Issue link: https://iconnect007.uberflip.com/i/1116895
MAY 2019 I PCB007 MAGAZINE 89 Senese: The primary dynamic is that the base business—I always think of it as an iceberg un- derwater, and it is underwater in more ways than one—is a losing business proposition. The cost of materials that we use—such as res- in, glass, and copper—are lower than they've ever been. There's not a lot of room for any- body because they're either not making money or they're in single-digit income. That business proposition makes it very difficult for fabrica- tors in the middle because they have constant pressure from all of the largest OEMs to reduce the price for their boards. If you can't squeeze that rock anymore, you have to find a better way to make the devices. Our industry has always made devices to han- dle more information at the same price, essen- tially going faster. While less expensive devic- es like phones are made with materials more expensive than FR-4, they're less expensive be- cause they're getting so much more data. Johnson: That's an interesting perspective. Can we put numbers to that? Senese: When I started in 1979, a piece of 059 FR-4 material went for about $2 per square foot, and it had 105 Tg. It used all 7628 glass, which is very inexpensive, and standard cop- per, which was very inexpensive. Laminators that no longer exist—such as Norplex, GE, and Westinghouse—were able to make a 10–11% net income business at the time. If you could buy that similar material—which you can't— the price would be half that now. There are cer- tainly economies of scale; the busi- nesses are all bigger, but there isn't a lot of room for anybody to wiggle when the market slows down. That creates this pent-up demand from the supply base regarding what is the next thing that we're going to be able to sell that people need for per- formance and not price. Right now, everyone is saying that 5G networks and devices are some- thing that will drive a high volume. The calculations for how many de- vices are going to be needed to cov- er the normal network areas are hundreds of times more than anything that's ever been de- ployed for communication before. Those devic- es all have to be inexpensive, and that creates a "good enough" mentality. In other words, can I make the cheapest thing work? Well, probably not. Then, what is the next cheap- est thing that I can make work? This drives some of that desire for halogen-free materials because some halogen-free FR-4s in the past have been less expensive than standard, bro- minated FR-4s. And that image in the market makes people think that's the way to go, but it may or may not be, depending on the complex- ity of the board. In Panasonic's materials division, we have to balance these two things out. If we make a material that's extremely robust and it costs a little bit more because of the raw materials or the process we use to make it, we don't get paid for it. And either the product doesn't sell, which is the primary way that we don't get paid for it, or the product goes in at a certain cost point within a very short time. And when I say a short time, I mean less than a year, that product is only driven by price because most of the companies that develop these devices will have at least two sources; they'll do what any good company does to make money, and they will push the pricing. Panasonic doesn't intend to be the price lead- er in the business. On the other hand, if we in- vent a bunch of materials that nobody is going to buy because they're 10 times more expen- sive than the current product, that's not useful Koriyama Plant (West Factory), Fukushima, Japan.