PCB manufacturers are in difficult times: A slump in orders, difficult working conditions, cheap Chinese products. The projects and problems of 14 companies in the industry are presented in two parts of the article - part 2 deals with PCB producers from neighboring EU countries.
The research revealed that numerous board producers are using the time to push ahead with digitalization and invest in new machines and technologies. It is not only in Germany that many PCB manufacturers are busy investing in their production facilities this year, but also in neighboring EU countries. Eurocircuits and Eltos will be presented as examples. Eurocircuits is of particular interest because the medium-sized Belgian service provider with production facilities in Germany has repeatedly made public statements not only about its own situation in the coronavirus year and the company's professional development, but also very critically and warningly pointed out the increasing dependence of European electronics manufacturers on China, including PCB manufacturers.
International Eurocircuits N. V.
The Belgian full-service provider with headquarters in Mechelen and three production sites in Germany (Kettenhausen and Bäsweiler) and Hungary has been in existence since 1991. It initially started with PCB production. Since 2017, it has been building up its own high-performance assembly service, with the result that the company and its 420 employees now operate in a similar way to Asian service providers. It is somewhat unusual for Europe. The company followed the motto on its website "Invest in Europe - invest in the future" again this year and continued its investment activities from 2019 during coronavirus(Fig. 11).
"The European electronics industry's dependence on the Chinese supply chain is dangerous"
The company's very open communication with customers on its website, especially from February 2020 onwards, is noteworthy. Eurocircuits was overloaded with the flood of incoming orders due to the supply disruptions from China and tried to meet customer requirements through extreme capacity utilization, while at the same time the management was dealing with the unsafe behavior of Chinese PCB companies. The press release from March 23, 2020 entitled "The European electronics industry's dependence on the Chinese supply chain is dangerous" is particularly worth reading. Among other things, it points out that Chinese suppliers are showing an increasing interest in the prototypes and small series market segment with fast delivery times that remains in Europe.
Fig. 11: Clear message from Eurocircuits on its main website In August, Managing Director and Head of Sales Dirk Stans said publicly: "For us, the lockdown was an opportunity to prove how efficient and flexible the European electronics industry is and how important domestic suppliers are to us." The current innovations are aimed at further developing digital processes and tools for hardware developers and PCB designers. In mid-September, Eurocircuits released its new 24/7 customer interface. Developers can now validate design and assembly data step by step around the clock online in the beta version free of charge, calculate prices and delivery dates precisely and order prototypes online. The new customer interface is a further development of the company's digital strategy. All measures serve the basic goal of 'first time right'. The intelligent PCB and PCBA Visualizer web tools are integrated into the customer interface. Their advantage: before ordering, the developer can see in a 3D image what his PCB and assembly will look like after production.
The interactive, fully automated web tool developed by Eurocircuits checks the design data for completeness, shows critical areas in the design and provides specific suggestions for correcting design errors. It cannot be overlooked that Eurocircuits is making great efforts to be attractive to German and other customers so that they do not increasingly migrate to China. Russia is a warning example of this migration. Despite enormous efforts by Russian PCB manufacturers, major Russian electronics manufacturers prefer to have their products manufactured in South East Asia, particularly in China. They thus contribute to the sad situation of domestic PCB and EMS companies.
Eltos S. P. A.
The Italian PCB manufacturer based in Arezzo was founded in 1991 and supplies to Europe, Asia and North America. It uses an impressive range of laminates with a corresponding range of suppliers and serves a broadly diversified group of end users. Boards based on high Tg laminates and UL approval are a key focus.
At the moment, the minimum L/S values for the outer layers of standard PCBs are 0.125/0.100 mm and 0.100/0.100 mm for inner layers. In the advanced area, the values are 0.100/0.075 mm and 0.075/0.075 mm respectively. In the prototype area, the values shrink to 0.075/0.075 and 0.050/0.050 mm respectively. The objectives of the current investments are derived from this, namely to advance further to the next smaller values in the standard and advanced range. To this end, a second Inspecta Combo HP X-ray drilling machine was recently installed.
Eltos' investments are therefore primarily aimed at the realization of printed circuit boards with ever smaller line/space parameters in the HDI sector (25 µm). To this end, the company is focusing on appropriate high-precision 5-spindle Schmoll drilling machines with a repeat accuracy of +/-25 µm and a high speed (max. 250 kU/min).
The LDI (Laser Direct Imaging) capacity was recently doubled. In fact, the new investments run through the entire production hall. Examples: Spray Solder Resist system, Micro Etch line for the preparation of inner layer surfaces, customized AOI from Orbotech for the inspection of extra long boards, ITC plugging machine for the resin filling of thru-hulls, Burkle press for Teflon lamination, Cut Sheet Laminator SMARTLAM 5200 from Dynachem for inner layer production. The biggest investment, however, are two LDI Orbotech machines, one extra-large and one fully automated machine with AE robots for loading/unloading. An X-Vision for X-ray inspection of multilayers and a Duo milling machine are also new(Fig. 12).
This huge expansion of the machine park from the perspective of a smaller company is astonishing, as Eltos has around 100 employees in the High-Mix Low-Volumes and QTA Express Services segments and produces PCBs that are used in a wide variety of areas. This so-called 'niche production' is similar to that of the majority of German board manufacturers. Product examples include printed circuit boards for respiratory equipment, telecommunications, automation, security, the automotive industry, aviation and the military. The company also manufactures for European research institutes, in particular CERN in Geneva and the Italian Institute for Nuclear Physics. It is fair to say that the company occupies an important position in terms of strategy and safety.
The latter also reaffirms the importance of Germany's own secure and economical electronics production, as called for by the Federal Minister of Education and Research, Anja Karliczek, at the launch event of the BMBF's flagship initiative 'Trustworthy Electronics' in June 2020. It is a complex and sensitive topic that will most likely continue to occupy the German PCB industry intensively in the coming period and where certain European or at least national fundamental positions must be taken.
How can the German or European PCB industry protect itself?
When talking about protection, there are at least three aspects to consider:
- Security against the erosion and loss of the European PCB industry due to cheap Chinese imports
- Security of physical supply chains, especially in the event of a crisis
- Security of the intellectual property of German and European electronics manufacturers
A press release issued by ICAPE France on September 16, 2020 addresses the first point. It announces that the French branch of the Chinese PCB manufacturer ICAPE has opened another sales office in Poland, ICAPE Polska sp. z o.o. Until now, ICAPE France has also been responsible for Poland and Germany. The Chinese company's turnover in Poland amounts to more than 11 million US dollars per year, making it its third largest market after the USA and France. In the last financial year, ICAP recorded a total turnover of 125 million US dollars with 420 employees, and the trend is growing. The company believes that the Polish market has great potential. ICAPE Polska will focus mainly on acquiring new customers, with an initial emphasis on the Polish market. Over time, the area of activity will be expanded, for example to the neighboring countries to the south. However, German PCB manufacturers are also active there, so it is to be expected that the sales market for PCBs will gradually change structurally in the coming years - possibly due to lower board prices in favor of the Chinese.
"Germany is a country of innovation and wants to remain so."
However, there are also German PCB companies that already have very close personnel ties with Chinese companies. For example, the Mannheim-based PCB manufacturer EPC ELREHA Leiterplattentechnik GmbH joined forces with Bleam Group Limited from China in 2019 and has boards manufactured there. EPC ELREHA has a Chinese managing director, Zhongjian Wie.
This brings Eurocircuits' previously expressed concerns that the European PCB industry is being increasingly undermined by Chinese manufacturers back into play: Now, however, not only by the European trading or production companies that have been active for several years and order PCBs in China, but also increasingly by the Chinese' own local sales offices in Europe. ICAPE is just one example of several.
Fig. 13: Schweizer's new PCB factory in China If we consider the ongoing activities of the USA and Japan, for example, to reduce the dependency of their electronics industries on China (keywords: returning production to the home country or relocating production to other countries, increasing product and supply security), we come to all three of the points mentioned above. The activities of the USA and Japan are aimed at finding solutions to all three of the points mentioned above. They had already begun to do so before the coronavirus pandemic, but the latter has given them further confirmation and acceleration. Last but not least, the reduction in the production of critical product groups in these countries will also secure or create new jobs.
It is therefore not surprising that the German government has now also gradually jumped on the bandwagon of national security and stable, secure supply chains that is in full swing elsewhere. The Federal Ministry of Education and Research (BMBF) has launched the flagship initiative 'Trustworthy Electronics', not least to support Germany's own economic electronics production. At the launch event in June 2020, Anja Karliczek, Federal Minister of Education and Researchsaid the following: "Germany is a country of innovation and wants to remain so. To achieve this, it is important that we hold our own against international competition in key technologies and are technologically sovereign. This applies in particular to electronics, which are taking on more and more safety-critical functions." Of course, this also includes the PCB industry as a crucial link in electronics production. Printed circuit boards contain the essential intellectual property of their creators. The flagship initiative ultimately includes all three points mentioned above.
The USA is already one step ahead on these issues and passed the National Defense Authorization Act (NDAA) in the US Senate in 2020. The aim of this is to ensure that security-relevant electronics are increasingly produced in the USA itself over the next ten years or, as an exception, possibly in countries that are trustworthy to the USA. If you consider everything that is already security-relevant in the modern digitalized world or is in the process of becoming so, the product range is likely to be very large. This is reinforced by the fact that many electronic products can be used for both military and civilian purposes.
The US industry association IPC, which has very active lobbyists in the White House, led the US electronics industry in the installation of NDAA. It did crucial groundwork for the implementation of the National Defense Authorization Act with its multiple facets. The development of basic standards that deal with the selection of trustworthy partner companies, security in the supply chain and the establishment of trustworthy supply chains is a growing field of activity for the association. Examples:
- IPC-1791A: Trusted Electronic Designer, Fabricator and Assembler Requirements (January 2020)
- IPC 1782A: Standard for Manufacturing and Supply Chain Traceability of Electronic Products (being updated)
- IPC-1792: Standard for Cybersecurity Management in the Manufacturing Industry Supply Chain (Working Draft, i.e. in progress)
What do German industry associations offer?
The question can be asked as to which similar documents German industry associations such as the ZVEI (or even a European umbrella organization) can effectively support companies in the DACH region in the problem areas mentioned. It would also be interesting to find out what conclusions the ZVEI, for example, draws from the "Trustworthy Electronics" flagship initiative and what recommendations it can make to companies.
If one recalls, for example, the press release issued by Schweizer Electronic AG on May 26, 2020 regarding the commissioning of its new PCB plant in Jiangsu with a capacity five times greater than at the German site in Schramberg, the question immediately arises as to the extent to which the goals of the BMBF's guideline can be met. Schweizer also wants to supply the German electronics industry from China with high-quality printed circuit boards at competitive prices, e.g. the automotive industry.
Is it not to be expected that companies such as Eurocircuits, which deliberately only produce in Europe, will now have to cope with cheaper production offers from German board manufacturers such as Schweizer, which manufacture in China and supply the boards assembled or unassembled to the European or German market, in addition to the ruinous Chinese offers? The tendency to automate or digitalize production in the German PCB industry as far as possible as a countermeasure to the cheap Chinese offerings (and possibly also to those of Schweizer), which can be seen from the company examples presented here, has its limits for various reasons, especially for the smaller medium-sized board producers.
The danger that the remainder of the German PCB and EMS sector will gradually 'go down the drain' in the medium term cannot be denied. This is where the authorities would ultimately have to introduce regulatory mechanisms, if necessary by adjusting import duties to protect domestic PCB companies. How else are the demands of the flagship initiative to be met on important core issues? Through voluntary action by certain circles in the German electronics industry?
At a time when the digitalization of companies is advancing rapidly worldwide, why shouldn't it be just as easy to order PCBs directly from a Chinese board store in China using modern digital, possibly even AI-supported tools as it is from European or German companies, such as Eurocircuits?
This adds another aspect that the BMBF's flagship initiative is unspokenly concerned with: Because 'Trustworthy Electronics' is also primarily about security, a simple truth must not be forgotten: With modern apps, the electrical circuits and thus the IP (Intellectual Property) of the device and system manufacturers can be easily read from the PCB production data and even more so from the assembly data. The fact that all the necessary manufacturing data is 'fed' directly to the Chinese service providers means that the gates are wide open to industrial espionage and subsequent undesirable influence. One thing must not be forgotten: Not least due to the trade disputes with the USA, the Chinese government has significantly increased its efforts to catch up with advanced international standards in many areas of technology as soon as possible.
No matter how you look at it: Production of safety-relevant electronics (this includes not only critical industrial equipment, but also autonomous driving vehicles) in one's own country or within the EU is still safer than if the data is given to faraway countries such as China, regardless of whether it ends up there with Chinese or German production companies. This topic should be the subject of intensive discussions in the near future.
