Challenging times ahead…

As Europe’s electronics industry continues to develop to meet rapid changing technology, legislation and demand, the challenges facing equipment manufacturers and process developers is as ever great. Much of this challenge has been driven by the boom in mobile telecommunications, lead-free legislation and the shift from OEM to CEM (contract electronics manufacturer). Mobile communications will continue to drive next-generation products by ongoing miniaturization, lower power consumption and sophistication, obscuring the barrier to information technology. It is estimated to form 41% of the European board market by 2001.

The greatest challenge presented to the industry has been the move to lead free soldering – a move which should be approached as an evolution. The higher temperature melting points of many lead-free alloys has resulted in a smaller process window. Both equipment developers and process suppliers will continue to refine the meeting of the lead-free demands. Equipment performance and process control become ever more critical, and the effects of limited lead-free sources also poses a challenge to paste manufacturers as they develope suitable substitutes.

All this is happening when the tide has turned in the direction of CEM. Since 1997, we have seen the outsourcing market expand at an average annual rate of 18%, which is anticipated to continue until 2002. This results from the OEM’s divesting production facilities to concentrate on their core competence, and presents the equipment manufacturer with the challenges of supplying flexible and modular machines within short lead times. Whereas the OEM’s equipment investment was based on long-term assembly manufacturing, the typical CEM has relatively little visibility on future jobs or capacity needed. Often, the contractor cannot invest until the deal is made. Therefore, the time frame between the decision to invest and time to produce is decreasing. We are coming close to a situation of “If I order it today, I want it today” – a tall task for any equipment vendors.

Further demands on equipment vendors has been brought about by the shift to production in the Eastern European countries where the major multinationals, who supply globally but act locally, have taken advantage of lower labour rates together with skilled workforce. Until recently, the growth in the CEM market in Europe was seen primarily in the U.K., Ireland, France, Germany and other areas, but this is not so any longer. The strongest growth is expected in the Czech Republic, Romania, Poland, Hungary and other Eastern European countries as they make the transition to a market led economy. Meeting the support requirements of these markets is compounded by poor transportation infrastructure and has necessitated that the equipment supplier invest in continuous on-site local support as a way of meeting those requirements, regardless of geographical location.

In meeting the demands of the market place, I predict that only the committed supplier will survive, and we will shortly see the gap between the technology leaders and followers widen as we strive to meet the criteria of “I want it today – And I need to meet the demands of today and of tomorrow”.

Peter Franklin, Managing Director, BTU Europe Ltd.