Issue link: https://iconnect007.uberflip.com/i/1116895
30 PCB007 MAGAZINE I MAY 2019 to leverage those three materials, which were completely commodity materials at the time. All of us that were in the business thought about them as technical materials because we were doing a lot of research on how we made things better. The most basic two-part epoxy resin, which is the same kind you would buy in a glue to- day, was almost all of what Panasonic made. It cost about $1 per pound and was avail- able from 10 different resin suppliers in North America as well as 2–3 in Europe where it was being made. In some cases, Asia was just start- ing to get into the business, but it was such an easy product to make that the first people in the business there made their own. These products were a commodity and very cheap. They are still extremely high-quality adhesives and resins to use in a composite as we do. Fiberglass has also been around for quite a while. Most of the glass styles that we used in 1980 had been available for industrial use for other products for a while. That glass would sell for $1–2 per square meter, and that price hasn't changed much today. Further, electro- plated copper was only used in our business. The applications that we have today, including batteries, didn't exist in any volume. Copper price was dictated by the commodity price of copper and the conversion cost, which is elec- tricity and capital. Copper cost about 30 cents per square foot in 1980. When you added up those three to a 0.059 material, which was still a large part of the business and sold for around $2.50 per square foot with 70% gross margin. But that margin seems like a distant memory. Most people would argue with me about whether or not that was the real gross margin because our net profits were in low, double-digit numbers, but there was a lot of money being spent on many other things. All of these large compa- nies that were in the business at the time were quite profitable. Price negotiations were really a question of your position in the market and supply and demand; it didn't have as much to do with cost. Today, overall prices for standard FR-4 mate- rial haven't changed very much. In 40 years of inflation, no matter what you count as infla- tion, the cost of those materials has decreased by 30–40% in relative dollars. The margins, however, have decreased by at least an order of magnitude to the point where the net profit of making those FR-4 materials is in the low single digits unless you're making a couple of billion dollars' worth of that material in a very high volume environment. Many people would say that's not making money. Johnson: These margins are down in the gro- cery store range. Senese: Yes, if you're good. And if you're bad, you're going to go out of business; it's one of the drivers for laminators to look for materials that offer other value and try to change it up. That's driven us into specialization. The raw material suppliers for resin, glass, and copper have changed even more. Epoxy resin for our business in the United States is only available from one supplier, and it's not inexpensive. In China, Japan, and Taiwan, a lot of the volume of that epoxy resin is made in-house. For them to make a profit, they've had to vertically in- tegrate downward to survive; they can make their own resin as cheaply in that volume as anybody can sell it. The specialty resins that constitute the other 40% are still extremely expensive. Compared to that $1 per pound price, they're anywhere from 10–20 times more expensive. Copper foil is in the same price range that it was then, and Panasonic factory.