From Math to Marketing: Orbotech CMO’s Worldview of the Industry

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Matties: When you say designers, are you talking about system designers, PCB designers? Or the actual product designers?

Maayan: We define designers as the OEM designers—the actual module-based designers, as well as the full end-product designers. They are getting more and more involved. Here in Shenzhen, there are some large companies that are emerging as very competent players in the final product, both smart mobile devices as well as automotive electronics. We have large all-around players, worldwide players, in the U.S., in Korea, in Japan. And they are all getting more and more involved in the supply chain, who are our customers for the last 30 years.

Matties: When you look at the flex market, what sort of growth do you anticipate on a percentage basis?

Maayan: I'm not sure, but clearly there is a shift towards more and more flex in multiple modules. And I think we will see close to double-digit growth for the flex side, at least on the high-end side of it.

Matties: We haven't really talked about HDI at all. What do you see in the HDI market?

Maayan: The HDI market is very interesting, because it benefits from two different directions. On one hand, the shift from some mobile phone manufacturers to MSAP has generated, in a way, a shortage in HDI capacity. This is a good prospect for people who are focused on HDI for other smartphones or electronics. The other trend, which is clearly positive, is the adoption of HDI by the automotive world. We see more and more modules that will become HDI in the automotive world. In general, we'll start to see automotive roadmaps in many sectors, and they’ll follow the smart mobile device roadmaps which are very aggressive. Of course, automotive has unique environmental, safety and durability requirements, but it benefits from the experience and innovation that comes from smart mobile device manufacturing processes, and thus HDI translates into a valid, very strong proposition for that vertical.

Matties: It's not just automotive, it's really that whole transport industry, I think, that is embracing it, whether it's in aerospace or locomotives, or traffic.

Maayan: Indeed. We internally call it automotive, but you're totally right. It's the sophistication and the miniaturization that is present in many of the mobile-related industries, that is being implemented.

Matties: Typically, we think of technology drivers coming from, say, the military; do you see that? Or do you see more of the technology drive coming from the consumer space, or automotive?

Maayan: Historically it started with the military. And the military still has very high demands of some sophisticated electronics sub-segments. The sheer volume of smart mobile devices, coupled with the tremendous innovation of some of the strongest OEMs is generating a power, a trend, that is surpassing or adding to the military sophistication, and generating innovation in spaces that one could have thought are behind us. For example, MSAP, the modified semi-additive process, has been in this industry for 20 years, but it was never for the PCB mass market. The results of that trend can be seen in the tear-downs of the most recent generation of advanced smart phones. The subtle point here is that you can bring very sophisticated technology to market, but you need to bring it at the right price point, with the right yields and efficiencies, in the right structure, and with highly sophisticated manufacturing processes. And that's where Orbotech is playing a significant role and has played a substantial role in the last few years with the emergence of MSAP.

Matties: Now, circuit board fabricators are really your end-customer, but most are job shops. What advice would you give those in that space for preparing for the future?

Maayan: First, I would say that the PCB industry is comprised of different segments, and no two shops are the same. There should be specialization, and specialization is already one way of generating a solid business model. Western-based shops are already specializing in being very close to the design world, so allowing rapid prototyping, short-scale ramp-ups, allowing medical and military applications, where sophistication and safety is a much larger issue. And they are geographically closer and supply shorter runs to their clients. And of course, the mass producers of PCBs for smart mobile devices and the automotive world reside right here in Asia, and they are busy building and investing heavily in solid production lines to serve the high-volume manufacturers with HDI or MSAP or a substrate, for that matter.

Having very strong contacts with the design world, an ability to support and enable design requirements, and being a partner in driving their design roadmaps as much as possible, are all policies that I would embrace if I were in their shoes. There must be a very solid and logical way of investing in technology, with a robust understanding that investment in technology is essential. Because today's production lines cannot sustain more than one or two cycles of the changes in electronics. You have to make sure, when you're a high-volume manufacturer, that you have that loyalty with your customer to drive those one or two cycles. And do that early enough to address the next cycle.

Matties: That's the key, right? To be working two, three years ahead.

Maayan: No question.

Matties: And that window is getting tighter and tighter.

Maayan: Yes. But I would say, there is a limit. And the limit is our ability as end consumers to adopt new trends. The cycle of that adoption cannot be too fast, as well as the ability of the OEMs themselves to run those cycles without running out of steam. I think we are getting to the stage where those cycles are already being factored into the lifecycle of this industry. Obviously the first thing that we see is that automotive, for example, is starting to embrace faster and faster cycles. Once, automotive was a six-year cycle electronic industry. Now, it's a four-year cycle, and it's getting shorter and shorter.

Matties: That's what I mean. It's just compressing. Especially with developments at companies like Tesla or Nvidia. That's a game changer.

Maayan: I agree with you, the game-changing is in two facets. One is the technology and the fact that we are using more and more sophisticated electronics for more and more functions, replacing traditionally non-electronic or mechanical elements in the car, such as in the power track or safety elements. But there is also a change in the ecosystem, in the sense that the OEMs and the Tier 1s are becoming electronic players. And as such, they are driving different dynamics with Tier 2s and Tier 3s, where our customers are coming to play. It's no longer the industry we knew, and this is another element that any PCB house should have: the flexibility to entertain and address a new breed of customers. A customer that has a much closer understanding of its design needs, and in some cases, much less hands-on knowledge of the manufacturing side. This is an opportunity more than anything else. Because it gives our customers, the suppliers of this industry, the ability to educate and to be part of the innovation process.

Matties: It is interesting talking with you. You're very well-versed in this subject matter. Is there anything that we haven't talked about, that you feel like we should share with the industry?

Maayan: I'm not sure how the industry reflects on the continuum that has been generated across the PCB side to the advanced packaging world. A continuum that we identified, and undertook a major corporate M&A move three years ago, when we acquired a semiconductor supply company, a supplier of technologies to the advanced packaging world. This is because the industry is starting to look at the packaging of IC as part of an approach that puts the IC together with a substrate and a motherboard. As part of that, we are already considering importing technologies from traditional PCB technologies such as drilling, inkjet, lithography or even inspection technologies, into this continuum of needs that is emerging over and above the board itself. And this is something that answers industry needs. I think this is one of the most interesting dynamics that is happening. The fragmented historical steps are being integrated all together, coupled with the revolution in flex, and the new assembly technology. All that is becoming, one may say, one continuum of production processes that calls for more innovation and more flexibility from ourselves and from our customers.

Matties: What's the impact of that overall on the industry, do you think?

Maayan: I think that in the long term, the industry cannot prevail without strong innovation cycles. Of course, short-term, as a production industry, one would like to have a solid period to mature technologies. But the cycles are getting faster, and the needs are getting more and more demanding. That, in turn, generates innovation which generates opportunities. It means that you must be on your toes, you must invest more, but the pay-off is bigger. And as you may imagine, the industry is willing to pay the price. Because at the end of the day, the end-consumer is willing to pay the price.

With the cars we buy, maybe the price of the car is not changing, but the amount of electronics as part of the overall price is growing. The phones we buy are certainly more expensive, at least on the high end. We have seen this again and again. And clearly it goes well with additional verticals. There is enough demand there to generate the need for innovation and new investment. That's where we all as an industry play, as partners in the same ecosystem.

Matties: Thank you so much for spending time with us today. I appreciate that immensely. This has been wonderful.



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