As electronic components remain scarce, the pressure to get a design right the first time increases. OEMs — which always want to reduce time to market — are also keeping the long-term viability of their products in mind. If a key component can’t be sourced, production lines remain idle.
Case-in-point: The chip shortage has cost the automotive industry billions of dollars in downtime and lost sales. Component shortages are changing the way engineers design, according to a customer survey by electronics distributor Avnet Inc.
Component and services providers that get involved early in a customer’s design process can optimize manufacturing considerations such as efficiency, cost, sustainability and – increasingly — supply chain. Subcontractors want to work closely with OEMs, but that’s not always realistic if manufacturing is offshore. Proximity to designers is an advantage for electronics manufacturing services (EMS) providers that fine-tune product designs for highly regulated markets.
KMC Systems, for example, services the healthcare industry, developing products for liquid biopsy, animal sciences, bioprocessing, blood management, pharmaceuticals, biotech, cell & gene therapy, in-vitro diagnostics and next generation sequencing. Its Merrimack, NH, manufacturing facility is within an hour of Boston’s world-class hospitals and academic institutions and its suppliers within several hours’ drive.
“We made a deliberate decision to stay onshore and that’s stood well for us especially in the past couple of years with the Covid pandemic,” said Derek Kane, vice president and general manager for KMC. “When [customers] are designing something, we have found time and again that getting involved at an early stage has a longer-lasting impact on the product.”
KMC and parent Elbit Systems of America recently opened an innovation center in Cambridge, MA, consolidating expertise in hardware and software design, robotics, optics, fluidics, chemistry integration, motion and thermal control, risk management, supply chain management, performance testing and advanced manufacturing techniques. “What I feel really optimistic about,” said Kane, “as we expand in life sciences is engaging with new development projects.”
San Francisco-based Tempo Automation has developed a software-driven platform for automating and perfecting the design and assembly of PCBs, said Joy Weiss, president and CEO. The company – which is undergoing a transition – specializes in quick-turn, high-mix low-volume PCB prototyping. “Customers tend to be companies that are iterating a new product that has a long tail – things that go into space or an MRI machine – that are low volume,” Weiss said. “But a lot is spent on these PCBs before they are released as a new product.”
For example, chip companies want to test their new products on a board, along with ancillary circuits, for functionality and performance. Other customers test boards for quality control or for reference designs. “As part of our customers’ supply chain we think about sourcing for quick-turn products with an emphasis on timeliness and quality,” said Weiss. “Our goal is to get to market quickly with fewer mistakes.”
Tempo’s solution features digital process automation, data-driven intelligence and a connected smart factory network for an edge in quality, speed and agility. It leverages machine learning and an ever-expanding dataset to learn from every order, part, and process step.
Long-term sourcing is normally not a primary concern for prototypes. But sixty-four percent of respondents to Avnet’s survey said their companies are designing more based on the availability of components rather than preference.
In highly regulated industries, customers are more likely to balance rock-bottom prices for security of supply. “Low-cost sourcing is now where most of the pain points are,” said KMC’s Kane. “With [sourcing from] or offshoring to China you may get better rate variances but there comes and inflection point when you can’t take any more cost out.”
KMC focuses on innovating around the challenges of size, performance and accuracy of medical tests and equipment. It is tightening collaboration with its parent company, defense contractor Elbit Systems America, to leverage common technologies. “We can study technologies such as detection methods that could apply to detect new diseases of various viral states,” said Kane. “There’s a lot of adjacency with what our parent company does in terms of thermal cycling and electoral optics and imaging, etc.”
Tempo expects to go public in Q1 and will merge with special-purpose acquisition company ACE Convergence Acquisition Corp. (ACE). Upon closure, Tempo will simultaneously acquire PCB manufacturer Advanced Circuits and Whizz, a provider of electronic product design, development and manufacturing services. These transactions will leverage Tempo’s software platform and create a vertically integrated platform servicing the electronics prototyping and on-demand production industry in the U.S.
Prototypes typically rely on low-volume, high-mix component orders from catalog distributors. But most PCBs eventually are manufactured in volume.
“The good news is we need tens of something not millions, but ultimately [PCBs] are heading into production,” said Weiss. “It’s easier to source those kinds of quantities than to source on the broader scale. If customers have to do some redesigning due to availability of parts, we can do that in days rather than weeks. We can monitor the availability of components and collaborate with customers and advise them about shortages as we go through the design process. It’s really a matter of design versus the ability to build a board.”
The prototype- through on-demand production market is estimated at $290 billion domestically, according to Tempo. The segment is rapidly growing in the semiconductors, space, medical device, industrial/ecommerce, and aviation/defense industries.
Onshore business models got a short in the arm recently from the Biden administration’s review of strategic supply chains. While much of the attention in the electronics arena has focused on semiconductors, the administration has now officially recognized the need to rebuild the entire electronics manufacturing ecosystem, including printed circuit boards (PCBs), PCB assemblies (PCBAs), critical minerals, advanced packaging of multichip modules and substrates and skilled workers, according to electronics industry association IPC.
Recent IPC studies have urged Congress to combine its investments in semiconductor manufacturing with additional support for advanced packaging, PCBs, and related technologies. Without such action, even if the U.S. begins to produce more semiconductors, the chips will still need to be sent offshore to be packaged and assembled into finished products, leaving the U.S. vulnerable to supply chain shocks.
“While the U.S. has allowed its domestic electronics industries to atrophy, America’s competitors have invested heavily in theirs,” said Chris Mitchell, IPC vice president of global government relations. “These reports are another step in a long-term effort to rebuild this crucial industry in the United States.”