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NEMI Roadmap Indicates Strong Market
Growth Will Strain Manufacturing
Capacity and Demand New Processes

Supply Chain Management Emerges as Differentiator and
Environmental Profiles of Products Gain Increased Significance

APEX (San Diego, Calif.) — January 17, 2001 — The electronics manufacturing industry continues to grow at a phenomenal rate, driven by an explosion of new products and applications, and this growth will put tremendous strain on manufacturing capacity in the next few years. In addition, the breakthrough technologies enabling these new products present manufacturing challenges that will require new solutions in areas such as packaging, components and assembly processes. This is according to the findings of the National Electronics Manufacturing Initiative’s (NEMI’s) latest roadmap, which was made public today at APEX (sm), the IPC-sponsored electronics assembly process conference and exhibition, and via a live webcast from the conference.

Other leading trends identified by NEMI’s 2000 roadmap include a continued quest for greater productivity and lower cost, a shift in focus for where future gains may be found, plus an increasing emphasis on the environmental profile of electronic products.

Speaking to the gathering of electronics manufacturers and suppliers, Jim McElroy, executive director and CEO of NEMI, told conference attendees and webcast participants that portable wireless products will dominate electronics manufacturing. Third-generation cell phones, Bluetooth devices and optoelectronics are eclipsing the personal computer as the drivers of manufacturing volume. In addition, the prime source for continued cost reduction has migrated from manufacturing efficiency to improved supply chain management.

"As the types of products driving volume manufacturing change, the industry must meet changing technology and business requirements, such as demands for lower overall cost and rapid product life cycles. Industry must also gear up for increased manufacturing capacity for components such as passive devices and optical fiber," McElroy said.

McElroy told the audience that business issues, such as supply chain management, have become paramount to companies' success, and carry the greatest hope of continuing gains in productivity.

"Industry has optimized manufacturing efficiencies, and continued productivity gains in materials conversion will only be incremental. Instead, companies are now focusing on their business and management processes," explained McElroy. "This shift began several years ago, as OEMs began outsourcing an increasing amount of manufacturing to electronic manufacturing services (EMS) providers and other supply chain partners. As this trend intensifies, the center of manufacturing competence is shifting from the OEMs to the EMS providers, affecting the entire supply web and driving a number of new business practices, philosophies and tools. We are seeing a shift in focus from personal productivity to company productivity, aided by the Internet. In fact, enterprise IT, encompassing supply chain management, enterprise resource planning, human resources management and customer relationship management, is becoming the value center of the entire enterprise."

The New Volume Drivers

New products and applications are demanding new technologies and manufacturing capacity. The explosive growth of cell phones, and the possibility that these devices will overtake PCs as the primary method of accessing the Internet in the near future, could easily consume the entire installed manufacturing capacity for passive devices. It also increases demand for high density interconnect (HDI) boards, an area where North American fabricators continue to lag behind in volume capacity, and for integral passives, for which limited installed capacity exists. Similarly, growth in optoelectronics threatens to outstrip existing manufacturing capacity for components and fiber.

The technologies fueling the growth of new products and applications will require new packaging solutions, assembly processes, test capabilities and more. This is especially true for disruptive technologies such as optoelectronics and MEMS where integration of light and micromechanical motion with electrical signals will change the rules of the game from a technology and manufacturing perspective. For example, optoelectronics will require new low-cost assembly/test processes as well as low-cost packages for components. In addition, components such as wave guides may be integral to interconnection substrates for high-performance applications. Optoelectronics will also drive new technologies such as microelectromechanical systems (MEMS), which pose additional packaging challenges. MEMS applications are incredibly diverse and each will require its own unique packaging capability, making volume production (and, therefore, lower costs) difficult to reach. Another concern with MEMS packaging is that, given the unique form factors of the components, it is difficult to automate assembly and test.

The convergence of automotive and consumer electronics is also creating new demands on electronics manufacturers. The roadmap predicts that, by 2005, consumers will demand features such as Internet access and fax capabilities in their vehicles. This increasing prevalence of consumer-like electronics in automotive applications will require innovative electronic packaging solutions that can meet consumer cost targets while providing automotive’s environmental and reliability requirements.

Productivity

The 2000 roadmap identifies two different types of productivity challenges. First, as electronics manufacturing becomes increasingly distributed, business issues will dominate the quest for further efficiencies. As supply chain management emerges as a differentiator, manufacturers are grappling with the challenges of electronic integration of the supply chain and development of standards to enable that integration.

The second productivity challenge is the design tool infrastructure. Design tools and designer resources are unable to keep pace with the rate of advancement in silicon technology. The 21 percent per year increase in productivity of chip designers and tool infrastructure lags far behind the 60 percent per year increase in functions per chip. This same challenge affects packaging and board test. In addition, rapid time to market and short product cycle times demand that a product work right the first time, meaning industry also needs increased productivity of modeling and simulation tools and to put less emphasis on physical testing that can take longer to complete than the entire product life cycle.

Design for Environment

Environmental concerns present a number of technology as well as business issues. North American companies continue to lag behind their Japanese and European competitors in development of "environmentally conscious" products. Foreign environmental regulations currently in development focus on products and may include "take-back" requirements, as well as electronics recycling and hazardous waste regulations. Costs associated with environmental compliance and waste product disposal are soaring, and impact competitiveness in world markets. Major Japanese manufacturers have announced aggressive environmental goals, which they plan to implement by April 1 of this year, and are already focusing marketing efforts on these features.

The major technical challenges are: (1) to minimize the environmental impact of products at the end of their life and to enhance their reusability, and (2) to eliminate the identified "materials of concern" throughout the electronics infrastructure by identifying, developing and qualifying alternatives.

Roadmap Availability

The 2000 NEMI roadmap is now available to North American organizations, and will be available to organizations outside of North American beginning April 1, 2001. Roadmap findings will be highlighted in a keynote presentation by Jim McElroy, NEMI Executive Director and CEO, at IPC’s APEX conference on January 17, 2001. To sign up for a live webcast of the presentation, go to http://www.ipc.org/.

Ordering information is available on the NEMI website (http://www.nemi.org/)

About NEMI

The National Electronics Manufacturing Initiative’s mission is to facilitate leadership of the North American electronics manufacturing supply chain. Based in Herndon, Va., the industry-led consortium is made up of more than 50 electronics equipment manufacturers, suppliers, industry associations and consortia, government agencies and universities.

NEMI roadmaps the needs of the North American electronics industry, identifies gaps in the technology infrastructure, establishes implementation projects to eliminate these gaps (both business and technical), and stimulates standards activities to speed the introduction of new technologies. The consortium also works with government, universities and other funding agencies to set priorities for future industry needs and R&D initiatives.

2000 Roadmapping Process (areas covered, new features this year)

For further information:
Cynthia Williams
cwilliams@nemi.org
phone: 207-871-1260