Staying Ahead of Market Trends Through Education
ESI equipment has been in high demand with the recent rise of flex and HDI. But when Barry Matties met with Patrick Riechel and John Williams at HKPCA, they explained that it is really ESI’s future protection and flexibility in the process that keeps them ahead of the market and allows for ongoing success.
Barry Matties: First of all, Patrick, what are your impressions of the show?
Patrick Riechel: Extremely positive, as we expected. From our own experience with the industry right now, the PCB market is booming. It's really an exciting time to be part of this. ESI, fortunately, is benefiting from a lot of that as well. It shows in the market as well as here at the expo. Everybody has smiles on their faces, and the industry trends are really in our favor.
Matties: John, tell us a little bit about ESI and what you do?
John Williams: ESI enables the commercialization of technologies through precision laser processing. All manner of flexible printed circuits, rigid PCBs, MLCCs, and materials. We help our customers to get them ready for high volume manufacturing in a variety of applications.
Matties: Is it laser vias?
Williams: Yes. Via drilling is our main application, in this sector, especially. But we've got lasers doing all manner of drilling, milling, routing—a variety of applications. We're mainly known for flex circuit via drilling, but also have a large presence in the HDI market.
Matties: Both extremely fast-growing markets, right?
Riechel: Absolutely. Some of the same trends that you're seeing in HDI are present in flex as well. If you've heard of the term "chip on flex," this is a technology especially in use with display drivers now that the market trends for smartphones are moving to OLED and bezel-less technologies. So chip on flex, like HDI, is using extremely thin copper over the dielectric and you're using much, much finer lines and spaces; the technologies are really in ESI's favor because our accuracy capabilities and very fast beam positioning are perfect for the high-density vias that are present in these next-generation technologies.
Matties: What sort of market drivers are you seeing out there right now?
Riechel: One of them is the move to finer lines and spaces. There is a lot more broadening in the types of applications that we're seeing this year. Finer lines and spaces as one of those, but also, on the complete opposite end of the spectrum, there are much thicker copper applications for technologies like wireless charging. When you're trying to apply wireless charging to such small devices, you have to enable it with flexible circuits. We support both ends of the spectrum. You have the thin, light fine-line applications, and you have these thicker, heavy-duty high-current applications, and then there is the standard flex circuit right in the middle. ESI is successfully applying our technology to all these trends. We pride ourselves in the ability to produce systems that are very flexible. Our customers can use the systems for each of these applications successfully at high yield.
Matties: Do they have one system that meets all those needs or are they buying multiple systems?
Riechel: They have one system that supports all of these needs. Not only can customers use these systems for whatever their needs are now, but as they diversify their own product portfolio to their end customers, they're able to support that as well with the same system. Their capital investment is protected by the flexibility that our systems enable.
Williams: I think the thing we know is change is a constant. The end users are constantly making more complex, more powerful devices, and that's manifesting itself in the wide variety of applications that Patrick described. So the ability to have capability that has future proofing built-in is key because it’s difficult to know exactly what's coming with the next phone release, or the one after that. It's imperative that we're investing well ahead of that and putting capability in that they're going to use for two, four, five, seven years down the road.
Matties: You said, "We don't know what they're doing, but we're building something for seven years down the road." How do you do that if you don't know?
Williams: Well, what we do know is the devices are going to get more complex. The pitches are going to get smaller. All the materials are going to get smaller. All the features are going to get smaller. What we don't always know is how that will manifest itself in the consumer device itself. But we do know the trends and because we are the leader in the flex via drilling space, we've probably got a better view than anyone into the trajectory of where those applications are going and that's where we invest. We invest ahead of those trends.
Riechel: The laser drilling market space is extremely broad and continually expanding. Certainly, what John was saying is true. To add to that, we work hard to develop product and technology roadmaps that align very well with our customers' roadmaps. It's really critical to be aligned in that way so that we meet the real needs of the customers, not just now, but in the future. In terms of our laser drilling product portfolio, we're continually expanding it. There is a lot of room for growth for all of us, especially with the way that the market is going right now.
Matties: It seems like laser drill will be a necessary tool in every facility in the near future.
Williams: And in increasing volume.
Matties: What about the quick-turn shops in North America? I know we're sitting here in China where there's a large appetite for laser, but North America, in the smaller shops, the quick-turn shops, that's an expensive proposition for a market space that may not support that investment just yet. What do you see there?
Riechel: I can talk about this for the flex market. A lot of the characteristics that Chinese and other Asian flex manufacturers value in our tools are also valued by North American customers. In North America, a majority of the customers are trying to process many different applications with a high mix, generally low-volume business, but the high mix is really what differentiates our products there because, again, our systems are extremely flexible. Our customers can use the same tool for all of these applications and so we've found that time and again our customers continue to come back to us, and by word of mouth ESI comes to the front of the list of candidate companies.
Williams: I would add that what makes us somewhat special is the depth of applications expertise that we've developed over the many years that we've been in the laser drilling business. At the end of the day, beyond the system architecture, the automation, the handling, and all those things that make it factory ready, it comes down to the interaction of laser and material. If you have not just the expertise in the laser itself, but you've got the people who understand the laser−material interaction, you can get someone from problem to solution in the shortest possible time. Those quick-turn shops absolutely need that. They can't experiment until they find a solution. They need to get to solution really quickly. We can help them do that.
Matties: When you're giving advice to somebody about laser drilling, what's the most important consideration they should take?
Riechel: Think about the corporate strategy. Everything flows down from that. You start with the overall strategy and work your way down. The corporate strategy will influence how your organization is structured, what sorts of products you expect to process now and in the long term, even the type of process development that is undertaken. For process development, as an example, there are choices that can be made to prioritize throughput versus quality versus yield; the corporate strategy on the target customer and company value proposition can help make those priority decisions. I wrote a series of columns for PCB007 to help customers understand all these choices and how to best utilize their systems, from choosing a system, preparing their site for installation, and calculating and optimizing their cost of ownership, to deciding how best to develop processes and taking care of their machines once they're onsite. A lot of information is provided and discussed in that series of articles, but more generally it's very important to have a very well-aligned strategy with what happens even at the tactical level with the laser machines.
Williams: I think it’s about the economics of the decisions they're making, right? These are significant investments that these companies are making. In some cases, they're even building Greenfield facilities in order to serve their end customers. So there are, in many cases, tens or hundreds of millions of dollars being invested on their customer's part, to Patrick's point. It's the implementation of their strategy. When I think of major investments like that, I think about, "How do I remove as much risk from that investment as possible?" If I can remove risk by maybe going with something that is future-proof, something that's going to last me longer, a path that ramps me to volume output sooner or gets me a couple of percentage points of extra yield, those are all things that are going to deliver success back to my company on that significant investment.
In some cases, if you don't take that future view and that low-risk view, you can be penny-wise and pound foolish. You try to save a little money up front and it costs you much more over time.
Matties: What are some of the sticking points or considerations or obstacles that you come across from a fabricator when they're looking to make a decision on a piece of equipment like this?
Williams: One of the challenges that I've seen with laser drilling is it's a part of a workflow. In some cases, if you line up a series of laser tools and compare them to one another in kind of a runoff of drilling, that may not be indicative of the actual yield that the customer will get through their entire workflow. Again, this goes back to our expertise in the applications in the laser−material interaction. If you can drill higher quality vias that have a higher probability of being plated successfully and, subsequently, deliver yield and product down the line, that's the visibility that you must ensure for the customer. They need to think of total workflow and that risk mitigation that I mentioned.
If they're thinking specifically about comparing specifications, for example, and then just having a speed runoff on drilling, maybe that's not the ultimate solution. That evaluation may not reflect the true return on investment that they would be making, so you have to really take that full process view and then figure out, "How do I best set myself up for success?"
Matties: That goes right back to what you were saying, though. It's got to be part of a strategy from the top all the way down.
Williams: That's right.
Matties: Because let's face it, someone is not going to go invest a million bucks in a piece of equipment if it's not aligned with a strategy. They won't be in business very long. That’s obvious. You have to be integrating into the workflow. Do you find circumstances where people haven't thought this through?
Riechel: Certainly. This is where discussions and education processes are really important. It's very easy to develop processes that skew one way or another to throughput or quality. It's up to us to help the customers understand some of those tradeoffs and make sure that the decision is made with a full understanding of how those processes were developed on each of the tools that they're considering, and help the customer then understand how that impacts their later production workflow. Not all customers think that way, and there is still a lot of education necessary in the field. That's one of the reasons why I put together the series of articles; these are questions that come up all the time with customers. It takes time to really understand some of the concepts.
Williams: It's sometimes a trap for a customer to behave with a supplier as a customer−supplier relationship. Where we've had the most success is where it's more of a partnership. If they can come to us with a clear articulation of what success looks like, what they see as the biggest challenges, then we can help them select the right equipment because we have a broad range. We can even help them with the non-product stuff. We can help them with service. We can help them with applications. Ultimately, what we want is for them to ramp to volume quickly and make their end customer happy, so that in the next round of decision making, that customer comes back to them and they come back to us. That's where you've really got the symbiotic relationship throughout the supply chain. If it's simply, "I need these specs, and I need them at this price," then we may not get to that mutual success situation.
Matties: What sort of nuanced features would keep somebody from not buying your equipment or buying another? Because it's really all about the laser, right?
Riechel: Not necessarily. The laser defines part of the laser−material interaction, but for laser equipment, beam positioning is key, power control is key and then the actual laser beam quality is key. All of that together with the process parameters is really what makes up the ability to process at a given throughput, a given quality, a given yield. Knowing that, those are some of the biggest areas of technology that ESI has focused on in our long-term roadmaps and technology development. Beyond that, ESI is also committed to supporting other trends in the market such as Industry 4.0, enabling customers to understand the production status of equipment and minimizing operator error.
These are less tangible areas where laser equipment must interact with a factory in general, but they can have a big impact on overall yield, overall system uptime. They can really impact the effective cost-per-panel because while it's easy to say, "Cost-per-panel is the price of the system divided by throughput," in reality, there are all these other areas that really matter, like yield cost, operator cost, system uptime, service costs, and maintenance. Many different areas add up to the end cost to the user.
Similarly, there is ability to use a system, not just now, but in the future. So there is the investment protection aspect to it. If the customer needs to buy a new tool next year or the year after because they have a new application that the system cannot accommodate, that will also drive up overall cost.
Matties: Really what I'm hearing from you is that future protection and flexibility in the process is really the core value proposition.
Riechel: Productivity and yield as well; these are all areas that we're focusing on.
Williams: The flexibility and the future proofing is a key differentiator. To your question of, "what's a specific feature?" I find it interesting to compare a single head tool to a dual head tool. On paper, a dual head tool is going to have twice the throughput. If it is priced at less than 2X, say 1.5X, on paper it's going to be the highest cost of ownership out of the gate. But there are some nuances to that, right? If one head goes down, both heads are down. Twice your throughput is down. If you're not yielding out of both heads at the same high rate, you're not yielding the effect of two different single head tools. That is the kind of education that we do a lot, to make sure we're matching them with the absolute right solution for their demand.
Matties: In your sales process, it sounds like when someone says, "I'm ready to buy a laser drill," then the education process begins. It's not like you're knocking on the door and saying, "Hey, buy a laser drill." Because it's got to be part of a strategy, and then it goes back to what you were saying about workflow. Does it fit into your workflow properly? There's a whole education process there.
Matties: So you guys are really teachers.
Williams: We can even be teachers at that very early stage because we do a lot of advanced laser−material interaction studies. We can predict that if the architecture or the material structure changes in a particular direction, it may lend itself to a transition from a mechanical process, for example, to a laser process, or from a CO2 laser process to a UV laser process. In some cases, we can see that those transitions may come and we can be ready for them. In that case, we are educating. This particular type of laser drill may solve that problem and that, again, goes to the future proofing. If there is already that capability in play, and that demand comes your way, we can then say, "Problem solved," before you even know it's here.
Riechel: Similarly, in our work together with materials manufacturers, we can already preempt some of these discussions. There's education that can happen from multiple angles, like working with materials manufacturers who interact with the customers on one front. Similarly, we can do it on our front. It can also happen before we even have our sales team involved through activities such as eBooks and publishing to help customers educate themselves before that buying process begins.
Matties: It sounds like a challenging selling process that you're in. A lot of decisions for a fabricator to consider.
Williams: Absolutely. That's why we are the clear leader in flex PCB drilling. We are the incumbent in each of the top 10 flex manufacturers, so they are going to come to us first for that consultation. We have that benefit in this market.
Matties: Is there anything that we haven't talked about that you would like to share?
Williams: We—together with our customers—are collectively in this market in a period of unprecedented demand. We're particularly proud that we've been able to ramp up our manufacturing capacity very quickly to meet our customers' demands.
I don't believe that many of our customers saw this coming and we certainly collectively didn't have as much time to prepare for this ramp as we would have liked. We have our primary manufacturing facility in Singapore and we've ramped it very aggressively to make our customers successful. They have very demanding customers on their end who are asking them to provide products on time, in high-volume right now. One of our core competencies is our ability to manufacture these complex systems in high-volume and do it on our customers' demand schedule and with really high quality, because if it gets to their factory and it's not ready to process, then it doesn't do them any good. We’ve worked hard to meet our customers' demand in this particular time and we’ve certainly been successful.
Riechel: For Industry 4.0, I've been interacting a lot with many different customers and surveying the market to see what standards are out there to support all the companies throughout the equipment industry, and our own customers amongst those manufacturers, to ensure the most effective means of communicating and achieving the goals of Industry 4.0. These are things like getting system status updates, controlling systems remotely, improving yields, and understanding the causes for downtime; things that can really improve overall cost of ownership. There are actually two different standards that are being developed right now concurrently, which I see as a challenge to the market. If you have two standards, there is no standard.
I'm working together with TPCA as well as IPC. Both organizations are developing their own independent standards at this time. The IPC is developing the Connected Factory Exchange standard. The TPCA is developing the PCB/ECI standard. I'm trying to understand which of those two standards is really most likely to best support our customers, because there are obvious benefits and downsides to any way that you do things.
Matties: Any early determinations on your part, yet?
Riechel: Still to be determined. Each standard is approaching the same problem from a different angle. The TPCA group has some buy-in from the IC packaging industry—companies that are adopting standards from the semiconductor industry because there's so much overlap between IC packaging and semiconductor manufacturing. That standard is based on SEMI standards of, for instance, SEMI E5 and SEMI E30, whereas, the IPC group is approaching Industry 4.0 from the PCB assembly side. So for the IPC Connected Factory Exchange standard, the PCB assembly houses and the PCB assembly equipment manufacturers are approaching the same issues from that PCBA angle, with a lot of the targeted features and considerations impacted by that perspective. Flex and HDI are in the middle of those ICP and PCBA markets. This is why I'm still interacting with both organizations and discussing the issue with my own customers to understand questions such as: What challenges are they facing? Where do they think that their communications standards are going to take them, and which of these standards are really going to best serve their interest?
Matties: What's the trend in that research for the customers?
Riechel: For the customers? We're still on the very beginning phases of that. I first wanted to survey what each of these standards committees is doing, understand what their existing support base is, which companies are involved, and so on. Then I'm taking that information and funneling it into my discussions with customers.
Matties: In the end for you, is that simply a software function? So it's not going to impede the sale process of a piece of equipment today is it?
Riechel: Generally, no it’s not simply a software function; it's an additional differentiator. Certainly the key for selling equipment like ours is "Can you drill a hole at a given quality, at a given yield, at a given speed?" But as I said, Industry 4.0 supports some of these other cost aspects that one doesn't necessarily think about in a tangible way. Furthermore, it's necessary to have an interaction between the equipment and the factory’s IT system. Having standards makes that interaction much more seamless. The end goal is to have a plug and play solution. We're still a long way from that, but the standards are attempting to go there. Once that is achieved, the speed of innovation on enabling useful features is much faster because you no longer have to worry about things like what the transport protocol is, what the encoding protocol is, and what the content protocol is to determine what types of information are being communicated and how they should be formatted and communicated. Once we get past that, then we can focus on the real value adders.
Matties: You said you were focused on flex, specifically. Is there somebody in the organization that focuses on HDI, specifically?
Riechel: I am working very closely together with my colleague in HDI, Chris Ryder, and together we're coming up with the most appropriate mechanism of interacting with these organizations as well as developing a cohesive strategy for the industry. There should be very little difference between the needs of HDI and flex; both are interconnecting technologies, and in many cases, the same companies are doing both rigid and flex processing. So there's a lot of synergy there.
Matties: We're seeing HDI moving into the automotive space.
Riechel: As is flex.
Matties: A lot of aluminum-backed boards for the LED, and that sort of thing.
Williams: Automotive is one of those macro market drivers that is accelerating demand across the board. We think of consumer electronics as the primary driver, but we have to start thinking of the next generations of autonomous vehicles to be the power of 20 smartphones embedded throughout the system.
Matties: Something like 50% of the value of the automobiles would be in electronics.
Williams: That's right, and we're seeing that already. Not just in the flex and HDI space, but in our other laser areas as well. The topic of standards I think is a really interesting one. Maybe it's article-worthy at some point. I think it's a really important industry position, as Patrick said.
Matties: The sooner we start talking about it, the better the conversation will become in the industry. Well, thank you very much, gentlemen.
Riechel: Thanks, Barry.
Check out the links below for ESI columns:
Laser Pointers: Stepping Up to Laser Processing for Flex, Part 6 — Proper Care and Feeding of Your Equipment
Laser Pointers: Stepping Up to Laser Processing for Flex, Part 5—Process Development