April 09, 2018
From math to marketing: Orbotech CMO’s worldview of the industry
Barry Matties met with Orbotech’s corporate VP of Business Development and CMO, Lior Maayan, in Shenzhen and spoke about the next-generation processes currently challenging Orbotech's R&D team. Most notable among them are additive technologies like the automated optical shaping solution, and the growth of MSAP, flex, and HDI. Lior also offered his advice to board shops trying to survive in today’s market and how to deal with a new breed of customers.
Barry Matties: Lior, tell me a little bit about Orbotech.
Lior Maayan: Orbotech has been a world leader for over 30 years in manufacturing solutions for electronics. We have grown from initiating the AOI role for inspection into production solutions for PCBs, such as direct imaging and drilling, and added display. Over the last three years we have added etch and deposition solutions and modules for the advanced packaging and sensor world. We are involved in today's electronics in a meaningful way. For example, Orbotech's solutions touch more than 30 different modules in the recently released, most advanced generation of smartphones, and this can be seen clearly in the tear-downs.
Matties: That's quite an accomplishment. Now, you're a CMO—chief marketing officer.
Maayan: Correct, and I am the corporate vice president of business development. My basic background is math and physics. I have a master’s degree in science and engineering, and then I moved into business. I joined Orbotech over three years ago to strengthen our customer-facing abilities as well as our presence in the full ecosystem of electronics.
Matties: That's quite a jump from physicist to marketing. It works well though, because you're selling a technical product here.
Maayan: Indeed. The first challenge in resolving substantial processes is the ability to interact with our customers and with the ecosystem, understand their ‘must-haves,’ and how to translate new processes into manufacturing solutions. We are taking designers' dreams and we are taking designers' aspirations regarding how a new product should look and translating them into manufacturing processes. That calls for technical as well as business understanding. I hope that our ability as a team, and my specific responsibilities, allows us to help in that.
Matties: How much time do you spend personally with customers?
Maayan: With the ecosystem, and that means our customers and others, probably more than two-thirds of my time.
Matties: So you have real industry input from that experience?
Maayan: Sure. This industry has emerged from a state where technologies were introduced into the industry by external technical teams into an engine of creation, where the innovation comes from the industry itself, with its new processes, new materials, new production processes, and from the designers themselves, who have more and more demanding requirements. There are multiple examples of this. After the tear-downs of the last smartphones came out, we know that a new era in PCB manufacturing emerged with the SLP, or so-called MSAP processes. That shows how the industry can deliver new technologies that meet designers’ demands for smaller and denser devices with more and more functionality.
Matties: It's all about functionality, we want more and more function in the same space, or smaller. That's really the drive.
Maayan: Indeed, the fight is for space, because you want to allow for more and more battery space. If you look at the tear-down of the iPhone X, for example, you already see two batteries. This is enabled as a result of the ability to shrink the PCB, which is the third largest real-estate element in the mobile phone.
Matties: When you look at the roots, you start with AOI, but now you have a portfolio of drilling, of direct imaging, solder mask systems, the Precise™ automated optical shaping (AOS) and additive printing. Where do you head from here?
Maayan: The key is the processes. Production processes have multiple steps, and we are enabling more and more of those processes with new materials and new solutions. And that calls for a new offering. We started over 35 years ago by generating the automatic optical inspection field. Around 20 years ago, we added the first direct imaging (DI) production solution, which is now the foundation of any high-end PCB, which in turn is the foundation of all meaningful electronics. We added to that drilling, the very high-end side of drilling, inkjet solutions for marking, as well as 3D printing applications and the very important software and traceability capabilities. We're trying to answer all the digital steps of PCB and substrate manufacturing with our solutions. Because without integration between systems, the ability to deliver high yields with those processes and to improve one's ramp-up, is at risk. We have made this industry that was historically a separated, disintegrated, solution-based industry, into a combined integrated workflow. And that's where we're headed.
Matties: I know you invest a lot of money in R&D, maybe the most in the industry. When you look at your R&D, do you look at how to eliminate the process steps primarily? Take for example, direct imaging, you took multiple steps and compressed it to one. Your new AOI is taking multiple steps and bringing it into one unit. Is that a strategy that's by design, and is that what you've set out to do?
Maayan: I would say, for sure, yes. We have two by-design strategies for any production process we look at. One is to allow or enable steps which cannot be executed with today's technology. For example, one cannot repair traces of under 40 microns. It manually cannot be done. To allow for a shaping solution that will be part of the production process of PCBs, of today’s highest smartphones, one must think about, and deliver innovation, such as the automated optical shaping we brought to the market. This is one major design aim we have. The other one is to look at inefficiencies in the process, parallel activities that are done on different machines, and combine them into one set of tools. Replace more and more analog processes that are chemistry-based with laser-based and other digitalized technologies, additive technologies, which allow for streamlining the process, and optimization of cost inefficiencies.
Matties: When you look into the distant future, whatever that happens to be based on your answer, do you look at a time where it's a completely additive process that's built in a box?
Maayan: In theory, a completely additive process has advantages. At the end of the day, it should mean less initial material for the same output, and much more digitized and straight from-design-to-production processes. The optimization of subtractive processes is such that, and this is true of other industries as well, it will still take time before the theoretical advantages of additive manufacturing will step in. We are leading that transition and putting our focus where things could make a difference today. For example, our inkjet solutions, which initially are playing in this industry for marking, legend-based solutions, are already depositing material in an additive manner in some substrate and advanced packaging applications. So this is where we see we're finding the niche, in which additive is an enabling element, because it's still a long way before it will become a cost-driving element.
Matties: Your shaping is essentially an additive process, right? It's the basis for one.
Maayan: Yes. When you look at Orbotech’s automated optical shaping, it is by nature an additive process. We are depositing material and the essential part of it is that we have found the right niche in the application process that will benefit from such an enabling technology. With the additive capabilities that we have today and will have in the near-future, it is much more realistic to look at systems that add specific materials in key elements of the process, and not a full-blown replacement for PCB processes.
Matties: Like one of your neighbors, Nano Dimension. They're going from base material up. They're taking a bit of a different approach.
Maayan: Yes. Technology-wise it is achievable. We have solutions, and the industry has solutions that could build a PCB from scratch, from design to a board using 3D printing technology. The key issue is the essential applications. For years, one of Orbotech’s biggest advantages has been its ability to bring real production solutions, not only technologies to market. As a technologist, I'm always intrigued and scouting for new solutions, but the end application needs to be clear and these technologies need to be put into the right sector. What we have done is incredibly innovative as our solution is the only one on the market which takes the actual material and 3D shapes it. It is not diluted inkjet-based deposition, but the copper itself that is being deposited. We've taken it into a realistic shaping application that adds real quantifiable value to the customer, and not only plays a role as a technology demonstrator.
Matties: And with the automated optical shaping, you've redefined what PCB repair is. Because that's all it is.
Maayan: Indeed, we have. I want to maybe rephrase or re-look at the definition of repair. Repair is a secondary process, a manual process that is used to overcome defects in the production process. Shaping starts with that, but shaping goes a step further, because shaping allows you to take the original design, and when you know you have demanding design requirements, ask yourself, can I do this using an additive process? And then implement it in a very selective part of the process. By doing that, we are reshaping the ability to translate design into production, and not only replacing manual work. And we enable a process that simply cannot be done by the human eye or hand.
Matties: Because it just gets finer, and finer, and finer.
Maayan: Exactly. It cannot be done.
Matties: So it's a nice recovery of asset, by being able to provide that.
Maayan: Yes. We can say today that, to allow for the modern smartphone MSAP processes, to allow for reasonable yields, one needs a shaping element in the process. And that comes from Orbotech’s automated optical shaping.
Matties: Now let's shift gears a little. You spend two-thirds of your time with customers. What sort of issues, or demands or trends, are you seeing in the marketplace?
Maayan: That's a wide question. I would say there are clearly five or six major trends. First is a new level of PCB manufacturing—MSAP or SLP, the so-called substrate-like PCB. Related to that, is the continuum between SLP and substrate work, and advanced packaging. People are starting to offer alternative solutions to the same need, coming from different historical supply chains. Next is the dramatic growth in flex, and the dramatic growth in the functionality that flex represents in the final product. It’s not only the ability to replace the copper substrate, but the ability to act as a substrate for additional elements in a more and more meaningful way. Another trend is the emergence of high-end electronics and PCB into the automotive industry. This is a major trend that generates very positive dynamics for our industry.
People are highly engaged in automating the processes, so you see more and more automation, which relates to the demand for industry 4.0 or smart factory, which relates as well to traceability. People are becoming more and more aware of the processes that offer an automatic ability to identify yield issues and to fully track their production process at each stage of production. I think that these four or five trends clearly demonstrate how very vibrant, positive and forward-looking the industry is after experiencing a slowdown in growth for some years. Importantly, this has also resulted in another larger scale phenomenon, namely the increased involvement of the OEM design community in the supply chain. OEMs today are increasingly able to communicate with their suppliers—our customers—and demand more sophistication. The effect of that is that our industry is much more on its toes, and much more competitive and experienced.
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.
Published in: Iconnect007
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