It’s no secret that development of electronics manufacturing capabilities in North America has stalled, largely thanks to outsourcing of production capacity and knowledge to overseas companies. Because the manufacturing capacity required to produce in-demand products could be accessed so cheaply over the past 20-30 years, it no longer made sense for OEMs to invest in their own capacity. The same can be said for electronics manufacturing services (EMS) providers as their customers chased the lowest production costs, leaving the North American cohort without the capital it needed to continue innovating.
Today, there is widespread recognition that portions of the electronics manufacturing supply chain should be reshored. However, reshoring efforts do not make much sense if innovations in fabrication capabilities, capacity and efficiency are not advanced. It’s about more than cost competitiveness, it’s about closing the loop on a supply chain problem that spans far beyond semiconductors.
Where capabilities and supply chain fall short
Meaningful reshoring of electronics manufacturing capacity can’t occur without focusing on two areas: production capabilities and the supporting supply chain. For North America and Europe, this represents multiple portions of the supply chain:
- Production of IC substrates, which is being pushed by a U.S. National Institute of Standads and Technology panel advising on implementation of CHIPS Act funding
- Development of a competent engineering and manufacturing workforce
- Development or onshoring of advanced automation technologies focusing on PCB and packaging production
- Greater outsourced semiconductor assembly and test (OSAT) capacity to meet increased demand for semiconductor packaging
- More advanced capabilities closer to end customers
- Workforce development focusing on process engineering
These areas align with the capability deficiencies outlined in a recent IPC report on the advanced packaging ecosystem.
Additive PCB fabrication processes
In this context, the term “additive” does not refer to 3D printing. Instead, it refers to fine-line copper deposition processes (SAP, m-SAP) used to fabricate ultra-HDI (UHDI) PCBs and package substrates for integrated circuits. The process can also be used for multichip module production on organic substrates, including on thinner FR4-grade PCB substrates.
Yet another type of UHDI PCB is the substrate-like PCB, where substrate processes are used to produce moderate to high layer count boards with very fine linewidths. These boards push right to the edge of subtractive etching and into modified additive (mSAP) fabrication on thin layers. They are essentially very large package substrates, and they could support chip-on-board production as well as fine-pitch components on a single component.
If onshoring is successful and more of the highest volume, high-compute devices are brought into production locally, then these fine-line processes will need to be developed locally. Currently, it is estimated that the U.S. and Europe are about 5-10 years behind the most advanced fabrication houses in China in terms of additive processing capabilities. Currently, some larger manufacturers are building out their additive processing capabilities for UHDI and IC substrate fabrication, but the local demand is lagging due to lack of investment.
Meaningful reshoring of electronics manufacturing capacity can’t occur without focusing on two areas: production capabilities and the supporting supply chain. Source: SweetBunFactory/Adobe Stock
Automation investments
A big factor driving production overseas is cost, which can be seen in both fabrication and assembly capabilities. The highest-throughput equipment has been developed and it exists, but the costs involved in procuring the equipment is beyond the reach of the smaller manufacturing firms. Without an infusion of private or public capital, most firms cannot access the capabilities that will be needed to compete in a global market.
For example, the need for automation to ensure competitiveness can be seen very clearly in PCB assembly costs. The average Chinese assembly firm is efficient enough to charge one-cent per placement, both for SMD and through-hole components. Due to the current use of older equipment in local production facilities, as well as differentials in labor and costs, U.S. and European assembly costs approximately five cents per placement. The differential is even more extreme for board and package fabrication.
Proponents of supply chain closure argue that investments in the most advanced production equipment and elimination of logistics costs back to Western markets will bring these and similar costs into parity. The side argument here for OEMs and global EMS providers is for these companies to produce closer to their end customers when capabilities allow. This in turn demands a globally diversified production base in or near established markets.
The rest of the supply chain
The areas pointed out above primarily target the most advanced circuit boards as well as packaging substrates. Advances in both areas are sorely needed once the current round of advanced semiconductor fabrication capabilities comes online. However, if the goal is to close the loop on the supply chain, fabrication capabilities only address a portion of the problem.
The remainder of the supply chain story centers around availability of components at high volume, as well as components that appear in high-density assemblies. Examples include high-density connectors, small-case passives, fine-pitch BGAs and many other components. On-shored production capacity is not meaningful, competitive, or timely if required components must be sourced and assembled overseas. A wholesale reshoring effort must be comprehensive and focus on the entire supply chain to the greatest extent.
