demand for fully integrated lines as next-generation software tools enable true line management and cost-effective offline programming. The economy will have an impact if discretionary household income falls and future electronics purchases are the victim. While it may not always be the case, our industry still has the ability to move the global economy.
Art Burkhart, Henkel Loctite
The insatiable demand for miniaturization continues. We are seeing strong interest in our next-generation CSP underfill products, which can be applied before component mounting. Despite the downturn, demand for lead-free technologies is gaining momentum. The downturn is keeping focus on materials and processes that are low-cost and compatible with existing capacity.
Craig Hunter, AVX Corp.
Thin film integrated passive components (IPC) are gaining momentum although they still are a small percentage of the overall market. Additionally, low-temperature co-fired ceramic (LTCC) modules will see increases primarily in the RF marketplace. ..Economic health is forcing many companies to evaluate their business models. There is likely to be a further step towards outsourcing by many. When the economy does see a stronger turnaround, there will be a swift increase in new product releases. These largely will be SMT-based, further fueling SMT production growth.
Jeff Timms, Siemens Dematic
I see no real technological challenges that cannot be handled by our current generation of gear. As such, it is important to consider what "might be coming" in the future. If a customer invests today, will their gear handle future challenges? As far as the economy, I believe that the longer the economy stays down, the less emphasis we will see on new technology investment in the manufacturing sector. The U.S. market has changed from being a mecca for high-volume manufacturing to a market consisting of hundreds of smaller low-volume/high-mix shops.
François Monette, Cogiscan Inc.
Moisture sensitivity is emerging as the single greatest threat to package integrity, with ..the very real danger of large-scale failures in the field. Automated MSD tracking will be an important technology in 2003 and beyond as manufacturers struggle to protect their assemblies from moisture-related defects. One of the most dramatic changes in the global economy is the migration of electronics assembly to more humid ecosystems, such as Mexico and China.
Jason Spera, Aegis Industrial Software Corp.
Doing more with less will be the trend as long as the challenging economic situations remain. Software for streamlining operations, handling change effectively and increasing line efficiency will help manufacturers navigate this economic storm and emerge more profitable than ever when conditions improve.
Bill Rooney, Panasonic Factory Automation
Look for increased use of 0201 type components as companies create more compact products. MEMS devices and other new components will require more sophisticated 3-D vision systems for accurate placement. The competitive economy will inspire companies to introduce more advanced and cost-effective products.
Tim Gillis, BTU International
Cost of ownership will be increasingly important in the current climate as manufacturers look to minimize their operating costs. Lead-free processing will continue its slow march to acceptance but will not become a mainstream technology until legislation mandates it. Suppliers whose equipment can handle the process now will have an advantage as customers look toward the future.
Paul Ramsay, X-Tek Systems
While others seem to blame the state of the economy for their own lack of progress, innovators are using the slow economy to bring systems to market ahead of the curve. However, the state of the economy certainly is impacting in that we are seeing increasing price erosion, ever more leasing and finance deals on SMT equipment, and a glut of pre-owned capital equipment in the market.