PCB Packaging & the Future of Manufacturing

Today we're chatting with Jeff De Serrano, President of the American Division of PCB Technologies. We had a fascinating conversation about the changing nature of the PCB Manufacturing industry, focusing on aerospace, automation, AI, education, and much more. This is a wonderful episode for anyone interested in manufacturing and where the industry might be headed.

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Show Highlights:

• Intro
• Intro to Jeff & PCB Technologies
• PCB Technology's Broad Reach in Aerospace
• Faster Packaging Times
• Packaging Advantages at PCB Technologies
• 2D, 2 ½D, or 3D?
• You Need the Know-How, Not Just People
• Broad Capability Won't Happen Overnight
• Semiconductor Companies Packaging?
• Workforce Challenges
• Automation Pipedream?
• Getting Students into Manufacturing
• Manufacturing is Totally Different Now
• AI Has a Long Way to Go
• Growth Areas in Electronics?

Links and Resources:

• Check the recent related OnTrack Podcast episodes:

  • PCB Manufacturing Reshoring, Automation, and Sustainability with Alun Morgan

  • Plug and Play Industrial Automation? It's Only a Matter of Time

• Learn more about Altium 365®, Where the world designs electronics

• See how Octopart help you search for electronic parts. It is the most accurate and comprehensive electronic part data search engine right at your fingertips

• Connect with Jeff De Serrano on LinkedIn

• Visit PCB Technologies website

Transcript:

Zach Peterson:

You alluded to automation, and I was actually wondering, to what extent can some of these challenges be overcome with greater automation? You can have too much automation to where it becomes, I guess you could say, a liability or a burden and there are certain areas where you can target with the right amount of automation. So, I'm just wondering, can some of these workforce challenges be overcome to some extent with automation?

Jeff De Serano:

I do believe that you can ... Yeah. Well, in the packaging side, yes. But you still need, I would say 25, 30% automation can probably help it but the rest is not. You need people. You need humans.

Zach Peterson:

Hello, everyone, and welcome to the Altium OnTrack Podcast. I'm your host, Zach Peterson. Today we're talking with Jeff De Serano, president of North America division with PCB Technologies. PCB Technologies is a manufacturer and you all know that I love to talk to manufacturers to get a better grasp of what's going on with the manufacturing side of the industry. Jeff, thank you so much for joining us today.

Jeff De Serano:

Glad to be here.

Zach Peterson:

So you and I talked briefly at PCB East last year and it feels like a whirlwind since then. A lot's changed in the industry. And I know that some things have changed with PCB Technologies, which is one of the reasons that I wanted to get you on here to talk about it. But maybe before we get into some new developments with your company, if you could, just introduce yourself and then what PCB Technologies does, what end markets you serve, things like that.

Jeff De Serano:

Sure. My name's Jeff De Serano. Been in the industry for around 34 years. Like I said, I'm the president of PCB Technologies USA. We're a sister division of a company called PCB Technologies that's based in Israel. And we are a flex, rigid flex HDI company building circuit boards for many different market segments. Defense and aerospace, communications, satellite divisions, onboard, medical, basically medical applications for onboard or on human products as well. So we are very diversified in that part of the business.

Zach Peterson:

So obviously there's a lot of different manufacturers out there. It sounds like one of your competitive advantages is pretty broad expertise because you bring up things like HDI, satellite, medical. I imagine some of that stuff is also high reliability and takes some manufacturing expertise that maybe the quick turn guys or some of the overseas folks don't really have.

Jeff De Serano:

Very much so. Again, a lot of defense and aerospace. So basically every airplane that people in the United States or around the world fly on probably has one of our circuit boards in it because we've been building for Rockwell Collins and Collins Aerospace for probably 20 years, and their main customer is Boeing. 737, 787 Dreamliner, 777s. We built a lot of the circuit boards for the radio communication equipment inside the Boeing aircraft and also the high-performance landing gear communications and the landing gear to the cockpit. That's just kind of one area of expertise.

We think we have a distinct advantage because we have three different divisions. We have a circuit board division that started 44 years ago and we've been advancing technology as we've been going on for the last 10 years of really advanced technology. And then we have a CCA facility that's in the same campus, about a $70 million assembling facility. And then we launched a division called Impact. I think it's probably why we're talking. We launched that a year ago at IMS 2022, and it is an advanced packaging division all in the same location. So it's sitting right on top of our circuit board factory.

 

Zach Peterson:

Yeah. So that brings up the topic that I was really excited to talk to you about, which is packaging, like you said.

Jeff De Serano:

Sure.

Zach Peterson:

So advanced packaging, obviously motivated by the CHIPS Act and semiconductor shortages in general. But I want to know really what motivated a company like PCB Technologies to begin this investment in packaging production and in capabilities.

Jeff De Serano:

I am really proud of my CEO and our private investment firm that owns ... We're a public company in Israel, 150 million. But there's a private investment company PE firm by the name of Femi that owns around 48% of our stock. In 2018, they hired a new CEO. His name's Oved Shapira, and then they felt there was an opportunity in the advanced packaging area for faster cycle times. Okay? You go across the water and you deal with the big guys, and all these folks. Their lead times are 12 to 18 months for MPI and then another 24 months ramp production, and they do millions and millions. And so they saw a window. And then unbeknownst to them, COVID hit. So then the CHIPS act came in after COVID.

They had already invested the 19 or $20 million for all the capital equipment and the infrastructure and the building and the people and all that. And then so by the time COVID hit, it kind of put us to the back burner just a little bit, but they kept building. And now with the CHIPS Act, they're reshoring wafers. It's a little bit different than packaging. So now I think the defense industry is starting to realize, because you bring the wafer back, chips don't float. Everybody can hear that. That's kind of the new term out there in the industry with the PCBAA group and Travis Kelly and from Isola. Chips don't float. So now they're going to build the wafers here, but now they're packaging back across the water again. So they got to cut the wafer, they got to bump the wafer, they got to do that.

 

The equipment and stuff that the team put in, we do all that in one location now. So we've taken what takes five supply base for a customer like a Intel or a Qorvo or any of these guys that develop chips. They have five different supply chains they have to use to get their product to market to test, and we put that all in one spot. So it was a visionary from the team, the upper management team, on the packaging side. It's very unique. The lead times and cycle times that we're able to accomplish, either bill to spec or bill to print, is a year shorter than the other guys. Right? So we can take the wafer, they can build them here. We can take the wafer. We can bump the wafer, solder bump it. We can cut it. We can use the microelectronics assembly on it, which is different than my CCA facility. Okay? That's different. This is a very, very unique assembly operation. Wire bonding, so forth. Package it and go from there, right? The whole thing.

 

And all in one spot though. So we can do a three to six month window to production. Now, we're not going to be 5 million a month, 10 million a month components, but the defense and aerospace industry doesn't need that. They need a couple hundred thousand a year of very specialized products. So.

 

Zach Peterson:

So you said that someone like Intel, let's say. They might rely on five different supply chains. Could you just clarify real quick what those five different supply chains are?

Jeff De Serano:

Well, they've got to get a substrate board built, right? Then they've got to take the wafer and have it bumped or dyed. Right? Now, they might do some of this internally themselves. Some of the big guys do, but then they have to go to production. So it has to be caught over there. And after that, then you have to go to the assembly facility that's going to take the wafer and put the substrate on and then do the wire bonding and all the other little components that go on it. And then they go to the package house that's going to take the whole thing and put a lid on it is basically. They put an injection on it. Not an injection mold. It's a plastic material to make a lid.

Or we're doing SIPS, system in package, where we're taking multiple ones and stacking and putting them in a package. Now Intel, a big guy, might have a lot of this in-house for prototype runs and so forth. And the defense and aerospace, I know, has some of this capabilities in-house. But they limit it to very, very small quantities. Right? So that's the five market segments we're talking about. They've got to do packaging. They've got to have a substrate or an interposer built. We do that here at our facility.

 

Because we were a board shop. We built things in panels. We outfitted the substrate facility in the same format. It's just a smaller. And then we made sub-tiers that we can build it in the microelectronics area. Right? Again, the deal for us is, they can come to us with a print and we can build it all the way from the start to finish in the same location, and then we can also take a statement of work, SOW, and they say, "Hey, I have a package. It's this big. We need to make it this big and it needs to be this price point." And then we can help them design it and get it built in the same place. It's very unique.

 

Zach Peterson:

So is this only silicon and organic interposers with 2D or 2.5 D, or are you doing 3D stacking of dyes as well?

Jeff De Serano:

We are doing 3D as well. Yes. So we're able to do the copper pillars and then stack on top of each other. So we do two, two and a half, and three. Most people don't understand what that means when I talk about that. So I'm glad that you asked that question.

Zach Peterson:

I think a lot of industry groups are pretty clear on the role that packaging plays in the chip on-shoring movement, and they see it as a really critical part of the supply chain. Now, industry groups, and maybe some people in government may see it that way, but obviously, you have to ask, how well does this translate over to industries such that you can have a sustainable supply base? Hopefully one that's profitable and doesn't require subsidies. So to what extent do you see this playing out in North America, in Europe, or in other regions of the world that are outside of Southeast Asia?

Jeff De Serano:

Well, I think there's more talk going on in the DOD, in the Defense Department right now about putting some money out because they see bringing the wafers, again, the chips don't float. They got to send it back. So they're looking at putting money and investment into the packaging side as well. In the US. Even our company itself is looking to replicate what we have in Israel and put it here for the defense guys for some of the really black box stuff that they do not want going, even though we're an ally. We're an ITAR company and 90,100 in net cap and all the stuff that goes around with it, some of them don't want to send some of it. Okay?

So I think you're going to see some changes in the next maybe 18 to 24 months, 18 to 36 months. People are going to start ... They're going to go after the money first and try to do a startup. Right? I think at the end of the day, there'll be more of those companies on shore to support the TSMCs and the Intel and the guys that are doing the wafers here. The Texas Instruments and the Qorvo guys and so forth. I think you're going to see an influx of people trying to jump into the game.

But I have to tell you, it's not the easiest thing to do. If you can jump in the game and put $10 million down or 12 million and buy the equipment, you got to have the people, the know-how. This is a very, very advanced technology to say the least, right? Now, the substrate boards are still going to be built somewhere, and there's not a lot of companies in America that can do sub 25 micron lines in specs, which we're doing in Israel, but we've been doing it for three years now plus. And we're going to go more advanced, more advanced, more advanced, and it's a modified semi additive process.

 

Then you're going to go to semi. And it takes a big investment. So it's not just packaging. Right? So it's basically building a component for the customer. It's a SIP or an MCM modules. They're components. Right? You're building a very, very advanced technology component now.

 

Zach Peterson:

Yeah.

Jeff De Serano:

So we probably will have one relatively quickly in the US. Customers are asking us. We can duplicate the pod. We have the resources and the people to do the training and then start this division up. Just we're not announcing it yet. We're not ready. We're not there yet. We're close.

Zach Peterson:

Well, that's fair. But I guess the progression that I'm hearing from you more broadly that maybe we can expect here in the US or North America more broadly is driven by DOD first. So supporting the defense base because really where the critical need is.

Jeff De Serano:

Right.

Zach Peterson:

And then eventually branching out to support the Intel TSMC type of companies that are going to need this packaging capability locally in order to support their existing on-shoring efforts. Because those plants aren't going to come online overnight. They need some additional time.

Jeff De Serano:

Right.

Zach Peterson:

So I guess the broader commercial packaging capability also doesn't need to come online overnight.

Jeff De Serano:

I agree. And I think what they'll do is they'll end up using the US operations for more of an advanced, time critical production of the package. Again, when you go to commercial, it's very large volumes. And overseas, you have to pick A, B, C, D or E line. And you design your product to go to that line. I'm going to go to A line and I'm going to get 2 million a month. It's going to be this. I go to B line, it's this. C line, this. And certain design characteristics that you have to adhere to in their design rules.

With us, we're more flexible. So we can do all of them and you don't have to pick a line. But again, they're going to need capacity here to do faster cycle times than the guys across the water. And if the wafers are here already, it only makes sense that there's going to be probably three or four players that are going to put these up and going to support the fast return. Right? So it's whoever going to come. I don't know about the money. I'm still studying about the money from the DOD side. The CHIPS Act, 50 billion. And there's some more money allocated. I just haven't got to the bottom of it yet.

 

Zach Peterson:

Well, you bring up the money, right? The capital expenditure sounds sizable. So I think that means that you're really only going to see this kind of capability come from really the larger manufacturers. Probably they already have operations overseas to support that capital that's already needed. And if they're larger, they can probably get private capital to also support those investments. Is that fair?

Jeff De Serano:

It's a fair assessment. Right? I don't think the little guys ... I mean, to do what we're doing in Israel for just the microelectronics assembly side and the system and package business unit, it's not a huge, huge ... It's probably six to $12 million depending on what you're doing and where you are. But again, it's people. People. Number one. Besides the investment of the dollars, and you still have to have the substrates made or the interposer, whichever you'd like to call it to make the two and a half D and the 3D. So there's multiple parties around again that are involved. So I do think the bigger guys on the wafer level side will eventually probably get some of the money and put packaging places here.

That's what I think. I'm not a hundred percent, but I don't see many circuit board manufacturers doing it. I don't see the guys where I came from in the last 30 years, I don't see them investing that money into the mSAP, ASAP, small form factor buildup technology. Right? And then do the packaging. I don't see that happening. I think it's going to be more the semiconductor companies looking at getting in and getting some money to do it and putting them up. That's what I think.

 

Zach Peterson:

Well, I'd agree with you. I don't expect every mom and pop shop in the US to start looking at packaging capabilities necessarily just because of the capital level involved. But it's interesting that the semiconductor companies might also move into packaging. And I think it makes sense because it reduces some overhead.

Jeff De Serano:

Right. And it's time to market.

Zach Peterson:

Sure.

Jeff De Serano:

Think about the speed, right?

Zach Peterson:

Yeah.

Jeff De Serano:

And because they're going to build them here, they were doing it all over there because of the cost and that's where everything is. And so everything's over there. So if you're going to bring that here, why are we going to build it here and send it back there to get it done and then bring it back over here? So I think the CHIPS Acts are great. I'd like staying here in America, in American allies. I think it's important. But they kind of forgot about a certain part of the business, which I think they're now paying attention to. Everything I'm reading, they're starting to pay attention that you can't just bring the wafer here, right? You're going to have to do more to really make America self sufficient again.

Zach Peterson:

Yeah. And I would expect to see the same type of thing happen in Europe to an extent as well.

Jeff De Serano:

Yes, I have to agree. Mm-hmm. Yeah.

Zach Peterson:

So we've talked about a couple of challenges here, one of them being capital. But you've brought up twice so far, I think twice so far, the workforce and having people who are competent or who at least have the basic level of knowledge to the point where they can be trained up to then be competent operators and users of this technology. And there's probably also some design education that's needed as well. Could you maybe elaborate on some of the workforce challenges?

Jeff De Serano:

All the reading I do, I mean, you can look at TSMC. They announced just recently that they were supposed to be ready in 2024 and they're not going to be ready until 2025 now because they don't have the workforce. They don't have the people. I just read an article, I think it was on Monday. They don't have the know-how and the people with the know-how to get the plant running. So that's just on the wafer side, let alone thinking about the other side, which has not been here. How long has packaging been gone? Since the nineties it's been over there. So if they're having trouble with bunny suits and the clean room environment for automation, because its a lot of automation in the wafer side. I think what they're going to have the challenges to do when it takes people, the know-how to do this advanced packaging.

But I think that's a challenge a lot even in the circuit board industry that all my competitors are friends of mine. At the same time, we all have the challenge of the younger generation not getting involved. It's not a Google. We're not Google and we're not Apple and we're not these guys. You could sleep in pods and stuff, but we're also not GM where you're turning a screw, right? The equipment now costs a million bucks, $800,000, a million and a half.

 

So we're all kind of in the same boat. You would need mentoring programs. You need something going around the US where these kids in the summertime can come to work with us, right? And learn how to run and operate these things. So I think that, again, you can put a pod in all you want, but the proof's in the pudding when you don't have anybody that'll teach you how to run it and teach the next guy how to run it or how to do it. And I think it's going to be a big challenge. I think it's going to be a big challenge.

 

Zach Peterson:

You alluded to automation, and I was actually wondering, to what extent can some of these challenges be overcome with greater automation? Because we just recently talked to somebody at Marquette University and they're working in the Omron Innovation Lab. And this guy has brought up the point that automation can kind of be a pipe dream. He didn't exactly say it like that, but you can have too much automation to where it becomes, I guess you could say a liability or a burden. And there are certain areas where you can target it with the right amount of automation. So I'm just wondering, can some of these workforce challenges be overcome to some extent with automation?

Jeff De Serano:

Well, in the packaging side, yes, but you still need ... I would say 25, 30% automation can probably help it, but the rest is not. You need people. You need humans. And interaction and visual and so forth. So wire bonding, things of that nature is semi-automated right now. The person does a certain thing. The machines do the rest, but then the quality inspection is done on certain machines. That could probably, as the years go on, get automated. You're still going to need people. When I look at it, I think about this. I've been in the board of business a long time for circuit boards. And 10 years ago I said, "You know what? We're going to have the semiconductor facilities inside our shop eventually." Because where we were going then, it was four mill lines in space or something in HDI. And now look where we're at. We do. At least in our facility, we have partial wafer semiconductor stuff in our own printed circuit board shop.

But again, I don't know how we're going to do automation and get away from people. The advanced stuff that we're doing today, how do you stack and dye and so forth and do a SIP of a 3D model and have it all automated? Again, I read the article on TSMC. They were going gangbusters and they're automated probably around 80% in their processes I think to make the wafer. It could be even more than that. And they can't start their building up. They're going to have the infrastructure and all the stuff is there, but they're not going to be able to fire it up because they don't have the people. And it's very much automation. So I think automation is fantastic, but I don't think it's going to get to where it's 95 or 98% automated.

 

Zach Peterson:

Yeah. Yeah. My hope is that young people who like to solve complex technical problems, who probably would've been attracted to going to a Google or a Facebook or some other tech company in Silicon Valley-

Jeff De Serano:

Right.

Zach Peterson:

Will see some of the challenges in manufacturing and will say, "Well, hey. I want to do that."

Jeff De Serano:

Right. That's what I was talking about. We need to figure out a way to get them in in an internship in the facilities because to teach them, they're not a GM worker turning a screw. Nothing against those teams, but that's what the mentality, when you say manufacturing, they think, "Oh, I'm going to have a boring job." Listen, what we build today makes the world go round. Okay? And what you fly on every day, we put stuff in. What the missiles that you're shooting across the world and the guns and the weapons and all this stuff, we make that stuff. Right? So the younger generation needs to understand that.

And like you said, it's problem solving. That's not automated. Right? Somebody sees a problem, we give them a task, and they go try to figure out how can they solve that problem through microelectronics. Because everything is doing the miniaturization, so to speak. Right? The real estate's big. They want it a little bit smaller, but they want to double the function out of it. And how do they do that? They miniaturize. And that's where the substrates and the advanced packaging and the SIPs and the MCMs come into play. You take a board that's two by four and you're out of real estate and you make it a one by one and you double the throughput because you put a 3D component on that board. And all that board this big is now something this big. So we're in for a challenge just because the workforce, I think, big time.

 

Zach Peterson:

You brought up a really great point, and this is something that I think, when I was younger, kind of drove me away from manufacturing. When I was younger, I thought I wanted to go work at an Intel, be in the bunny suit, and I'm kind of glad I didn't.

Jeff De Serano:

Right.

Zach Peterson:

But when I was a kid, my parents both blue collar. My dad was cabinet maker, my grandpa was a cabinet maker. And they both said, "Don't work in a factory. Don't work in a cabinet shop. Go learn to do something with your brain."

Jeff De Serano:

Yeah. Yeah.

Zach Peterson:

And I did that and it was under the impression that manufacturing was always going to be like you described, some person on an assembly line turning screws by hand.

Jeff De Serano:

Right.

Zach Peterson:

Or attaching bolts to something or whatever.

Jeff De Serano:

Right.

Zach Peterson:

And I think over the past 20 years, it's really become totally different. And I would agree with you. Kids really need to see that it's not like that anymore. It really is problem solving and even computer programming. If that's what they want to do, they can do it in a manufacturing environment.

Jeff De Serano:

They're changing the world. I mean, seriously. The circuit board industry has never been a sexy industry. Okay? It's a lot of chemistry. But again, the stuff we build, we make sure that our factory workers understand what we're building and we show them all the time so they understand what they're doing on this part of interlay. When the final product's done, it's over here in this thing that's protecting the world. Or on an aircraft that they fly on when they go on vacation and things. And I think it's super important to somehow get the young generation in.

It is automating. Again, the industry that we're in, there is automation, but that doesn't take the worker out of a job. It teaches them to do something else. And then we cross train and you learn how to do this, this, and this. So you don't get bored of doing the same thing over and over, and you can move around within the organization and you can get more knowledge and growth and try to help solve problems. Right?

 

Zach Peterson:

Well, speaking of automation, one area, of course, that, of course you have to be living under a rock to not know about it. I know you know what I'm going to say, is AI. We've talked to some people recently who are looking at targeted applications of AI in factories, one of which was to handle things like traceability using vision systems, which I think makes sense and is targeted. Are you expecting or investing in the use of AI at all in production facilities? And do you see greater proliferation that produces positive ROI?

Jeff De Serano:

We are not investing in the AOI as of today because we're investing so much in capacity and technology. Do I think AI is going to be helpful in 10 years in our world, in my world where I'm in? Yes, I do. So it's something we're looking at. Right now, we're currently just investing the money where we think can grow the business and help our stock as a public company. So I do think AI is going to help. I think it has some challenges right now. I mean, it's really neat stuff, but I think for what we would use it for, it's still a little ways away for us.

Zach Peterson:

I would agree. I think anything really skill heavy and knowledge heavy, that's more niche. It's still has a long way to go before it really has broad applicability.

Jeff De Serano:

Right. Right. I agree. Yeah. But, hey. The driverless cars that they thought were going to be ready to roll pretty soon, I still think they're 20 years away, 15 to 20 years. The technology's getting better and better and better and better and better. But it has to be perfect. So that can't be better.

Zach Peterson:

Yeah, it can't be good enough.

Jeff De Serano:

You're talking about ... Yeah. No, it's got to be perfect. Right? It's not like it can be okay. It's got to be perfect. But it's going to go there. And when they take my driver's license away, by that time, it's not going to matter to me. I'm just going to get on an app and say, "Come pick me up anyway." It's not going to matter.

Zach Peterson:

Well, there you go. That's the right mentality.

Jeff De Serano:

Yeah.

Zach Peterson:

I think we're getting towards the end of our time, but you brought up some growth aspects in the industry, and obviously, you're investing in packaging because you see the growth prospects. But what other areas of the printed circuit board market or the electronics market more broadly do you see having large growth? Maybe areas like flex or rigid-flex?

Jeff De Serano:

Rigid-flex and flex. They're getting rid of cables in a lot of areas because it's just a direct connect and they're using rigid-flex because they can get rid of two products over here and connect them out here, and they make it one and fold it. So not a lot of folks in the United States are doing rigid-flex especially for aircraft and the defense market industry. It's a big growth. It's a big growth for us. It's about 60% of our business is rigid-flex.

Zach Peterson:

Oh, wow.

Jeff De Serano:

Now, with that said, we do think Impact, the substrate advanced packaging division ... Excuse me, will outgrow our circuit board thing in the next five years just because of what is happening in the world. But again, it's a serious growth market for us, and I think in the printed circuit board industry and stuff, it's flex and rigid-flex for sure.

Zach Peterson:

Yeah. You brought up aerospace. That's kind of typically where it's existed, and so it's almost like it's come full circle.

Jeff De Serano:

Yes. If you're really good and you can build some really challenging HDI large form factor rigid-flex, it puts you in a good spot. And that's another thing the PCB company, PCBT, focused on. We built very large form factor panels, and that was one of the really exciting things for me. Being in this business for so long, I didn't have that opportunity. I had to give them away all the time. There's only one company that could do it, so now there's more. And if you can do that style of business quicker and be nimble and have a decent production area for it, you can really do well. Yeah, it's good.

Zach Peterson:

Okay. Well, as all of this evolves, I'm sure we'll have you back on in the future. We'll invite you back on in the future to discuss this and see how it all falls out.

Jeff De Serano:

Right on. Yeah, glad to be here.

Zach Peterson:

Great. Well, thank you so much, Jeff, for talking to us. To everybody that's been listening or watching on YouTube, we've been talking with Jeff De Serano, president of North America Division for PCB Technologies. If you are watching on YouTube, make sure to hit the subscribe button. You'll be able to keep up with all of our tutorials and podcast episodes as they come out. And last but not least, don't stop learning, stay on track, and we'll see you next time. Thanks everybody.