Issue link: https://iconnect007.uberflip.com/i/1392944
JULY 2021 I PCB007 MAGAZINE 61 Johnson: As management in contract manufacturing, it's almost like you don't know what the market's going to be when you walk in every day. McMeen: It's a constantly changing landscape and all you can do is address each situation individually. Each de- sign is unique and has its own compo- nent set. Your buyers need effective re- lationships with their distributors to know what the component pressures are likely to be. It's all based on trust. e distributor does not want to fail you because they know you will re- member that once this crisis is over. In the end, it's not just about making as much money as you can in the short term; you've got to take a longer-term approach. If that relation- ship fails, and the oversupply goes into prac- tice, what will you do? As a customer, you will go to the supplier who was reliable and hon- est. Even with a shortage, if you felt you were treated fairly and received good market intelli- gence, you will continue to buy from them. Johnson: Are we going to be looking at market consolidation, or is this one of those points in history where the industry starts to innovate again? Is this going to be disruptive? McMeen: ere are a couple of different vari- ables and points to address here. One, the Unit- ed States is going to view this as a national and safety challenge to itself. Congress will put in- centives into place to bring ICs onshore so that we can produce our own integrated circuits and put pressure on the supporting industries, such as packaging. For every IC manufactur- er like these big IC fab facilities such as Intel, TSMC, and GLOBALFOUNDRIES, they will be supporting the integrated circuits that we need here in the United States, so that it pro- tects our core industries in electronics. With that will come a surge in needing sup- porting companies. For every integrated cir- cuit fab facility which costs billions of dollars, you're then going to have to take those ICs and test them and put them into packages. Now you're going to have these big packaging hous- es here. So, where we had gone global—most of them were in Asia—you're now going to see that being redistributed around the world so that we are not caught in the same dynam- ic. Even though the pandemic brought us to change, it is also a national security thing. e military uses a lot of ICs. National security will mean a redistribution of electronic component manufacturers to different parts of the world to mitigate risk from a DoD standpoint. e same thing is going to happen with our raw material supplies, because if one country controls too much of the raw material basis— such as steel, iron, copper, or lithium—you could give a certain part of the world too much of an advantage. We're going to see a change in our procurement, in our way of thinking about managing risk on a global basis by redistribut- ing processing plants and mining of the materi- al sets to try to find some more equilibrium on a global basis. Johnson: Mark, you just delivered an amazing overview of the situation. ank you. McMeen: You're welcome, Nolan. PCB007