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Sean Mirshafiei, chief sales and marketing officer for Isola, discusses the company’s perspective on material market trends and how they are adapting product development processes to respond to new customer needs.
Nolan Johnson: Sean, can you tell us about what Isola does?
Sean Mirshafiei: Isola is a global laminate supplier for the PCB industry. It’s a conglomerate made up from multiple laminate suppliers, such as Isola, AlliedSignal, and even AlliedSignal’s predecessors. As a global player, we are manufacturing in North America, Europe, and Asia, and we’ve been servicing those markets for years. In North America, we have a presence on both the West and East Coasts. In Europe, we’re stationed out of Germany, and we have four facilities in Asia, including two in Taiwan and two in Mainland China. Our predominant product focus is high-Tg FR-4s and high-speed digital materials as well as RF microwave laminates. We service certain niches within the market. Our revenue is realized primarily in Asia with fair representation in Europe and North America.
Johnson: What do you see as the current market dynamics globally, and how is Isola responding to those?
Mirshafiei: Market dynamics are a mixed bag. In North America, you still have strong growth driven by the aerospace and defense market as well as continued investments in higher-end telecommunications and automotive safety, such as radar systems. There’s also telecommunications equipment for next-generation 5G applications, and strong defense spending which is bolstering demand broadly across our North American PCB customers.
When you look at Europe, it’s a little bit of a different story. The European market is very much tied to the automotive electronics industry as well as industrial applications. We have seen softness there in both markets. Some of our customers have had to take time off, and there have been some weakness between Q1 and Q2; we’ve had to respond accordingly. We think that two effects are happening. Vehicle production has slowed, but automotive electronic content has continued to increase, particularly with safety systems.
In Asia, we see a negative impact in our business due to a certain degree of market slowdown compared to 2017 and 2018. The tariffs have contributed to some of the slowdown, but there have been large changes in automotive demand as well. Additionally, we have seen softness in certain market segments, which impacts the entire supply chain and increased competition. Some OEMs, for example, are recognizing this scenario and are looking to cost savings since they have excess capacity available.
Thus, we’ve had to respond. We’re seeing more price pressure and more sporadic and irregular order patterns from customers, which creates a fairly complex market dynamic with growth in the U.S., softness in Europe, and a higher degree of competition in Asia.
Johnson: What are the dynamics in technologies and what are the features of the materials that you’re being asked to deliver based on the dynamics?
Mirshafiei: Our development strategy relies on assessing the technology shifts and understanding the underlying technical challenges to determine whether we are best positioned to address those challenges. Since these technology shifts span multiple segments, solving the technical issue for one segment will benefit another segment.
One scenario is that there’s a push for increased safety systems throughout entire model offerings, not just as high-end offerings. But with increased content making its way through automotive companies’ model line-ups, there’s a huge push to drive cost down, and existing RF/MW materials are often too expensive to integrate into mainstream vehicles. So, there’s a need to investigate other options.
It’s great because when these technical problems show up, and there’s motivation, automotive Tier 1s will spend the R&D dollars to find alternatives to incorporate safety systems into vehicles. Those technical problems that come as a result of these changes, creating opportunities for PCB manufacturers as well as laminate suppliers.
Another scenario, which also ties back into automotive, involves higher-temperature applications as well as electrification. The higher-temperature applications are interesting. The feedback we’ve seen is that there’s increased push from the automotive Tier 1s to put the PCB closer to the point of operation instead of using as much cabling, etc. Maybe that’s due to the intention of reducing weight plus a myriad of other reasons. That leads to increased attention on the operating temperature of these PCBs, which creates new problems and opportunities for PCB manufacturers as well as materials suppliers to address these underlying technical challenges.
Despite the fluctuations in the general market demand today, what’s exciting to see is there’s continued investment in addressing technology. We can look forward to the deployment of 5G technologies as well as more advanced automotive electronics, including safety and high-temperature applications and greater electrification to continue to demand innovation in our industry.
Johnson: So there is a definite push into needing some new materials. What’s on the roadmap for product development to make the next sweet spot for Isola?
Mirshafiei: We’ve done our best to narrow our focus on those two end markets: telecommunications and automotive electronics. For telecommunications, we have focused on solutions for backhaul and wireless applications. More recently, our focus has been to develop next-generation, ultra low-loss materials that are suitable for 400-G applications as well as offering alternatives to RF/MW materials for 5G antennas. For automotive, we have had a long history of offering high thermal reliability materials and leading through the lead-free assembly transition. More recently, our product development focus in automotive electronics has narrowed to automotive safety with products positioned for radar and high-temperature, high-power, and high-current applications that are being considered for automotive electrification.
One noticeable change in our industry is that the traditional high-speed digital applications have continued to evolve and require high-performance materials, which are now encroaching on the performance of more exotic RF/MW materials. This convergence will allow the industry to benefit from increased flexibility in material choices and flexibility in design.
To read the full article, which appeared in the May 2019 issue of PCB007 Magazine, click here.