Reading time ( words)
Opening statement: Plated copper vias will replace reflowed solder paste to form electronic component interconnects.
How Oxford-style debates work (borrowed from The Economist, an international business periodical based in the U.K.):
The format was made famous by the 186-year-old Oxford Union and has been practiced by heads of state, prominent intellectuals and galvanizing figures from across the cultural spectrum. It revolves around an assertion that is defended on one side (the "proposer") and assailed on another (the "opposition") in a contest hosted and overseen by a moderator.
Those attending an Oxford-style debate participate in two ways: By voting to determine the debate's winner and by addressing comments to the moderator. The same holds here. As a reader, you are encouraged to vote. As long as the debate is open, you may change your vote as many times as you change your mind. And you are encouraged to air your own views by sending comments to the moderator
Opening Statements and Representatives
Defending the motion is Joseph Fjelstad, founder of Verdant Electronics, recognized authority in the field of electronic interconnections.
Against the motion is Dr. Hayao Nakahara, recognized expert in the PCB industry and President of NT Information.
Moderator is Harvey Miller, I-Connect007 contributor, pot-stirrer, economist (B.S. University of Michigan, 1948).
Moderator's Opening Remarks
Electronic solder has served the electronics hardware manufacturing industry, in many forms, for nearly 100 years--since the birth of the industry. The form that is the focus of this debate is solder paste, composed primarily of a conductive metallic alloy stenciled and reflowed on PCB lands to make electrical connection of components to circuits, mechanically joining the component terminal to the PCB pad at the same time. Solder paste began its march to dominance 40 years ago, growing alongside the previous wave soldering, through-hole technology (THT) on one- and two-sided PCBs. Increasing density requirements of integrated circuits (ICs) led to the growth of Surface Mount Technology (SMT), increasingly on multi-layer PCBs with increasing numbers of layers and increasing complexity and cost.
The Motion calls for ultimate replacement of most solder joints by electroplated copper, but that statement is deceptively simple. SMT solder joints are reflowed in a plane, but electroplated copper joints would require embedded components whose leads or terminals would be accessed by vias that are subsequently plated. That would represent a shift from two to three dimensions for electronic PCB component interconnections. The new manufacturing paradigm would also completely replace today's electronic manufacturing plant and supply chains. That is what the debate is really about.
Our debaters will discuss the risks and potential rewards of such a game-changing manufacturing shift. A discussion of the economic stakes will provide the setting.
In 2010, over 10 trillion solder joints used over $1 billion (est.) worth of solder paste:
- IC unit estimate for 2010: 160+billion x 50 average lead count using Electronic Trend Publication. Figures = Discrete semi: 500 billion x 2 = 1 trillion; Passive est: 500 billion x 2= 1 trillion. Total: 10 trillion+ solder joints.
- Tin production over 370 thousand tones x $27,000/tonne (Feb 2011 price) = $1+ billion. According to trade sources, electronic solder uses over half of tin supply. According to IPC's Solder Products Value Council, solder paste price sensitivity to Ag cost is approximately equal to that of tin. (Source: Global Impact of the Accelerating Cost Increase of Metals on the Assembly Electronics Industry.) "A kilogram of SAC 305 solder paste contains approximately 0.85 troy ounces of silver. At 14.30 per troy ounce, this represents $12.22 in silver cost per kilogram of solder paste, before including any alloying, powder production costs, etc. This is contrasted to an estimated silver cost of $6.374 per kg of SAC 305 solder paste in 2005."
- The price of tin has doubled in the past three years.
Result: The cost of solder paste is a large and unpredictable burden, but one billion dollars is not a show-stopper in the $1.2 trillion electronics industry. The best is yet to come.
The ultimate implementation of embedded component technology is Verdant Electronics' Occam Process. It separates the component substrate from the interconnect substrate. All the component lead interconnects are thus copper plated vias in 3-D. Below are the manufacturing material and labor cost savings potentially achieved by Occam, in both PCB fabrication and assembly.
The estimates of material and labor cost savings derivable from Occam plus embedded components are mostly derived from analyzing how that $1.2 trillion value of all electronic hardware, "at the dock" is comprised. It begins with semiconductors, mainly ICs.
In 2010, the Semiconductor Industry Association (SIA) reported shipments of merchant semiconductors over $300 billion. That didn't include internal captive shipments like those of IBM, so it provides a conservative base. Typically, according to iSuppli and others, ICs represent over 25% of electronic hardware manufacturing revenue. That is how we derive $1.2 trillion for electronics hardware--conservative.
Dr. Nakahara estimates global PCB fabrication value in 2010 at $62 billion. That represents approximately 5% of manufacturing revenue, a very generally accepted bare PCB contribution to total manufacturing cost. Check. Occam plus embedded would drastically reduce that cost by separating component from interconnect substrates and fully utilizing 3-D laser drilled vias for interconnects. Some of the potential cost and performance benefits follow, first at the fabrication level:
- PCB laminate cost would be cut drastically.
- Laminate cost represents more than 12% of PCB $62 billion--over $7 billion. By separating component and interconnect substrates, component placement density can be greatly increased, reducing real estate requirement. Furthermore, components would be placed on anodized aluminum instead of resin impregnated and cured glass fabric. There goes most of that $7 billion lam cost!
- Interconnect substrate PCB multilayer layer count would be greatly reduced by full use of 3-D to access component leads, instead of 2-D traces on the PCB surface.
- Labor cost for processing bare PCBs are about 25%, about $15 billion. That cost might be cut in half!
Total electronic manufacturing cost saving potential: Basis 2010 at PCB fabrication level--from adoption of embedded technology plus Occam is $14 billion or more.
Now, on to the consideration of electronic assembly economics. I'll use Dr. Ron Lasky's cost models for that analysis. He provides the best.
Dr. Ron Lasky has served at IBM, Cookson and, currently, Indium Corporation, and has studied and definitively modeled SMT electronic assembly costs from many points of view. In a recent blog he stated, "From another assembly cost perspective, a rule of thumb is that it costs between $0.05 and $0.10 per component to assemble and test an electronic device. It is hard to imagine that the iPad has only 200 total components (including passives!), that a $9 assembly cost would require. Hence, I think the assembly cost would be more than $25. If so, this suggests a total cost of about $275 for the $499 iPad, still leaving a quite healthy gross margin of 45%" Read more of Dr. Lasky's blog here.
The cost question for Embedded-Occam savings is, "How much of that 5 to 10 cents per component is due to the solder reflow process including amortization of stenciling and reflow equipment? Dr. Lasky, and others, provided the answer in Real-time Cost Estimates Measure ROI in the September 1999 issue of SMT Magazine. Below are tabulated the cost element percentages for sample assembly, a modem card, in decreasing order:
- Components: 72.2%
- PCB: 14.4%
- Labor: 11.8%
- Machine costs (amortized over five years): 0.8%
- Consumables: 0.5%
- Rework: 0.3%
- Floor space, utilities: 0.1%.
To refine the cost elements, Fjelstad's table from his prize-winning paper at the SMT Pan-Pacific Conference, identifies the many labor-intensive steps in today's electronic assembly. More than half of the steps in the table are related to SMT lead-free solder stenciling and reflow. The potential for saving in labor and capital, using Dr. Lasky's labor and capital cost figure, exceeds 5 cents per component. Rework would be practically eliminated. Floor space and utilities would be greatly reduced.
1,160 billion components x $0.05 = $58 billion potential electronic industry assembly savings from Embedded + Occam.
Let the debate begin!
Watch for the debate in next week's SMT Week Newsletter