A Conversation with Gaby Waisman, Orbotech, Ltd.
During the recent HKPCA and IPC Show, held in Shenzhen, China, I sat down with Gabby Waisman, President, Orbotech Pacific. We discussed the exciting electronics market in Asia, the market for Laser Direct Imaging (LDI), AOI and AOR. Gaby gives his futurecast for the market in 2015 and beyond.
007: Gaby, thanks for taking time to talk with us.
GW: Thank you very much for having me.
007: My pleasure. How's business been for Orbotech?
GW: Business has been good. We see a good year ahead in the Asia Pacific market in general with specific strengths in China and Taiwan. I would say it’s not as strong of business as we expected in Korea or Southeast Asia but overall a good year for the PCB business in general.
007: Is Orbotech manufacturing anything in China?
GW: We are currently not manufacturing in China, although we do have some R&D here.
007: So LDI is still a hot topic?
GW: It is but actually I believe that we have a suite of products and that’s probably what is giving us a competitive edge with the ability to offer a one-stop shop for customers that are looking for digital solutions. It’s the AOIs, the repair tools, the digital printing inkjets, the LDIs, and we're offering new software packages to our customers this year. We are able to cover many of the market segments and I would say this is also contributing to our ability to become more resilient to fluctuations in demand from different segments. Our ability now is to cover anything from multilayer boards, obviously QDA, multilayer board HDI, to IC substrates and beyond. This is very important. Even within each product line we have diverse variations—for example our AOI, the Discovery, which is serving the three micron market and below compared to our newer products which offer solutions of up to five microns. This is again enabling us a breadth that allows us to sustain both the market variations as well as obviously cater to the customers’ demands and requirements.
007: Orbotech has been in business for how many years now?
GW: 33 years, since 1981 or 1982.
007: So Orbotech must have the largest installation of AOIs than any other supplier by far I would think.
GW: Yes, both in AOIs and LDIs we enjoy the lion's share of the market. First of all I'd like to say we are very proud of our ability to have such a relationship and partnership with our customers. Our ability to succeed is really dependent not only on product performance but also the service side. I think I would definitely like to emphasize it's our priority to provide service all over China, in the southern part as well as the north and the east side, and definitely throughout the Asia Pacific area in general. Our resolve is to really be able to meet the customers wherever they are and provide a local service for the customers there. For us, this is really the backdrop of our strategy and the way we provide solutions not only on the product aspect but also on the service side—because eventually this is capital equipment that is being used for decades. So our only ability to verify that we can succeed and have this kind of translation into our market share is the ability to provide service wherever our customers are.
007: In China now we're seeing there's a big demand for automation, how do you fit into that scheme?
GW: That's an excellent question. Basically our machines are supporting automation and we've identified automation as a thing that's definitely going to happen. The increase in the wages and the cost of labor that is happening in China today and over the last few years, and probably in the immediate future, calls for higher productivity—that's essentially automation. Our products are catering to that both in terms of inline automation like side-by-side or roll-to-roll, and those trends are definitely something that we support with our machines.
007: Now one of the things that I thought was really ahead of its time was the AOR. How's that in the marketplace? Is it widely accepted or is it just almost a novel machine?
GW: I would say that we've seen the tipping point in which it became a mass market and widely adopted product about a year ago. I think that it was at that point the industry moved to a situation where two main trends defined the success of this product, which is now phenomenal. One was the need to increase the yield below 40-50 microns, in which it's almost impossible to repair manually. The second is the flex. Once the machine was able to provide a 10 micron solution and repair flex, those two trends basically made a success of this machine to become widely adopted in the market. Currently it's really a phenomenal success.
007: It took quite a while to find its tipping point it seemed.
GW: I think we worked on our LDIs for about 10 years before it actually started to sell and become a widely adopted machine. That’s one of the biggest challenges of being an innovator in our industry. You really need a lot of patience and breadth to continually invest in a product that you don't really know in advance whether it will succeed or not and whether there will be a demand for it. The AOR has been there for quite some time, and this is due to the changing generations of technology and the demands from our customers which result in the fact that you have a drop in yield. Let’s say that you have a production, everything is good your yield is okay, and then your customers all the sudden demand something better. Your yield is bound to drop. Then gradually you improve your processes until it stabilizes and grows again. Well what happened during this period of time? This machine is basically ensuring that you continue to provide higher yield and solutions not only in day-to-day operations but also to cover those areas in which you have to increase the yield very fast, like in order to provide the commitment that you have to your customers and your processes basically don't support it. So many of our customers realize that it's not just that the industry is moving to let's say below 40 microns, which is becoming impossible for manual repair, but also that they must somehow overcome this and very quickly increase yield. Today I can tell you that we have customers that bought dozens of those machines as a set, AOI and AOR, working together in conjunction and providing this low yield improvement as well as providing a higher productivity in times that you really need it, and it can be very fast.
007: We're seeing the auto industry become a real driving factor in their demands with fabricators and it probably fits into exactly what you're talking about. They came in and all of a sudden everything changed.
GW: Exactly, the automotive industry is seeing tremendous changes with all those collision prevention radars and sophisticated electronics that are basically driving the consumers with whatever other sensors are on there. It’s forcing our customers to require parts which they haven't seen on their radar in many years.
007: Your focus is here in China, and how long have you been here?
GW: A year and a half.
007: What's your impression so far?
GW: You know I came in prepared to see something different. You compare China to the rest of the world and are aware of the fact that it's different, but I really didn’t expect this level of maturity, business-wise, with the professionalism and dynamic decision-making processes that to me are very impressive. Customers are very focused on the vision and know exactly where they want to be in a few years and what needs to be done in order to get there, how to best serve their customers and what they need them to change in order to fulfill this vision of theirs. They are very dynamic, very to the point and it's impressive.
007: And really in the last five years there's been this accelerated maturity in all aspects: financially, socially, and the rise in the middle class has changed the landscape incredibly.
GW: Absolutely, China is really incredible. You go out and explore Shenzhen, and I've traveled here over the last 10-12 years and you cannot even recognize the city. I think this movement and progress is characterizing our industry as well. Just look at the smartphone landscape—I definitely can't compare it to 10 years ago with Nokias, etc., but I also cannot even compare it to five years ago either! We’ve seen Apple and Samsung dominating the market and now others are gaining a lot of momentum such as the eco system, which is quickly changing. Obviously we need to follow that landscape and verify that we can also understand where our industry is going. As I mentioned before, the R&D cycle is quite long, and that means both time and money consuming. We invest a lot in R&D and would like to verify that this answers a real need. We need to have a very deep understanding of where this industry is going and basically use our R&D in order to provide solutions that answer needs and requirements that could either be coming from our customers or our understanding of where the industry is heading. We constantly drive our teams, both in corporate as well as in the field, to verify that they're on top of what they see as part of the evolution and requirements of where the industry will go to.
007: Printed electronics is an obvious future step for the industry, how do you see Orbotech fitting into that?
GW: It's definitely something that we've looked into very deeply. It's an amazing market whenever it does actually happen, but I think we have some time.
007: We have time but I think that period is accelerating.
GW: Absolutely, I think first we will see wearable devices—this is a trend that's already happening and I think will continue gaining momentum.
007: Right, the proof of concept is working right now.
GW: Exactly, we see the drive in wearables and that should lead to printed electronics, because the type of technology that will be able to serve that market is very different than what we have today. We're working very hard to define the core technologies that will need to exist in order for us to implement them within products that will eventually lead to solutions in the marketplace.
007: You've been president here in Asia for a year and a half, have you met the goals that you set coming in and achieved what you thought you would achieve in that time?
GW: Wow, that's a tough one (Laughs). I would say the answer is yes. I think that we have been very aggressive in the goals that we have been setting for ourselves, but overall I believe that we did achieve them. We still have a lot of work to do however. It’s a constantly changing environment and organization, a very dynamic one, but there's one thing that I'm really proud of and that is our team. We have been successful driving a very unique culture, one that is able to bring excellence and drive customer satisfaction. For me, customer satisfaction is probably the most important thing. This market is all about the ability to provide consistent and sustainable customer satisfaction and it is the type of market that we operate in. The number one important thing for me has been to achieve this satisfaction level and I think our team has been able to do that in the last year and half I've been there. My predecessors have done a tremendous job in order to build upon the foundations of such an organization and I obviously have the challenge to continue and serve the future as well, but we really do have a good team that I'm very proud of.
007: How many people do you have here in Asia?
GW: Overall in Asia today we have over 700 people. Most of it is service, although we have it split up between operations, R&D teams, etc.
007: Are all of your sales direct?
GW: Yes, most of the sales worldwide are direct. We feel it's very important because it really allows us to feel the vibe of the market. We want an unbiased relationship with customers in order to better understand where we are as an organization, as well as where they're headed, and I believe the only way to do it is to provide a service directly but also maintain the relationship. That's how we are geared and how we're built. But to answer your question, most of this organization is customer support.
I have to share with you that I'm an electronics engineer, which is my background. I always tell our R&D team in Germany that has developed this new machine (DI) that I'm really jealous. I could probably very honestly never have achieved the level of professionalism and skillset that they have. As proud as I am about my engineering capabilities I'm not even close. The fact that they have been able to develop not only a very sophisticated light source but also the ability to attach the optic system that can maintain that depth-of-focus for such a multi-wavelength light source is really a phenomenal achievement. The level of R&D that we have that was able to make such a machine happen is honestly beyond me (Laughs).
007: When did you launch the new equipment?
GW: We launched it at the TPCA show in October in Taiwan. We had a fantastic event which I believe had more than 50% of the global PCB suppliers participating. It’s been exciting and we've had quite a few sales.
007: How many have you placed now?
GW: I would say a couple dozen. Not all of them have been installed of course; we've only been selling them and installing them as we go since we just launched them quite recently. The feedback we've received from customers already using it has been truly amazing. I know I'm not objective, but I believe it's a real revolution. We finally have a machine that lets us not only significantly reduce the cost to print by 40% but also become a real alternative to standard, traditional exposure. Most of the market today is still exposure, not the LDIs and such. Today if you buy an exposure machine you're probably making a mistake, because this new machine is very cost-effective and can also provide the old advantages of an LDI with an improvement even towards the current LDIs that we have—it is 18 microns vs. 25 microns, better registration, and obviously all the scaling that allows for very sophisticated capabilities as well as a higher yield. On top of that you get half the fullness, which is better than exposure, using many resists. So you have the flexibility of using different resists which is contributing obviously to cost performance, and have all the advantages of a DI. I think that this is the real breakthrough that we’re talking about. It’s the first time in which we finally have a solution at hand which is able to target this kind of a market, and this is a different market than what we've been working with so far.
007: What do you see for the China in 2015?
GW: I don't see the growth in 2015 being higher than in 2014. If you measure the growth I see this as a slower growth than we're used to seeing, but so far it is still growing and is still the fastest growing market in the world.
007: The number of cars that I see on the road today in China compared to just five years ago is unbelievable.
GW: It's the cars, the rapid growth of the 4G base stations, products, etc. The entire electronics industry in China is gaining momentum, but the domestic sector is obviously growing very fast. But we're quite optimistic, I think that we obviously target capacity expansion, which is one side of the market, but we also cater to the technology changes and the fact that we can provide solutions for the changes in technology. I believe that we're not going to have a slowdown in the cycle of different new and exciting technologies that are going to drive our business but also the business of our customers. As you may know about five months ago we also purchased SPTS, a very exciting company in the UK providing solutions for advanced packaging. So our ability to have solutions in the microelectronics area has just expanded tremendously. SPTS is providing different kinds of solutions to advanced packaging, and not the ones we have been providing so far so it is completely complementary. We definitely see good potential in the synergy of technologies and the ability to offer additional technologies that we have in-house with the capabilities of SPTS. It’s a very exciting time for us and we're very bullish about the future as well.
007: Does all that feedback from your equipment come back to you guys so that you can see the trends in yields, etc.?
GW: Our capabilities basically provide the factory manager of the plant with a very detailed analysis of his production floor. We are basically aggregating all the raw data from the machines so we can analyze it and provide business intelligence for the general manager. This is done on a plant level and it is actually a very powerful tool that we provide as part of our service package. We can provide quality improvement tools by aggregating the data from say AOIs, LDIs, and other machinery that we have and they can definitely improve their processes and we've seen it happen firsthand in many places.
007: The way that your equipment is integrated into the factories from the front line all the way to the AOIs, I can imagine you have probably one of the most unique snapshots of what's going on in our industry than anyone else out there. Gaby, thanks again for your time.
For a related video from RealTime with...HKPCA & IPC Show 2014 click here.
About Orbotech Ltd.
Orbotech Ltd.(NASDAQ/GSM:ORBK) has been at the cutting edge of the electronics industry supply chain, as an innovator of enabling technologies used in the manufacture of the world’s most sophisticated consumer and industrial products, for over 30 years. The Company is a leading provider of yield-enhancing and production solutions, primarily for manufacturers of printed circuit boards, flat panel displays and other electronic components. Today, virtually every electronic device is produced usingOrbotechtechnology. The Company also applies its core expertise and resources in other advanced technology areas, including character recognition for check and forms processing and solar photovoltaic manufacturing. Headquartered in Israel and operating from multiple locations internationally, Orbotech’s highly talented and inter-disciplinary professionals design, manufacture, sell and service the Company’s end-to-end portfolio of solutions for the benefit of customers the world over. For more information please visit the Company’s corporate website at www.orbotech.com