A New Source for Laser Drills
When I recently visited the West Coast offices of Nano System Inc. I caught up with Sam Sekine, formerly of Hitachi. Nano System is a new company focused on producing and selling laser drill systems to the PCB industry. In this interview, Mr. Sekine discusses his staff, the company’s technology, and Nano System’s strategy for the future.
Barry Matties: Sam, start by telling us a little bit about the team at Nano System Inc.
Sam Sekine: All the people currently working for Nano System used to work for Hitachi. As a result, our staff has a lot of experience with the circuit board industry—they are in R&D, design, and sales and marketing—so we field a very strong team based on these experienced people.
Matties: Is Nano System primarily focused on laser drilling equipment?
Sekine: Basically, but it’s not necessarily just laser drilling, it’s laser processing of other types of materials. We have our R&D department back in New Hampshire and these are the guys developing the laser equipment. Our office here in Milpitas is more sales and marketing, as well as R&D and application development.
In the past, our focus has always been on the circuit board. Circuit board manufacturers are still the main potential customer base, but we do have some applications in semiconductor and consumables, so those are new areas for us. Our core business is providing state-of-the-art laser equipment for the PCB and other industries.
Matties: Did Nano System acquire the Hitachi brand?
Sekine: No, it has nothing to do with Hitachi. I established Nano System as its own company. We are a totally separate company from Hitachi.
Matties: As far as you coming back into the marketplace, how is that process going? I've watched other companies struggle to gain traction, like Interdyne, for example. I went to their facility and met Mr. Kosmowski and saw his flying wing design. They had several nice-looking pieces of equipment built, but they ran out of the horsepower needed to make it. How is this process going for you? You're coming up against some strong competitors out there.
Sekine: I see the big challenge. I do know Mr. Kosmowski; he’s a very nice man and a leader in the industry. When we first started, of course, we had no machines, no demo machines, no customers, no nothing. That's a big challenge! That was last year.
Luckily, the people who believed in us in the past said, "Okay, if you say you can make the machines, I will believe you." We presented drawings, specifications, and our team, and we got the first laser machine order last year, which we are delivering next week. We really appreciate the commitment from our customers. They used to be our Hitachi customers.
Those are the people believing in us, and they haven’t even seen the machine—just drawings on paper. It's not like they’re low-cost machines either; it's an expensive machine.
Matties: Do you have any that are currently on order from a circuit board fabricator?
Sekine: Yes, we were fortunate to receive orders already. One company ordered our own laser machine and another PCB fabricator already placed an order for a mechanical drilling machine that is not our brand, but made by Tongtai, a Taiwanese company. We represent Tongtai as the sole distributor in the United States and Canada. Both companies said that, because we are handling and can support Hitachi machines, they also felt comfortable buying machines from us. The Tongtai machine will be customized by Nano System staff after arriving in the U.S., to meet specific customer application.
We have also sold a couple of Tongtai machines to Asian customers. It is kind of like having a relationship with a partner. We already have shipped those two machines, one in Chengdu and one in Shenzhen. We have recently been working with a big company on a large project for Tongtai. I cannot share much yet, but we’re working with 100–200 machines. Because we started as a laser equipment manufacturer, beginning with design and then manufacturing supporting those applications, that is our main business. However, with these Tongtai machines it is as a distributor.
Matties: So they are building their equipment, and it's their brand, but you are distributing it. Is their equipment laser as well?
Sekine: Their equipment is mechanical drills and routers, but ours is laser.
Matties: How will you handle sales in Asia for your brand?
Sekine: At this moment, we are just working with one U.S. customer. However, because of our relationship with Tongtai, when we get to that level and volume we will have a lot of support. Our partner also has a huge facility in Asia and many locations that they can support. Eventually, when we need to make large volumes we are planning to make the major portion of important parts here in the U.S. Then they can just make the commonly available base parts in Asia and we can integrate those two together. That is our plan.
Matties: You don’t have any orders for that yet?
Sekine: Actually, we received an order from Nova Drilling as well as a few other requests from PCB customers and customers in other industries. Everybody feels very comfortable with our capabilities to support them or develop customized equipment to meet their specific process needs.
Matties: Nova Drilling is right here in Santa Clara.
Sekine: I’ve been talking with Nova Drilling because I'm the one that sold the UV, CO2 and mechanical drills to the PCB industry in the U.S., and they said, "Well, if you can make a UV/CO2 combo, then we’ll want to buy your machine." I said, "I haven’t even made one machine yet." But they know the dimensions and which laser head will work well. They are the experts regarding the optics. We are expecting to ship in maybe three months.
Matties: Where are you in value proposition? I’m guessing your prices are all equal, but performance and speed are probably the big issues?
Sekine: Exactly: speed and quality. At the beginning, a lot of people had problems with quality—the hole shape, the diameter, or the positioning accuracy, with the biggest problem being the hole shape. Can they make a really good shape in order to make good plating? Some of them can, but for many it's difficult. So in order to make quality holes they’re dependent not only on the laser head itself, but also on optics, utilizing those lenses or mirrors. All these are important to make better holes, which is our expertise. Once we can show what kind of a hole we can make, I think that will have a big impact on the industry.
Matties: It is the credibility factor, and the longevity that is your big hurdle though, isn't it?
Sekine: I think so.
Matties: And that’s because you're new, and long-term service is the question. We know Excellon, ESI and others have been around for years. How do people find confidence in buying your products?
Sekine: From my time at Hitachi, we have had a long relationship with the industry and have supported them from the beginning. I sold the first mechanical drills to Zycon in 1985.
Matties: And they have a lot of them.
Sekine: We sold more than 800 machines in the U.S. From that time on, we have been supporting our customers. They see us as people they can trust. Of course they trust Hitachi, but prior to trusting Hitachi they trusted us—our people. We also have a lot of customers already asking us, "Can you just take care of the service for Hitachi machines?" We do that as well.
We have a service engineer who worked for Hitachi for more than 20 years. Those companies are joining us because we can support them. A lot of people are asking us to do that. Why is that? Because they believe we can do it, and also we have been giving them good support. I don't see many problems once we can deliver good quality machines. With our support, our customers will stay with us. They know we don't just turn around and say goodbye.
Matties: Where are the machine parts being manufactured for the U.S.?
Sekine: Right now it is all done in New Hampshire.
Matties: Is the laser your technology?
Sekine: We don't make the laser head itself. We have many laser companies supporting us. They're willing to let us use their laser as a demo. We don't just say, "We only use a specific laser head manufacturer." We use the laser that will best fit the customer's requirement. All the laser companies know we're very small and that we're just a start-up. However, we have a lot of inquiries from customers to give them application support.
Matties: How many people do you have currently working in your company?
Sekine: About 10.
Matties: When you look at your company, where do you see it in maybe five years?
Sekine: In about five years, we need to have somewhere around 50-100 people. We need to have it, but I'm not planning to make all the machines here in the U.S. The biggest thing is we just need to make it, and then later outsource to the partner back into Asia to make the base. They have a big capacity to do that.
Matties: Is Asia already in this industry?
Sekine: They are in different industries, like consumables. However, they are the machine tool manufacturers supporting the consumable area, and that makes them very successful.
The biggest question I get is, "Okay, Sam, that's good, you started up the company, how long is it going to last? How much money do you have?" That's very important. Our partner supporting us has been really good. They aren’t involved in anything with the daily business; that's my responsibility. They don't touch me, so I can do whatever I see fit. They support whatever we need, and we have been very happy working with them. In the meantime, we’ve had at least two companies working along with us. Once we get these big orders we will be okay for two or three years, but we need to have more people so we can make those machines. Quantity-wise, of course, these companies also are asking me, "Are you sure you can support these numbers?" Yes, we can support them by working with the partner facility in Asia and integrating them with what we make in New Hampshire.
Matties: Your partners must have some line in the sand, though. They have to say, "We have to hit some performance measurements, and if we don't do this, then we have to re-evaluate our partnership."
Sekine: Yes, the big orders we are working toward are big companies that have tried to utilize the laser process. They have been using so-called die cutting and now they want to use laser cutting. They are asking us to come up with the best solution to utilize the laser, which means our application engineers need to work hard to come up with those recommendations. They know we are not a laser manufacturer—we cannot create the laser source to meet their requirement—but they are hoping we can select good laser sources.
Once we select these sources, we can mount the laser source to our machine and then integrate it as a LAM system. The first two machines we need to make here in the U.S. Once we get those big contracts we need to start making parts in Asia. Then, with key things like laser sources, optics, software, or the controller portion, we’ll just assemble them together.
Matties: What sort of configuration are your machines? Are they a single head or multiple heads?
Sekine: At the present time, the base machine is a two-beam machine. Are we going to go with more beams in the future? I don't know yet. Maybe. For now, there are two beams with UV/CO2, or two beams with any kind of laser sources. If the customer feels they can utilize green to their material much better, then we can go with IR and green. With the design we're making right now, we can do any combination.
Matties: In this whole endeavor, what do you think is the greatest challenge?
Sekine: I have to say that, with the machine we are proposing, it’s that we need to deliver. At the present, it's paper. The first thing we need to do is show that we can do it; that's a must. I don't have much concern starting production, but the biggest concern at the present time is to make sure we can deliver on what we are promising.
Matties: But you're going to see it for Nova Drilling Services here in three months’ time.
Sekine: We already started before Nova gave us the order a couple of months ago, so those parts are coming in.
Matties: So you're already building the first one in New Hampshire. Why did you choose New Hampshire for manufacturing?
Sekine: It's simply that the key R&D engineers and designers are in New Hampshire. I asked them if there was any potential for them to move, possibly here to California, and they said no. They have no plan to move to California. It’s too expensive, and their families don't want to move. They love New Hampshire, so we decided to make the facility there.
Matties: It probably works to your advantage to have both coasts covered with offices.
Sekine: That's for sure. We can take care of the East Coast customers from New Hampshire, and here in Milpitas, the West Coast.
Matties: With all your contacts, I would think that you're the guy doing primarily all the sales at this point.
Sekine: Yes, I'm the sales guy.
Matties: Are you covering all of North America?
Sekine: Actually, I have a couple of representatives. Maybe you know Dick Betz? He used to work for Hitachi. Once I started here, he said he is willing to work for us. The other one is Photochemical. They are taking care of the East Coast.
Matties: The thing you had working to your advantage at Hitachi, though, was that it is a very well-known brand name. A lot of brand recognition.
Sekine: Yes, at that time we were selling mechanical drills to top-10 U.S. customers, not PCB fabricators, but IBM, HP, Honeywell, Xerox, etc. All these big companies were making the PCBs by themselves and they accepted our new technology, which was the only one available at the time. We're lucky to get into that area now. This is a very similar time for Nano System—a zero start. What we have working for us is flexibility to meet the customer’s requirement. If the customer said, "Can you make this change?" or, "I have this material, can you come up with something?" we can do this for them.
Matties: Is the growth market for you Asia?
Sekine: Yes, as long as we can show the capability and what we can do.
Matties: Asia is a more price-sensitive market. I would think that you're going to find more competition over there.
Sekine: I think so. However, there are two things to consider. Asian customers always feel comfortable if the product is designed and made in the United States, and the main laser component we will probably purchase from the U.S. or Japan. The message to Asian customers is that this is designed in the U.S., the majority of the parts are from the U.S., and Japanese engineers are joining on to complete the machines. That's a big selling point.
Matties: That should give you a strong team and collaborative effort that way.
Sekine: Exactly. I don't think customers mind if you make the machine in Asia, they just want to know the Japanese or U.S. guys are going to support the Asian manufacturing. Instead of having an idea, design and manufacturing in Asia, the idea is from U.S., with support from Japan, and then we can make it anywhere. I think this will be well-accepted and that might be the direction we will go.
Matties: That will be interesting to watch. Because I know everyone has their eye on Asia for large volume. In Asia, automation obviously is a big issue. Are your machines going to be automated?
Sekine: Our partner has these automation capabilities. They make many units for a huge company in Asia. Basically, they're delivering these automation parts to an Asian company who is a supplier to a big U.S. company. We can utilize this when we make the base of our laser machines so they have loader/unloaders or other automated equipment. That's something we need to have, and our partner already has it.
Matties: Are you going to be distributing other equipment in this organization?
Sekine: I'm not focusing too much on it, that's the 'by the way,' because I want to have the core focus of business to be our laser equipment. Luckily, I have these distributing opportunities, and they might turn into a very big sales chance that we can manufacture. But that’s the ‘by the way,’ much like our service department that can service lasers and mechanical drills of any brand.
Matties: Are you doing that on a contract basis?
Sekine: Yes, it's on a contract basis.
Matties: So people sign up for monthly maintenance, that sort of thing? Then you also do emergency service repair?
Sekine: Exactly, both of them. Those are the 'by the way.'
Matties: What about Europe?
Sekine: No plans for Europe right now. They have a few good companies over in Europe.
Matties: Well, Sam, congratulations and best of luck with your new machine.
Sekine: Thank you so much.
