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What if the Occam Process Actually Works?
January 1, 2008 |Estimated reading time: 7 minutes
Since the introduction of the Occam Process back on August 1st, several thousand people have read the White Paper and tens of thousands more have read technical articles, news releases and attended conferences where Joseph Fjelstad founder of Verdant Electronics or one of his advisors has spoken about the Occam Process.
It's pretty safe to say that, by now, at least 10% of those in the electronics industry should know about the Occam Process and its promise of changing the way electronic products are made.
Although much of the feedback we've received has been quite positive, there have been some doubts expressed about the "Occam Promise:" Can all of the extensive list of benefits promised be realized? Are the technical challenges too great? Can Occam truly offer enough cost advantages to justify the reinvention of the PCB and Assembly industries? Those are really good questions and important concerns. The answers to most if not all of these questions will be resolved over time. Almost all of the technical people I've spoken to acknowledge the challenges but they do not see major impediments. It doesn't seem like there are any technical "show-stoppers" out there.Along with some of the other technical editors in the industry, Joe Fjelstad has been providing updates to us, here at 007, relative to the progress of the Occam Process on a regular basis. He and his team have made significant progress in a very sort time, which Joe attributes in part to a "perfect storm." One part of the storm is the accelerating globalization and the relentless drive to provide low cost, reliable products to the billions of consumers out there and to the millions of new consumers who enter the market each year. Another part is the "greening" of the industry and the drive to build products which have a neutral impact on the environment. As part of the effort to go "green" the industry has been saddled with Lead-Free which, anyone who reads the technical journals will know is causing lots of problems throughout the supply chain. Whether the pains of lead-free are just the natural pains of transitioning to a new process technology or will prove a disastrous demand from the EU, remains to be seen. But, one clear result is that OEMs are much more open to alternatives these days. The fact that the Occam process is not only lead-free but also solder free has been a major contributor to the interest the process is receiving.
There has, as well, been growing interest from around the globe with more and more people being introduced to the technology, daily. Although unable to name names, Joe states that an Occam Process Project for the US Military will likely start in Jan-Feb. He also has met with some leading household name OEMs and global equipment suppliers. With one OEM he is moving into the final stages of a development deal which could well move Occam into the mainstream sooner rather than later. One major equipment company (not a current industry supplier) has expressed interest in building an Occam specific piece of processing equipment. Their top technologists have met several times with Joe and Verdant. They understand the advantages of the technology and the opportunity. They are motivated and confident that they can build the machine if there is customer demand. They see Occam as a way to break into and, desirably from their perspective, dominate this market. Joe has noted with some disappointment but not without understanding that none of the current industry equipment suppliers have expressed an interest in the Occam Process. Fortunately that is not the case with some of the more alert and progressive printed circuit materials suppliers. Perhaps the traditional equipment suppliers are taking a "head in the sand" approach, hoping it will all go away. Personally, I hope that isn't the case, but it has happened before.
So, based on what I've been able to glean from our conversations, the picture for the future of electronics fab and assembly looks something like this:
Driven by a major OEM, the Occam process will be pushed down through the supply chain to reluctant suppliers, initially. If the right OEM is first to jump, and Joe has indicated that his discussions are with just such a company, then Occam will begin to spread to other OEMs and their suppliers. The rate of growth could well be exponential. As more and more PCB and Assembly suppliers come-up-to-speed with the technology, they will begin to offer it to more and more of their customers who will want the reliability and cost savings which will be well documented by then. So, that's the OEM dealing with the current supply chain. But Occam goes beyond that which is likely why there would be significant interest from a substantial equipment company.
Allow me to speculate a bit. What if there was a machine an OEM could buy for 5-10 million dollars which would replace their current requirement for boards and assemblies? What if the end product of such a machine was much more reliable, flexible and cost efficient. What if the products it produced were much "greener." What if the machine cost $20 million dollars and produced all the boards and assemblies they needed for a certain product line? Let's say it was a mobile handset OEM producing 100 million units each year. Of course, they'll still have to purchase most of the same components, but they can now pack them more closely together, allowing more function in the same or smaller footprint. The weight of the assembly should be about the same since the PCB and solder are gone but an encapsulant has been added but by removing the solder ball which contributes roughly half the height of a package, the assembly could well be thinner.
Materials costs for the Occam assembly can't be too much (say 50 cents per, max) and with the elimination of the PCB and Assembly cost, say $2 ($1 for each) that's a gross savings of at least $100 million annually. The lease rate is probably $100-200k monthly for that $20 million dollar piece of equipment and operations another million (labor, facilities, etc,). So, just off the top, it looks like Occam could save an OEM mobile handset manufacturer between 100-150 million dollars annually. As Joe points out in his White Paper and in all his presentations, reliability is a key benefit of the Occam Process, so, now someone has to factor that savings in as well.
Now that I've made the argument for the OEM, let me do a bit more for the equipment supplier. Can an OEM justify spending $100 million for an Occam Process machine? Will a one-year (or less) payback justify the move to Occam? It seems so, but I would venture to say that the simplification of the supply chain alone may be enough to justify this expense, or the improvement in reliability or the greening of their products. If these arguments are starting to make sense, then you can see why this may be attractive to a major equipment supplier. They see a huge potential market, and they are the only player, at this point in time.
Good news for the West, bad news for Asia
As many have pointed out, the Occam Process will probably not proliferate over night. That's Joe's position as well. However, I and some others I know in the business are not so sure about that. As I stated earlier in this article, if the right OEMs get a hold of it, it may move very quickly. Some of the "right" OEMs are those making consumer products for the global market. Harvey Miller has suggested that John Negroponte's $100 computer (which now sells for $200) could well end up being made using the Occam process. The OEMs will drive this down through the supply chain so fast that most won't know what hit them. The good news for PCB fabs and Assemblers in the West (the US and Europe) is that they don't do too much business with these types of OEMs any more. The bad news for Asia is that they do. The $64 billion question is: how far will the OEMs go with Occam. Will they reverse their out-sourcing trends and start bringing production back in-house? I didn't think so a few months ago, but now, with the indicated interest of this global equipment manufacturing company, I'm starting to believe that we may see some manufacturing trending back to the OEM because of Occam. It would certainly give the OEM more control over their IP with the ability to ship an opaque "Occam Brick" to a final assembler. That begs another question: how much is IP control worth? If it gives a company another 3-6 months market lead, what's that worth? One company comes to mind right away: Apple. What would this be worth to them?Send your comments to: ray@iconnect007.com