Report on Phase I of IPC Market Research on Electronics Technology Trends: Insights about 10 Key Trends from Interviews with Industry Experts A White Paper by Sharon Starr, Director of Market Research, IPC Several new and comprehensive technology trends studies are underway at IPC. They began with a series of interviews with executives and other experts in printed circuit board (PCB) manufacturing, electronics manufacturing services (EMS), original equipment manufacturers (OEMs) and suppliers of materials and equipment to those industries. The interviews helped to identify the top trends to watch in the electronic interconnect industry. They also uncovered wide ranging views about the time horizons and potential impact of these trends. Miniaturization Miniaturization, high-performance electronics and high-density interconnect (HDI) are three closely interrelated trends that are already in full swing, but have no foreseeable stopping point. Competition and customer demand continue to push electronics OEMs to offer products with ever greater functionality, speed and performance attributes. At the same time, consumer demand for lighter portable and hand-held electronics has grown, and the response has been the miniaturization of electronics. OEMs must continue putting more functionality into smaller spaces. While miniaturization may have reached its limit in some consumer products, based on usability, there is no end in sight to the drive for greater product performance and value. High Performance The demand for more input/output per square inch and/or smaller devices is driving the trend toward high-performance electronics. These products are needed to meet the large and growing demand for data transmission capability of up to 25 gigabits per second, which requires lower-loss tangents and signal integrity. As OEMs continue to demand more high-performance materials and their requirements keep increasing, lead free becomes an ongoing concern. 1
High-performance materials are more brittle than FR-4. Thermal reliability is the issue. Laminators are working on it, but North American PCB manufacturers express the concern that the major laminators in their region are not investing enough in research and development to address this issue. Some see a big gap between OEMs requirements and the current high-performance materials. Other interviewees believe there is no gap between what OEMs want and what suppliers can deliver, except on the issue of cost. High performance is converging with high speed in electronics. This adds complexity and the need for low-loss materials, more backdrilling and sequential lamination. Materials made for radio frequency (RF) applications will be used for routers, and this poses big challenges to the average PCB fabricator. Some PCB manufacturers see big challenges, but also interesting opportunities for PCB and laminate suppliers in this market. There will be opportunities for non-traditional, non-digital laminates, and more use of Teflon materials. The opportunity for PCB manufacturers is higher margins from producing complex products. There are challenges in working with material that is not reinforced by glass weave, but the producers that can do it will prosper. High-Density Interconnect (HDI) HDI is the PCB technology that is one of the keys to achieving miniaturization and high performance in electronic products. OEMs want smaller, thinner and finer packages in both rigid boards and flexible circuits. Higher speeds, increasing complexity with low-loss materials, fine-pitch components, input/output (I/O) requirements, the need for more back-drilling and sequential lamination are driving demand for HDI boards. While miniaturization has been a clear trend in consumer products, HDI technology is now being used in large form-factor products as well. It is being seen in high-end networking, military, aerospace and medical equipment. The military is now interested in HDI because it solves radio frequency problems. The medical equipment industry is moving from ceramic to organic solutions so they can do wireless updates on implantable devices. Chip designs with HDI can put more functionality into smaller spaces. The high capital investment needed for PCB manufacturers has been a barrier to entry into the HDI market. Building a complete HDI line can cost around $10 million. PCB manufacturers in Asia have 2
been investing heavily in this technology for years and now have most of this business. Few North American PCB manufacturers have entered this market to date, but more are doing so in response to the demand from OEMs. An IPC survey in late 2008 showed that 29 percent of North American OEMs considered the supply of HDI boards inadequate to meet regional demand. Embedded Technology Embedded components, some believe, could move board manufacturers into the role of chip integrators. The board will become one large component. Resulting developments will be new technologies that can manage electrostatic discharge and shock. In addition, some components will move from PCBs to being embedded in ball-grid-array (BGA) semiconductor packages. This trend could continue to drive the merging of PCB and semiconductor technologies. It is believed that the major developments will occur on the package/substrate side than on the PCB side. Flexible Circuits It is widely believed that the demand for flexible circuits will continue to grow faster than the demand for rigid boards. It is being driven by consumer electronics, the elimination of connectors, formfactor reduction, and the low profile or thinness of flexible circuits. Flexible circuits are being used in HDI as the interconnect between boards. Some new applications include stack-memory devices, smart phones, liquid crystal displays (LCDs), light-emitting diode (LED) televisions, printed electronics and now medical devices, especially implantable devices. Flexible circuits find applications in anything needing miniaturization. Sophisticated rigid-flex circuits are used mainly in military applications where cost is less of an issue. Rigid-flex is a small segment of the market. About $1.5 billion in rigid-flex was produced worldwide in 2009. It represents about 23 percent of the flexible circuit market and only about 3.5 percent of the total PCB market worldwide. Many manufacturers do not expect much growth from rigid-flex, except as an alternative to some undesirable connector solutions. They say it is problematic. When complexity goes up, yield goes down and that adds cost. Lead Free Manufacturers agree that lead free is here to stay. Lead-free PCBs and assembly are required for consumer products under the RoHS Directive, but the global marketplace has made this a de-facto 3
worldwide requirement. The RoHS exemption for high-end infrastructure and industrial products was extended to 2012. Based on the proposed revision to RoHS, it is expected that by 2018 medical, monitoring, control equipment, and possible other electronics will become subject to RoHS. Military, aerospace and automotive products are expected to remain exempt under RoHS. None of the proposed RoHS scope expansions are final yet. Nevertheless, even servers are becoming lead free in advance of the requirement. Leaded products are still available, but the supply base has shrunk and is now too small to drive development of new products. Some believe the cost of supporting both types of products will become untenable and the dual supply chain will eventually disappear. Many suppliers of components will not invest in small quantities of leaded products. Some believe the supply chain will not implement dual part numbers to differentiate leaded from lead-free products, due to the logistical difficulty. Many in the industry believe both leaded and lead-free boards will survive. New materials are the key. Laminators are continuing to develop enhanced lead-free materials because lead-free reliability is still a concern to many manufacturers. According to some EMS companies, assembly yields are becoming stronger, but they are still experiencing some problems. Other manufacturers now consider lead-free a proven technology. Regarding the impact of leadfree solder and processes on boards, some say the materials in the FR-4 space are pretty robust, but the high-performance materials still tend to be more brittle. New materials are being introduced all the time with better thermal properties, but they are costly. Halogen Free Interest in halogen-free products is growing everywhere due to political pressure from nongovernmental organizations (NGOs) on OEMs. Actual demand for halogen-free products is growing fastest in Asia, but more slowly in North America. PCB fabricators in North America say that more customers are asking for halogen-free boards. More solder suppliers are offering halogen-free flux and solder paste, and more laminators are offering halogen-free materials, but the materials are new and need to be tested for thermal performance in the lamination process. Qualification of halogen-free materials is needed, but this takes time and money. 4
Problems of halogen-free boards include brittleness, cracking, pad cratering and electrical performance. Some laminators believe halogen-free materials are becoming standard, claiming that problems in the plating process are minor and are being fixed. Some in the EMS industry agree, and say that technical challenges and reliability problems with halogen-free materials have been minimal. Some even claim that halogen free actually has performance benefits, such as better z-axis control which helps in low-frequencies, lower-loss tangent for higher-speed signals, lower moisture absorption, and better thermal conductivity for heat dissipation. The biggest problem they cite is assurance of supply. Not everyone believes halogen free is becoming universal. Some customers are more concerned with reliability, especially for military and aerospace devices, and high-end mainframe computers. The materials are unknown at this stage, and not all are the same. While many believe that bromine is not safe for the environment, not all of the alternative flame retardants used in halogen-free materials are environmentally friendly either. The U.S. Environmental Protection Agency (EPA) is now evaluating flame retardants in printed circuit boards, with input from IPC and other organizations. It is widely believed in the industry that the movement toward halogen free is not based on good science, but on marketplace pressures. Nevertheless, the consensus of the manufacturers IPC interviewed is that the trend toward use of halogen-free materials will continue. One U.S.-based PCB manufacturer claimed his company s production is now 100 percent halogen free and that this type of board will take over the market. Most North American PCB fabricators are getting into halogen free gradually. Light-Emitting Diodes (LEDs) Applications for LEDs are growing and demand is especially high in Asia where LEDs are widely used for lighting. LEDs tend to be used in high-volume, low-end applications. Asian manufacturers have developed a mounting scheme using polyimide flexible material with copper on one or both sides, and mounting the LEDs onto the flex. They are also using white solder mask to increase light intensity. They actually apply white legend ink to the etched copper foil, which functions as a solder mask. This process is also extremely cost-effective. Most LEDs need thermal dissipation. The boards are simple, but materials matter and LEDs will drive major changes in materials. LEDs call for higher-end thermal materials, including ceramics. LEDs 5
also require different solder mask. LED televisions, one of the big growth markets, are driving the demand for metal-clad laminate and metal-based PCBs. All of these drivers represent opportunities for the PCB supply chain. Optoelectronics Copper will reach its limit in bandwidth, and technology will need to go farther. The higher bandwidth of optical circuits, as well as lower power, lower heat and signal purity make optical circuits advantageous in high-speed networking and data transmission applications. Some optical circuits are used in military applications. They have also been seen in mobile phones from Japan. They are still more costly than copper. A cost-effective system has not yet come together, but some believe this could happen in as little as three years. Others are not so optimistic. They cite the facts that the technology is not yet fully developed and there is no infrastructure to support it. Optical circuits are not easily integrated one cannot plug and play them as can be done with copper. Light still has trouble bending. Another barrier cited was the array of different methods for design and manufacture of optical PCBs developed by the manufacturers that have invested in R&D for this technology. Standards and industry-wide agreement on the best method of design and manufacture are needed. A solution is not expected for at least five years and adoption will be slow due to the high cost of investing in equipment to make optical PCBs. Development will be driven by OEMs, especially in the server industry. While optoelectronics is expected to grow incrementally, most believe it will not replace copper. They will co-exist for a long time. No mainstream market potential is seen currently for optoelectronics. Most manufacturers interviewed see widespread acceptance of optoelectronics being 10 to 15 years away. It still could be the next big thing, according to one expert in the PCB industry. Many agree that it is a disruptive technology that, when it becomes practical and cost-effective, will have a huge impact on materials and processes. Printed Electronics (PE) While the potential for printed electronics (PE) is huge, most North American manufacturers see it as an early-stage technology. The display industry has adopted it. Improvements in materials are aiding the growth of PE in consumer electronics and low-end applications, as well as those that require flexible 6
substrates. The consumer applications are large and growing, but North American manufacturers view PE as a current opportunity for high-volume Asian manufacturers primarily. There are reports of emerging use of PE in some complex applications, however, including embedded passives, miniaturization, z-interconnects and multi-functional structures. The main problem manufacturers see in PE today is a lack of reliability, but this is improving with the development of new inks and processes. Developing micro-contact printing and nano-imprint lithography techniques will also facilitate more applications. There is plenty of speculation in the industry about the impact of PE in the future. One PCB manufacturer believes that cost and environmental concerns will make the etching process obsolete in ten years which, if true, would provide more impetus for the adoption of printed electronics. It is rumored that the major chemical companies are studying ways to create circuitry using PE to print components onto the dielectric. Another view heard in the industry is that PE will not replace PCBs, but will expand the scope of electronics applications. Manufacturers see PE blurring the boundary between laminate and PCB fabrication. They believe it will have the biggest impact on PCB manufacturers and could eventually move significant volume away from traditional PCB technology. Design standardization and process maturity are needed for this to happen. Many believe PE will change the world, but not for many years. A few experts in the field of PE, however, see it as a major disruptive technology that is ready to take off. This is one of the vital questions IPC hopes to answer in its technology trend studies. Next Steps Phase two in the research process is now underway with the development of surveys to collect hard data that will define the current state of these technologies, future projections, and their impact on the electronics industry. In-depth interviews will augment these findings with insights from the companies that are on the leading edge of these technology trends. This work will culminate with the publication of several new studies in 2011. For more information about these studies or to participate, please contact IPC s director of market research, Ms. Sharon Starr, at sharonstarr@ipc.org or +1 847-597-2817. 7