An in-person visit reveals unrealized potential.

It’s been almost two years since the authors’ first visit to Thailand, which occurred just after Covid travel restrictions were lifted. We first reported on our impressions of Thailand’s PCB manufacturing environment in August 2023.

On our first visit, ground was just being broken on several large facilities funded mostly by Chinese parent companies. These new plants are located a few hours outside Bangkok in large industrial parks with wide roads and plenty of land between neighboring factories.

On what was cleared land just two years ago, newly constructed modern facilities now stand, with room for an additional building or two. These new factories have large floor plans for each of the major processes involved in making a printed circuit board.

Some of these factories are designed with environmental sustainability in mind by collecting the abundant rainwater that seasonally falls on the facility roofs for eventual use in the PCB manufacturing process.

The equipment in these facilities is the latest and greatest. The plating lines are long, brand-spanking new and do not have the usual obnoxious odors wafting about. Back in the day, the plating lines (also known as “wet process”) often were accompanied by wet floors. But these new Thai facilities are dry and immaculate.

Autonomous guided vehicles (AGVs) are readily available to take manufacturing panels from one department to another (Figure 1). These AGVs even have their own special mini elevator system to take them from floor to floor.

Figure 1. AGVs are commonplace at new Thailand PCB factories.

Many facilities have all this great equipment, but do not possess enough of it. They are in the first phase of gradually increasing production volumes, expected for now to produce about 40,000-50,000 sq. m per month, using about 300 employees each.

Rooms set up to house eight laser drill machines have only two installed. A room that holds a plating line, be it for the inner- or outer layer process, has capacity for two more. Each department – automatic optical inspection, drilling, routing, press – has plenty of space for more equipment to add as demand increases.

Yes, they are operational and actively building quality product, but they are not at capacity, even with the limited amount of equipment installed. Many of the AGVs were standing idle when we visited because of the lack of work on hand.

While Thailand has been mostly known for low-mix, low-to-medium technology PCB manufacture, these new facilities are gearing up to take on higher-mix and higher-technology boards that are more conducive for sales to the US market.

With over 20 large PCB facilities currently manufacturing or about to begin operations in Thailand, machine operators, engineers and chemists – who are experienced in PCB manufacture – are in high demand.

High demand means short supply, and many of the established domestic factories have had technicians and engineers hired away by other manufacturing newcomers. And the available personnel have little or no proof of actual IPC training or certification.

It was interesting to note during our visit that English was the common language spoken between Chinese management and the local Thai workers. Language is still the greatest barrier, meaning it will take more time for a factory to become a cohesive operation. Some in management at these facilities estimate that could be as much as a year.

While Thai labor is much cheaper than that of China, the cost for electricity is 25% greater. Many of the chemicals and laminates required for board manufacture still come from China, which adds to the cost.

While Thailand does manufacture raw materials, it is not enough to support the burgeoning industry. A major Chinese laminate supplier intends to open a new facility by year’s end to hopefully ease the burden.

All that said, pricing for PCBs manufactured in Thailand is 15-20% higher than in China.

For now, the 25% US-imposed Section 301 tariffs for all PCBs manufactured in China do not apply to PCBs manufactured in Thailand. That is good news for US buyers, but the average time to receive a quote and for an order to ship is much longer, averaging six to eight weeks.

In comparison, China will quote a PCB in a day and will ship most product in three to four weeks or less.

And don’t forget, a 10% reciprocal tariff exists between the US and Thailand. As of the time of this writing, higher tariffs imposed on Chinese goods are on hold, and it’s unclear whether they will continue.

In our estimation, a total cost of ownership difference of only 10-15% will give pause to many buyers wanting to move work from a known supplier in China, where they likely have buying leverage, to an up-and-coming factory in Thailand.

The next 12-18 months will determine how successful Thailand will become as a PCB manufacturing player. It is not from the lack of investment, as there seems to be no shortage of monies pouring in. Instead, the politics, tariffs, struggles with labor and shoring up of the internal supply chain will determine the outcome.

Greg Papandrew and Clement Yuan are cofounders of DirectPCB (directpcb.com) and can be reached at greg@directpcb.com.

2025 is going to have a lot of surprises.

The political winds of change present challenges and opportunities for electronics manufacturing services (EMS) companies this year. This shift creates many challenges for EMS program managers. My April column discussed how to address customer tariff concerns. Here I will focus on the dynamics of market uncertainty.

IPC's April market trend data provide valuable insight into changing dynamics in the manufacturing sector. According to the US Federal Reserve, domestic factory output was up 0.7% year-on-year in February, predominantly driven by an 8.5% surge in motor vehicle production. US output showed renewed weakness in April, however, with the Purchasing Manager’s Index (PMI) declining to 48.7 from a year to date high of 50.9 in January. IPC’s EMS book-to-bill ratio data show shipments rose 0.2% in March compared to the previous year, while bookings climbed 12.7%. April orders pushed the EMS book-to-bill ratio to 1.37, its highest level since November 2022.

So, what do these contradictory data mean for program managers? The short answer is that customers are reacting to market uncertainty. Tariff concerns have incentivized material pull-ins to get ahead of tariff cut-ins. Since tariff rates have become a matter of negotiation rather than fixed policy decisions, this situation adds another layer of uncertainty to the market, complicating the program management role. Nevertheless, one rule of program management never changes: you can’t control what happens, but you can control how you respond.

First, let’s look at the impact of uncertainty on customer orders. Tariffs drive the need to understand price elasticity of demand. Some products are inelastic, meaning that the product is so necessary that consumers will continue to buy it at similar levels regardless of price increases or decreases. Other products are elastic, meaning that demand decreases or increases when prices rise or fall. Consequently, program managers should review their programs to determine under which category the products are likely to fall. Programs with inelastic demand such as defense, industrial infrastructure and medical products will likely perform to forecast. Natural disasters such as those experienced last year and this spring may drive ordering spikes in some industrial infrastructure. Comparatively, programs involving products consumers buy with discretionary income are likely to be pushed out, because these products are elastic and demand will drop as prices increase. Material availability may also fluctuate. There is already a spike in demand for components from countries with the lowest tariff rates. Reduced demand for products bought with discretionary income may partially offset this.

Do your homework. Program managers should work with their purchasing teams to better understand changing availability trends and options, particularly for programs with inelastic demand because these steady runners are going to be critical to achieving near-forecasted revenue levels. When dealing with programs that involve products with likely elastic demand, review the material related to orders, on-hand inventory, forecasts and contract terms. Discuss market conditions with customers and determine if there is demand softness that could lead to changes in agreed-upon forecasts. If a customer needs to push out the schedule, have an internal discussion on any contractual customer obligations (such as buying excess or inactive inventory) and decide if negotiation is necessary.

On the opportunities side, OEMs are going to be shopping to price out supply chain realignment scenarios. But much of this activity is likely to be “what if” scenarios rather than a sincere effort to select new suppliers until tariff policies stabilize and become predictable. Southeast Asia and Mexico will likely emerge as winners in this realignment, and if India opens its markets, it may also benefit. US manufacturing is set to see a reshoring of projects that never suited offshore settings. If tax policy changes to further benefit Made in USA manufacturing, this opportunity could expand.

Sales teams should do their homework on potential customers to determine how serious these prospects are on changing supplier location versus simply developing a pricing model. This diligence will help avoid wasting resources on quoting exercises or prioritizing quotes that cannot win over those that can. That said, increased shopping translates to increased opportunities to get on the radar screen of companies that may be serious prospects longer term. If there is a potential fit, it’s worth building a relationship and staying in touch even if the initial interaction is a pricing exercise.

In short, 2025 is going to have a lot of surprises. Program management and sales teams who carefully watch trends and strategize the best responses are going to have better outcomes than teams who simply react as their customers react.

Susan Mucha is president of Powell-Mucha Consulting Inc. (powell-muchaconsulting.com), a consulting firm providing strategic planning, training and market positioning support to EMS companies and author of Find It. Book It. Grow It. A Robust Process for Account Acquisition in Electronics Manufacturing Services. She can be reached at smucha@powell-muchaconsulting.com.

Can today’s sustainability drive turn on a solution from the past?

As global trading and economic power dominate the news, it's essential to consider the significance of the world’s electric vehicle markets in these developments. Western and Japanese car manufacturers are realizing that China has a huge lead in electric vehicle technology and a large, receptive domestic market that fuels the success of its local brands.

Brands that historically relied on strong exports to China may never recover the ground lost against these emerging domestic players, which offer cutting-edge products at lower prices. Chinese industry data calculate that battery EVs already represent about 25% of the country’s new car market and that China has been the world’s top producer in the new energy vehicles category for the past 10 years consecutively.

EV technology has rapidly advanced, with key targets focused on increasing driving range and reducing charging time. Range anxiety remains a significant barrier to widespread EV adoption and has resulted in vehicles equipped with large and heavy batteries. Their weight and bulk can compromise drivability and cause technical and environmental problems. Moving the vehicle demands a large quantity of energy, even though the powertrain may achieve extremely high energy-conversion efficiency.

Additionally, tire stress and wear increase, and producing the batteries demands large quantities of strategically important minerals like lithium. As the first wave of large-scale EV adoption reaches the end of life for many batteries, we will face urgent challenges with battery disposal and reclamation of valuable materials.

An abundance of hydrogen. If larger batteries are not a good long-term solution, hydrogen may offer an alternative power source. It’s much lighter in weight and has acceptable energy density. As the most common element in the universe, there is none of the scarcity challenges associated with lithium or fossil fuels. On the other hand, how clean hydrogen is depends on how it’s made. One method, electrolysis, splits water using electricity from renewable or nuclear sources – this is considered cleaner. Another method, called methane reforming, is more common today but produces a lot of CO₂, which harms the environment. These production methods are the reason hydrogen is labeled by color: green and pink hydrogen come from cleaner sources, while gray hydrogen comes from reforming and is less environmentally friendly.

Perhaps electric road systems (ERS) could offer a solution. Leveraging inductive charging, ERS lets electric vehicles go further with smaller batteries. Researchers in Sweden have built short stretches of experimental roadways and run simulations that suggest a combination of home and dynamic charging could shrink car battery sizes up to 70%. Clearly, ERS will be expensive to install and maybe viable only in urban areas, although the Swedish team reckons the system could be viable if only 25% of the road network is converted.

There’s a cool piece of lateral thinking at the heart of this idea. Since the beginning of the automobile age, the vehicles we drive have carried their energy source. Semantically, it’s a defining principle, but ERS flips the concept on its head by taking the energy source off the vehicle. This enables lighter and more affordable EVs with extra range, something that traditional methods have struggled to achieve so far.

Historical precedents. Like many of the technologies currently being explored and developed to support a sustainable future, there are historical precedents. The San Francisco cable car system provides an example that dates from the 1870s. Cables running in trenches are driven continuously at 9.5 miles per hour, each powered by a DC electric motor, while the cars are simple and unpowered. An operator on board manually clamps the vehicle to the cable when it is time to move. Through the 20^th century, people began to phase out the system until they acknowledged its cultural significance and preserved the remaining routes. The three surviving lines are still operating today, carrying passengers and sightseers to their destinations.

You may have noticed I’ve moved the goalposts, as the cable car system is an example of mass transit and not personal transport. Its simplicity is admirable, however, and this enabled the engineers to deliver a service of great value to the community using the limited capabilities of the time.

Similarly simple, functional and extremely environmentally friendly, are water-powered railways. Several are operating in different locations worldwide, including Braga in Portugal, Fribourg in Switzerland and the Lynton and Lynmouth Cliff Railways in the UK. Designed to carry passengers to the top of the steep coastal cliff, the Lynton and Lynmouth system comprises two carriages linked by a cable and consumes no power at all. Each carriage has a large tank filled at the top station using water from the nearby West Lyn River as ballast. The intricately engineered brakes are used to control the system as the heavy top car descends, which raises the lower car. At the end of the descent, the water is released and the other car is filled, permitting the process to repeat continuously.

Although the cliff railway has an extremely low carbon footprint, there would have been no such environmental imperative at the time it was built. A lack of funding is quite likely to have driven the unpowered design. Although ingenious, it was not widely copied. Today, under pressure to decarbonize, we should let ourselves be inspired by engineering like this as we seek to create solutions that are functional, affordable and fossil-fuel-free.

Alun Morgan is technology ambassador at Ventec International Group (venteclaminates.com); alun.morgan@ventec-europe.com. His column runs monthly.

Management decisions threaten the entire electronics industry.Tariffs always have an effect. It’s usually not the intended one.

Tell me it isn’t so. Tell me we are not going back, excuse me, that’s backwards, to when I began my career in the 1970s! As you age, you remember the way things were, for better or worse. And in my case, add being a student of history, albeit a casual one, as well as a selective packrat of industry periodicals. Together, looking at the current state of the global world of technology, the trajectory certainly appears less forward and more backward.

In the 1970s, America was an epicenter of manufacturing, including electronics and technology. Then Japan and Taiwan began to outperform the US in terms of quality and value. At that time, South Korea, Vietnam, Thailand and even China were not yet mainstream economic engines. The time-to-market for new technology stretched years. While innovation flourished, double-digit inflation hindered any single company or nation from profitably funding significant technological advancements.

Business executives are resourceful, however. Western countries, led by the US, began to study how Japan was transforming its economy into one that produced cost-effective and high-quality products. One of the most notable observations was how Japanese companies began to source components and sub-systems from lower-cost countries. Even more importantly, Japanese companies invested in building manufacturing facilities in lower-cost countries and taught the local workforce how to produce the quality products the Japanese required. By observing and copying the successes that Japan and Taiwan enjoyed, the modern global supply chain came to life.

Since the 1970s, companies around the world have developed global supply chains for virtually all products. These supply chains offer several advantages, including the ability to collaborate across different parts of the world, which creates a 24/7 workforce. This collaboration has significantly reduced time-to-market to months from years. Additionally, when product development teams are international, they account for the tastes, needs and unique preferences of consumers worldwide, resulting in products that truly appeal to a global audience. These two examples have dramatically reduced cost-to-market, while enhancing global product demand to enable scalable manufacturing, resulting in much lower unit costs. In short, a win-win-win for consumers, companies and countries!

Even in successful endeavors, however, imbalances can occur. Currently, certain specific technologies and industries need a better mix of imports versus domestic production. When we identify such imbalances, focusing on them has proven successful in the past. The CHIPS and Science Act, enacted by Congress in 2022, serves as an example of this approach to rebalancing critical needs. By implementing legislation similar to the Chips Act, rebalancing can take place without destroying the long-evolved and highly efficient global economy.

But now, these highly efficient supply chains that support global economies face threats from tariffs that one leader believes will revitalize its manufacturing industries. Regrettably, bulk, across-the-board tariffs have never worked. Worse, the taxing country loses more than the nation it taxes. The Smoot-Hartley Tariff Act, which the US Congress enacted in 1930, led to the collapse of international trade, prolonged the Great Depression and served as a catalyst for World War II.

Over the years, selective tariffs have worked, but only when implemented with the precision of a surgeon, not a lumberjack. Even then, free-trade biases have discouraged tariffs. Two decades ago, the June 2004 IPC Review recapped the IPC Capitol Hill Day, where Rep. Donald Manzullo (R-IL), chairman of the Committee on Small Business, stated, “Tariffs don’t work.” He discussed how tariffs raise costs and reduce supply of impacted materials. The results of 1930 and 2004 are harbingers of what could come.

Yet one government’s worldview may regrettably take everyone on a long, torturous journey back to the 1970s. Like a bumpy rollercoaster ride, markets will reel, shortages of critical items will develop and many common consumer products will disappear from store shelves. Costs for everyone will rise and time to market will equally suffer.

If the global industry has patience and sets a positive example by encouraging collaboration, we may be able to mitigate the disruptions that history suggests are likely to occur. Hopefully, we will wake up from a bad dream and resume thriving as part of a highly efficient global economy in 2025, not the 1970s!

Peter Bigelow has more than 30 years’ experience as a PCB executive, most recently as president of FTG Circuits Haverhill; peterbigelow@msn.com.