Issue link: https://iconnect007.uberflip.com/i/1501483
54 PCB007 MAGAZINE I JUNE 2023 PCB fabrication plants in the U.S. started clos- ing. OEMs began offshoring manufacturing to reduce operating costs. Today, U.S. PCB man- ufacturing is valued at $3 billion (3% of the global share) while board shops have dwindled to less than 200. What happened in the past three decades? How did the United States lose its manufactur- ing prowess? What are the impending ramifi- cations for R&D and innovation? To answer these questions, consider that in the beginning of PCB manufacturing in Amer- ica, OEMs owned their fabrication facilities. However, by the mid-1990s, OEMs were being pushed to maximize profit mar- gins and restructure com- pany finances. e most promising fiscal gain came from offshore manufac- turing, where labor costs were orders of magni- tude cheaper. " Th e r e w e r e s o m e c o m p a n i e s t h a t d i d not want to do this," says Brian Sinclair, tech- nical marketing analyst at AGC Multi Material America. "Higher tier technology com- panies like HP, IBM, and Motor- ola spent decades becoming powerhouses by investing in cutting edge manufacturing tech- nologies, processes, and methods. A signifi- cant portion of their money was spent on R&D to keep these processes state-of-the-art." And rightfully so. Technological improve- ment oen led to major changes in the manu- facturing process. When through-hole design was being phased out in favor of SMD, the man- ufacturing process was changed accordingly: Soldering pins were now replaced with ther- mal adhesives that bound SMDs to the PCB surface. When manufacturing is offshored, advances in production become severed from R&D. As a result, long-term innovation stag- nates as state-of-the-art manufacturing pro- cesses are no longer developed on home soil. "Unfortunately, the fiscal gains attained from outsourcing were tremendous," Sinclair con- tinues. "At this point in time, western OEMs were achieving record-setting financial results thanks to the low wages, the endless supply of workforce, lack of environmental regulations, and the duty-free taxation that came from off- shoring to places like China." What led to China's shi to manufacturing dominance? Former Chinese president Deng Xiaoping ordered a series of economic reforms in the late 1970s that opened the doors of a free market to China for the first time. is reform also created des- ignated zones dedicated solely to manufacturing. Today, several of those zones have evolved into entire cities devoted to manufacturing, sustained by decades of cultivating pro duc t ion k now-how and expertise. Shenzhen, for example, is a zone- turned-city that produces 90% of the world's elec- tronics. Unsurprisingly, from the manufacturing advancements made over the last four decades (as well as the fact that most raw materials are imported domes- tically), China dominates global PCB produc- tion, currently controlling 30% of the market share ($37 billion). With the steady perme- ation of AI into consumer electronics and mod- ern society, the demand for PCBs with higher complexity, finer pitches, and new materials will be higher than ever before. is will inev- itably call for more advanced equipment, pro- duction lines, and manufacturing processes. e message is clear: Investment in advanced manufacturing is a necessity for long-term growth of the domestic PCB industry. Where does that leave us now? Is funding domestic manufacturing the key to reclaim- Technological improvement often led to major changes in the manufacturing process.