More Options for OEMs
02/01/2005
OEMs have more options today regarding how to get their products to market on time, with the high quality and low cost that is now expected in the industry. With downsizing, mergers, acquisitions, scarce funding, and the push for smaller, faster, and more efficient products, it has become more essential to explore these options and weigh them carefully. Among the options are maintaining all R&D, design, production, and test in-house, purchasing specialized automated equipment, or outsourcing product development, prototyping, supply chain management, test, and/or volume manufacturing.
For advanced packaging products, a key to maintaining production in-house is to optimize processes. One way to achieve this is through automation. Automating a process disciplines it. Precision automatic equipment can be an extremely powerful, productivity-enhancing tool. This is especially true in the case of complex process automation, such as automating dispense and die attach processes, high I/O wire bonding, and active optical alignment. Augmenting production capabilities with automated, high-precision assembly systems enables high yield at high-volume production levels, revenue growth, and improved margins. New, higher-volume optoelectronic components requiring scalable manufacturing capacity dictate a cost-effective manufacturing strategy tailored to meet the unique demands of precision optical component assembly.
Since OEMs have been under considerable downward cost pressure for the last 3 years, many manufacturers have recognized that a paradigm shift in assembly methods is necessary to drive down component costs and accelerate time-to-volume. Besides a shift from manual assembly processes to automated manufacture and test, OEMs have looked toward outsourcing.
In the past, OEMs were reluctant to outsource electronic, mechanical, and optical assemblies. They felt that only they could manufacture high margin, complex assemblies because only they had the requisite design and process engineering capabilities to build the most complex assemblies. They considered outsourcing only for manufacture of low margin, low technology, commoditized assemblies. In addition, they were leery of the difficulty involved in transferring complex manufacturing processes to an outsourced partner and ramping to volume.
While that was true of the typical electronic manufacturing services (EMS) companies of a decade ago, EMS has grown up, and a new model has emerged. A highly educated and available workforce of trained operators, technicians, and engineers, even in many low-cost geographies, provides OEMs the option to outsource complex assemblies and reduce their manufacturing costs. However, in exchange for outsourcing their most critical and complex assemblies, OEMs must demand that the EMS partner have an existing base of engineering expertise and manufacturing technology, guard-banded IP protections, and traceability of materials, manufacturing, and engineering from procurement through shipment of finished goods. Today, a growing number of EMS companies specialize in the assembly of complex electronic and, in a limited number of cases, mechanical and optical devices.
While some OEMs are outsourcing everything but their core competencies and IP, others are taking a more scaled-down approach. With the advent of companies that specialize in the quick-turn prototype market segment for complex PCB assemblies, photonics, optoelectronics, and advanced packaging solutions, products can go from design to supply chain to build, and all of the information, data, and recipes that would help achieve this rate go forward to the receiving factory. A seamless transition is ensured because the prototyping company manages the transfer to the manufacturing facility of the OEM’s choice, wherever it is in the world.
Another outsourcing option can be found in the process development, prototyping, and test services of equipment manufacturers. A company that manufactures the equipment for assembling all types of optoelectronic and high-frequency wireless packages is familiar with the processes and manufacturing methods to optimize the performance, yield, throughput, and quality of the finished product. Companies looking to develop or validate new products, but who require the design, engineering, prototyping, assembly and automation expertise, and/or metrology resources to bridge the gap between product concept and automated production find this service a cost-effective and time-saving method to go from design to production.
There has been much debate as to whether it is better to manufacture in the U.S., Asia, Mexico, or other low-cost geographies. The best location to manufacture depends on where the OEM and where the end customers are located, the complexity, types, and volume of products being manufactured, where the product is to be delivered, the landed costs, and many other factors.
An OEM who asks the right questions and examines the options should find the formula that best meets his corporate goals.
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BRUCE HUENERS, vice president of Marketing, may be contacted at Palomar Technologies, 2230 Oak Ridge Way, Vista, CA 92081; (760) 931-3600; e-mail: [email protected].