I was all set this month to write about plating using additive manufacturing, but when someone pointed out just how subtractive the industry really is, it compelled a change in plans.
It came in the way of an email from Dr. Hayao Nakahara, the preeminent market researcher in the printed circuit industry. Naka, as he is known to friends, shared results of a months-long study of the North American PCB supply base.
This was no easy task. Naka started with the Fabfile database, long the favorite child of Harvey Miller. Harvey, who is about to hit 100 years old (!), gave Naka the keys to the car. In turn, Naka reached out to every company on that list, diligently revising and updating. The effort took more than three months.
When he was finished, he had a list of 177 merchant corporations in the U.S., Canada, and Mexico (yes, there are a few south of the U.S. border) that build bare printed circuit boards. Those 177 corporations represent 220 sites. The net revenue, based on his best estimates, is roughly $2.87 billion. Those companies broker another $400 million or so worth of PCBs to North American buyers. That puts the domestic fab market from the suppliers’ perspective at roughly $3.27 billion.
That’s on par with what North America produced and sold in 2018, and a few hundred million behind where it was in 2015 and 2016.
There have been some true success stories over the past decade. TTM has become one of the largest fabricators in the world, and that’s even after selling off most of its China operations—and the $530 million in revenue they reaped. Summit Interconnect has found a niche in the prototype and high-reliability sectors and grown both organically and through targeted acquisitions to become the second-largest U.S. fabricator. No. 3 APCT has done likewise.
But large-scale, industrywide organic growth has been hard to come by. Correcting for inflation, the domestic industry is trending sideways, not up.
That’s why I’m so bullish on the Printed Circuit Board Association of America. It has a vision for growing the industry, not just the member companies. It gets that the goal needs to be broad-based growth, not individual company preservation.
This picture isn’t complete, of course, without the buy side. The general thinking a few years ago was domestic bare board purchases by OEMs and EMS companies amounted to about $4 billion per annum (of which about $2 billion is for military and related buys). If correct, at $3.2 billion, the domestic supply base has an 80% market share. There’s not a lot of headroom to grow.
OEMs and EMS companies must grow their capacity in order to create a larger market for domestic suppliers.
As we’ve mentioned in these pages, new U.S. legislation, introduced in May, proposes to incentivize buyers of boards manufactured in the U.S.
As of this writing, H.R.7677 – Supporting American Printed Circuit Boards Act of 2022, the so-called Boards Act, has just five cosponsors. Even with the whole of Congress’s backing, however, it probably won’t move the needle on its own. The domestic buy side capacity just isn’t large enough.
So while the Chips Act has helped unleash billions of dollars in new semiconductor capacity investment in the U.S.—I’m not giving it full credit, as I believe crackdowns on exports of technology needed to design and build semiconductors are having their intended effect, too—it’s reasonable to think similar incentives for the Flexes, Jabils, Sanminas and so on down the line, not to mention the thousands of OEMs with internal purchasing or assembly operations, would help create the bigger market needed for those domestically produced boards.
And that market needs to be made onshore. After all, no one is talking about future export markets for North American-made bare boards. It is sell here, or sell nothing.
That’s the kind of switch from subtractive manufacturing—a shrinking domestic market—to additive manufacturing—a growing one—I can really get behind.
Mike Buetow is director of PCEA.