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—Part of this EE Times series: A Vulnerable U.S. Electronics Supply Chain.
Other articles in the series include: Experts: U.S. Military Chip Supply Is Dangerously Low, Reshoring Chip Industry Risks Failure With Just More Fabs, U.S. Crawls Toward Rebuilding Frail PCB Industry, USA Rare Earth Aims to Break China’s Grip, GF, Lockheed Martin Pair Up to Improve National Security and 3 Governments Investing in New Fabs Pledge Cooperation.
WASHINGTON, D.C.—Top executives of U.S. PCB companies this month visited legislators here to push for incentives that would help prevent the demise of their industry and save a vital part of the domestic electronics supply chain. They joined EE Times in an exclusive roundtable discussion, also held here this month, on exactly what is at stake.
EE Times also had an exclusive, remote interview this month with U.S. Rep. Blake Moore (R-Utah), to hear about critical federal legislation that he and U.S. Rep. Anna Eshoo (D-Calif.) reintroduced in the House last month.
The U.S. PCB makers today account for 4% of global production—a share that has plunged from 30% about 25 years ago. During the same period, China’s share has soared to 54% from 8%. The U.S. suppliers, which make PCBs for F-35 jets and night-vision goggles, count on defense contracts for their survival, yet they lack the production capacity to support a surge in wartime demand.
That PCB vulnerability is one of many across the U.S. electronics supply chain, ranging from semiconductors to strategic materials like rare earths. It is a now-or-never moment to bring back the PCB industry from Asia, Moore said, a sponsor of the Protecting Circuit Boards and Substrates Act.
“If we don’t do something to claw this back, we have basically ceded this overseas forever,” Moore told EE Times. “We’re in this position right now because China was willing to do this for the last 50 years. They played the long game.”
Moore added that “de-risking” is better than “decoupling” from China, the latter of which increases the chance of a “kinetic” war. Rebuilding the PCB industry would signal to China that the U.S. has filled a critical gap in its supply chain and shored up defenses, he said.
Learning how to create a law
The proposed act has strong bi-partisan support, Travis Kelly, chairman of the Printed Circuit Boards Association of America (PCBAA), said at the EE Times roundtable discussion.
“The purpose of the membership being here is to look for co-sponsors for the act that was just introduced,” he said. “We had numerous [Congressional] speakers come in to help educate us on the process in Washington and how we can actually get this bill to fruition.”
In addition to providing subsidies for manufacturing facilities, the act calls for offering demand-side stimulus through a 25% tax deduction for companies that buy U.S.-made PCBs.
The CHIPS Act stimulus measures, which aim to bring back semiconductor manufacturing to the U.S., have provided an opportunity to reflect on the entire industrial base, Summit Interconnect CEO Shane Whiteside said at the roundtable. The U.S. workforce is lacking, he acknowledged.
“Our secondary schools or high schools have not been turning out technically proficient graduates,” Whiteside said. “We’d like our high schools to be able to turn out graduates who are ready for the workforce that is going to be redeveloping here in the United States.”
The biggest hurdle for the U.S. PCB makers is finding technicians, Calumet Electronics CTO Meredith LaBeau said. “How do we create apprenticeships? We don’t have a lot of trades anymore.”
The migration of the PCB industry to Asia was about more than just moving equipment and technology, Kelly said.
“You’re actually moving the skill set. This is not an easy problem to solve for because it took us two decades to offshore everything, and now we’re trying to get it back,” he said “I don’t think it’s going to happen overnight. We’re going to have to invest not only money, but government investment into the schooling system. It’s more than just STEM. It’s community colleges with on-the-job training.”
After two decades of decline, business for the U.S. PCB makers has started to grow, and the companies are finding themselves shorthanded, Whiteside said.
“Since the industry started growing about four years ago, we’ve had to change our game and learn how to do this all over again,” he added. “We’re looking at a market that’s been growing 3% to 4% steadily, which is good because it wasn’t growing; it was negative growth for almost two decades. But for building investment and the capital that’s deployed in a 3% to 4% growth market, it’s not going to impress anybody.”
At the same time, growth of the global PCB market is outpacing the U.S., Whiteside said.
Government subsidies are key
The return of the U.S. PCB industry will rely primarily on incentives from the U.S. government, according to the roundtable members.
“Without any sort of external stimulus, it’ll be self-funded capital and it’ll be laid out in a very disciplined manner,” Whiteside said. “Is it going to really move the needle? It’s just going to keep us on pace with industry growth.”
Even with the U.S. stimulus package, the U.S. PCB industry would at best claim a 6% share of the global market in the short term, according to Moore.
“It’s a 50% increase from what we have right now,” he said. “If we could just claw back a little bit, it could have a big impact.”
Some PCB makers are investing cautiously in expansion.
“There are arguably two greenfield sites being worked today,” Insulectro CEO Ken Parent said at the roundtable. “When there’s six of them, I’ll feel better that that OEM shift is coming back to North America, whether it be medical, industrial, military. But there’s not a rush of it yet.”
Isola, where Kelly is CEO, is building a facility worth more than $40 million in Chandler, Ariz. Calumet Electronics, where LaBeau is CTO, has added 46,000 square feet of floor space in Michigan for advanced capabilities.
Supply-chain security at issue
Supply-chain security is an imperative for national defense, as well as industries like banking, energy and medical equipment—where executives are only beginning to realize the vulnerabilities, according to LaBeau. “For medical, they are aware of supply-chain issues, they’re aware of having some security located stateside. Also banking and even energy. If someone takes over the power grid, they want control of it.”
Still, PCBs are generally considered a commodity at the bottom of the supply chain in many of these industries, according to Whiteside.
“We’re kind of in the component sector right now,” he said. “Bank of America is not going to reach out to us. Are these institutions–whether it’s a bank or a utility or something like that–are they really cognizant of the sourcing of the component, the geographical source of the components and the vulnerabilities there?”