PCB Technologies Invests in Advanced Packaging

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Jeff De Serrano, president of PCB Technologies North America, gives an update on the company’s recent move into advanced packaging—a move that stemmed from company leadership and vision for the future. He also shares his forecast on the PCB market, specifically around rigid-flex, along with some of the challenges the industry still faces.

Barry Matties: Jeff, let’s begin with an overview of PCB Technologies and your background.

Jeff De Serrano: I am the president of PCB Technologies North America, a subsidiary of PCB Technologies, which is a $150 million public company that has been based in Israel for 42 years. We see the U.S. as our biggest growth area, so we’re currently focused on that, and I was brought on to lead that expansion. We have three business units: We're a circuit board factory specializing in HDI, flex, and rigid-flex; we acquired CCA capabilities in 2000, and now we have roughly a $70 million PCBA facility in the same complex; in 2019 we invested close to $20 million to start our advanced packaging division called iNPACK and to improve our PCB and PCBA capabilities.

Matties: How did you decide to move into advanced packaging?

De Serrano: Both our CEO, Oved Shapira, and FIMI—the largest private equity firm in Israel and which now owns 48% of our stock—realized that this market had significant growth potential and not any one company was able to do everything under one roof. Of course, after COVID, and because of the CHIPS Act, reshoring of wafers, and what customers were saying, we all know our team made a great decision. iNPACK (advanced packaging division) is right on top of the circuit board facility. We rolled our PCB knowledge into the substrate area; it’s a little smaller version but the same characteristics and same process flows, except for the mSAP process.

We're are currently shipping 25-micron lines and spaces and we're doing the microelectronics assembly, including wire bonding, assembly, and die attach. We can take eight-inch wafers, bump the die, cut them out, and then package them. We can build to a print now or we can build specifications. If you come to me and say, “Jeff, we have a problem with this package; the costs are too high, and it's not sustainable to produce and sell anymore because of what’s going on in the market. Can you help us?” Yes, we’ll help you figure out a way to where you need to go or find another solution. Right now, we're working with some really big companies on this very thing, and last year, we were fortunate to have landed deals with those organizations, helping them design a new, cost effective package.

Matties: So, by having fab, assembly, and advanced packaging, you created a total solution ecosystem for your customers. How has that impacted how your customers view and work with you?

De Serrano: It's been quite exciting because we were not well known in the United States. We’ve spent two years building a brand, advertising, and doing everything we possibly can in the U.S. market. Now, with boots on the ground, so to speak, we’re getting traction. Customers enjoy not having to go to, say, five different vendors to get a product manufactured. We brought the microelectronics ecosystem to them in one place.

Matties: Bringing advanced packaging into what was, historically, a board fabrication facility makes you an early adopter.

De Serrano: Yes, we are. My CEO and I project that over the next five years our packaging business will surpass our printed circuit board business. The future is there. Does it mean circuit boards will go away? If you listen to PCBAA and Travis Kelly, you’re reminded that “chips don't float.” You’ll still need a board, but the advanced packaging segment is going straight up.

Matties: With the shift in supply chain due to COVID shutdowns, there were many lessons learned. One is that the supply chain can be very fragile. What changes did you make that, ultimately, made you a stronger company?

De Serrano: Our CEO is a visionary, sales-oriented, forward thinker. It was a combination of his vision and that of our private equity group; they saw what was happening in early 2020, and talked about how the industry will push to make the shift away from China. We made a decision about how the PCB industry would react to this; we did not believe the PCB industry would invest in advanced packaging. Once the U.S. determined that the semiconductor industry should have more production in the U.S., we were in a perfect position to capitalize on the transition.

We wanted our customers to have a one-stop shop, rather than entering an ecosystem with several vendors, where it can take a long time. This was a great opportunity for us, and we took it. The customer base is there; they all need us because they're all fighting the same challenge. The challenge companies run up against is staffing. Do you have the knowledge base to encompass what we just invested in? We were fortunate that we invested in good talent and had enough people to get the business running, then we acquired another Israeli company that was doing some limited production.

One of our goals is to duplicate the iNPACK division here in the U.S., but we're not ready yet. We are reviewing with customers the needs and timelines, as well as considering the labor pool. The newer generation doesn't really want to work in fabrication, but we must be able to pass this on to them. High volume, networking, communication, and cell phone handsets are not markets we want to be in. The future is definitely in miniaturization, so we must be flexible, nimble, and very quick. What might take 18 to 24 months for others to do, we can do from start to finish in four-and-a-half to five months, getting product into testing and starting production. This is a really big seller for us. We launched iNPACK last year, and it’s going crazy.

Matties: How many employees do you have at your facility?

De Serrano: We have 705, which includes assembly, fabrication, and advanced packaging. In the U.S., we have nine people located in northern and southern California, and New Jersey. I’m based in Texas. We are growing at a fast pace and it’s been fun.

Matties: Earlier, you mentioned rigid-flex and HDI as some growth areas. Talk about what’s driving that market and where you see it headed.

De Serrano: It’s interesting how the rigid-flex market has taken off in the past five to seven years. It’s getting stronger, as cables are replaced with rigid-flex; taking out five cables and putting one rigid-flex board is helping customers. Not many companies are doing rigid-flex. We all know that the number of printed circuit board fabricators in America has diminished from something like 3,000 to about 150, and many of those are $20 million or less, which means that it’s very tough for them to invest a million dollars in LDI or laser that cost nearly as much. There are probably a handful of shops that can do rigid-flex. Yet it's a big market, so we heavily target that market. We can do very large form factor panels, and there are only one or two other companies in the world that can do that. Building very large rigid-flex panels is another one of our benefits. We're making custom things that keep America safe, such as aerospace products, satellite components, and advanced electronics for rockets. The defense and aerospace industry needs a good trusted supply base. Overall, the market right now is very busy and our growth is crazy good.

Matties: Let’s talk about the market: Where do you see it headed over the next two to five years?

De Serrano: I don't see that the PCB market segment is shrinking at all. I see it growing. I think the PCB business is an outstanding business to be in. Think about this for a second: Every person you see walking through an airport, even walking through this IMS trade show, all have at least one or two circuit boards on their person. Everything today has a circuit board in it.

As for the number of PCB manufacturers in the U.S., this will continue to shrink through acquisitions and/or closures. Some of the smaller guys who’ve been here for 30 or 40 years will end up just having to close if they can’t sell their business; they just won’t be able to buy the big equipment needed to move forward with where the technology is headed.

Matties: Perhaps with some of these smaller brownfield sites, it would be better to start fresh?

De Serrano: When you buy a small company like that, you’re not really buying the equipment, the people, or the location; you're buying the customer list. If you are to greenfield a new facility, the ROI takes quite a long time. No customers, no employees, nothing to help you offset your costs during construction and start up time. This is basically a five-year ROI, and the reason you don’t see more new PCB factories being built in the United States.

With all the studies I see about the PCB market, it's still growing at a very good CAGR. You’re seeing the impact of reshoring as businesses want to pull out of China and move back to the U.S. It's making the market grow here; however, customers are realizing there is a significant cost difference between the U.S. and China, which is a tough pill to swallow.

Mattiies: What’s next for your investment in capital equipment?

De Serrano: We just invested $6 million to $7 million in a brand new, automated lamination department, so next for us is in our plating area. We've already designed a new electroless plating and copper plating line to improve aspect ratio, process time, and quality. Plating is the hardest because you can't shut down during production or your revenues stop. You have to put in a new line and then re-work the existing area, so plating is the hardest to grow and the hardest to move. The new design is complete and we should be starting on this sometime in 2024.

My team likes to design their own products and then have others build it. For example, our etching lines are made in Germany by Schmid and they're just unbelievable. Next would be a $7 million investment into the iNPACK division; we would copy the division in Israel and open in the U.S. for microelectronics assembly and advance packaging.

Matties: Your move to advanced packaging really caught my attention, especially having the foresight, fortitude, and wherewithal to make it a viable offering.

De Serrano: Again, that was the vision of our CEO and our investment group almost four years ago. In fact, they had already started the investments in 2019 with the vision, but then COVID-19 hit. It delayed the program a bit but not much. Even with COVID they met their timelines, and it has been really exciting.

Matties: It’s fun to be part of a company like that.

De Serrano: I'm an EE and I’ve been working with PCBs and PCBAs for a long time, from designing them, to selling them, running sales, and now leading all operations in the U.S. What we’re doing now is new and exciting to me; I'm not an expert yet on packaging, but I’m learning everyday. We have staffed our team with the best in the business.

Mattiies: Any final thoughts you'd like to share with industry?

De Serrano: This is a growth industry, a growth market. I would like to start a mentoring program for the younger generation to encourage them to see what’s here. We're not getting younger and we know there’s a gap in this industry. We just have to keep talking about what we do, how important it is, and what an exciting field it is. Maybe we can have institutes around the country that provide summer jobs for young people, so they can see it’s not just coming in and turning screws. You're running a million-dollar piece of equipment. We'll teach you how to run a laser drill and so many other things. It’s more than a panel going through the factory; it brings purpose to the world.

When we build products we like to explain to our manufacturing team what it does or show them where it goes so they know what we’re building and how they are affecting the world around them.

Matties: Jeff, I appreciate your time and your insights.

De Serrano: This has been very enjoyable for me. Thank you.