Protecting the supply chain is about more than ensuring semiconductor inventories, some argue.
While most of the country’s focus is on semiconductors, there are other risks to the electronics supply chain that threaten our national and economic security that have not yet been addressed.
When President Biden signs the CHIPS Act into law, it will bolster U.S. chip manufacturing capabilities after the ongoing COVID pandemic upended global supply chains. Unless there is similar fast action for other electronic parts and components that semiconductors need in order to work, new shortages will certainly emerge and continue roiling the U.S. economy.
The U.S. printed circuit board (PCB) industry is mitigating supply chain risk by creating a rigorous quality control and supply chain standard, IPC-1791, Trusted Electronic Designer, Fabricator and Assembler Requirements, in consultation with the Department of Defense.
This standard promises greater security in defense electronics, but it also offers a path to a stronger supply chain. It “provides minimum requirements, policies and procedures for printed board design, fabricating and assembly, and for cable and wire harness assembly organizations and/or companies to become trusted sources for markets requiring high levels of confidence in the integrity of delivered products,” according to IPC, the global association of electronics manufacturers that issued it.
Understanding the broad potential underlying IPC-1791 requires a look back at the erosion in U.S. electronics manufacturing over the last 30 years.
“In the 1990s, policymakers prioritized the growth of the global marketplace both as a means to spur U.S. economic growth, but also to export U.S. economic values,” said Chris Mitchell, vice president of global government relations for IPC. “Unfortunately, this focus on the global marketplace came at the expense of the U.S. industrial base.”
Between about 2000 and 2015, the PCB industry was devastated. “We witnessed and experienced firsthand the commoditization of printed circuit boards and signals from Wall Street that you should buy your circuit boards from the least expensive source possible, which meant offshore,” said Todd Brassard, vice president and COO of Calumet Electronics Corp., a PCB manufacturer based in Calumet, Mich. “We went from 2,000 shops to 200 in just 15 years … And Wall Street celebrated; they had changed the basis of their costs for PCBs [and] saw it as a huge success for their shareholders.”
The erosion of our country’s electronics manufacturing base put the country at greater risk from counterfeiting, intrusion and the theft of U.S. companies’ intellectual property.
For example, “You buy a reel of components – and the first 100 components may be real, and then every seventh [one] is counterfeit,” Brassard said. “It’s subtle, but think if it ends up being 10% or 20%. DOD’s concern is that they could allow those circuit boards into their supply chain.” It means that fighter jets could be grounded because a key system might fail, or that circuits have been surreptitiously modified. “It’s really in that context that you see why it is so important for DOD to establish security requirements for their electronics suppliers.”
That is why “trust and unclassified information control became key components of this standard,” said Randy Cherry, director of IPC’s Validation Services program. “IPC-1791 is intended to evaluate a business and their ability to control the information in their company.” He said the standard incorporates components from other organizations that significantly improve quality, reliability and cybersecurity.
Why U.S. Sourcing Matters
The semiconductor is akin to the human brain, putting the “smart” in everything from smartphones and satellites to automobiles and aircraft.
The human brain is a marvel of evolutionary achievement. It controls everything from thought, memory and emotion to motor skills, appetite and the five senses. To accomplish this, the brain relies on the central nervous system – the spinal cord and peripheral nervous system that branches off the spinal cord and extends throughout all parts of the body. If the spinal cord is severed or seriously damaged somewhere, the brain will keep sending signals to the body but everything below the point of damage can’t receive the signals and respond.
Now apply that image to a semiconductor. It is a marvel of technological achievement, getting smaller, denser and more powerful all the time. But it relies on the printed circuit board (PCB) upon which it’s mounted, which connects it to its power source and transmits its signals to the components and devices it controls. In other words, as the industry describes it, “chips don’t float in thin air.”
“As the chips get smaller and smaller, it’s increasingly challenging to connect them to the other electronic components to create functionality,” Mitchell explained. “The connections between those components need to have integrity. But the U.S. is not investing in these segments of the industry, which leads to the stark reality that the U.S. today can design technologies that it can’t build at scale.”
Producing more semiconductors in the U.S. without addressing other electronics components will actually lengthen the supply chain, as those chips will still need to be exported to Asia to be mounted on foreign-made PCBs.
Mitchell said, “Policymakers are getting smarter about the ecosystem that supports technological innovation. They don’t want to incentivize the building of ‘mansions on stilts,’ so they are beginning to engage in constructive conversations with the industry on federal policy actions that will support what IPC calls a ‘silicon-to-systems’ approach to the electronics industrial base.
“Electronics manufacturing facilitates innovation across all sectors of the economy, but it is an industry in its own right that also requires innovation … IPC-1791 is a mechanism to support security but also to facilitate a move to a silicon-to-systems approach,” he said.
The Challenge for Manufacturers
John Vaughan is vice president for strategic markets with Summit Interconnect, headquartered in Anaheim, Calif. Summit is the largest privately held PCB manufacturer in North America. The company has seven factories in the U.S. and one in Toronto, Canada, with a primary focus on defense and customers all over the world. Four of the American plants have been certified as IPC-1791 compliant and designated as trusted sources. During his 40-year career, he has watched as the domestic PCB industry has been dismantled by Asian companies, but he’s fighting to keep the American industry competitive.
As semiconductors get smaller and more powerful, “the circuit traces on the PCB get thinner, and we have to stack layer upon layer upon layer of circuitry. [We have to] laser-drill holes no bigger than the diameter of a hair to accomplish the interconnects. It puts a lot of pressure on our industry. We used to buy a drilling machine for $75,000 - $100,000. Now laser-driven drilling systems are a million dollars,” Vaughan said. “Smaller companies don’t have the revenue or capital to keep up with the technology or security [requirements], specifically the cybersecurity requirements for managing the technical data packages for controlled unclassified information.”
Investing to meet IPC-1791 requirements provides Summit a competitive differentiator, Vaughan said. “There are probably less than 30 companies currently” meeting the standard, he said. “The prime contractors are beginning to adopt it. If IPC-1791 can pull some of those smaller fabricators through, we would absolutely have a stronger domestic industry.”
Sourcing requirements for IPC-1791 create increased opportunity for companies validated to the standard, and advances the concept that unmitigated risk is an unacceptable cost in the production of defense electronics.
Vaughan said Wall Street fundamentally misunderstands the capital expenditure challenge that keeps PCB manufacturers from raising the funding they need. “Technology changes rapidly, and if we’re going to provide the base platform for chips to mount on, people need to recognize there’s a lot of investment needed to keep up with the technology curve,” he said.
While the lack of funding is one challenge, it’s closely followed by another – the engineering aspect. From a technical standpoint, being able to design advanced PCBs is challenging, as is finding a skilled workforce that knows how to build them.
Calumet is one of the small companies working hard to meet the challenge, Brassard said. The company has a single facility, in Michigan’s Upper Peninsula, producing about 4 million PCBs annually. It employs about 350 people, many of whom the company trained. Everything it creates is manufactured in the U.S., and it was among the first to hold IPC-1791 certification.
“China is taking electronics manufacturing seriously, demonstrated by the sheer amount of money the state is dumping into its PCB industry,” he said. “Without the pandemic and political saber-rattling, the U.S. may not have noticed before it was too late to try and reverse course. We were coming dangerously close to being a post-industrial country.”
DOD backs IPC-1791, But It Isn’t a Department-wide Requirement Yet
There is an important but rarely visible level in the Pentagon bureaucracy – the Office of Executive Agent (EA). There are 81 EAs spread over 12 DOD components. Their primary role is to coordinate DOD objectives that spread across more than one component. They support a range of activities, including managing technology.
Craig Herndon is the program manager for the DOD Executive Agent for Printed Circuit Board and Interconnect Technology. His office worked with IPC in the development of IPC-1791. “We initiated development of the original concepts for the standard in recognition that PCBs needed to be trusted,” he said. “We’re very active in IPC, especially in the development of industry standards, and the eventual transition of the concept to IPC seemed like a smart path.”
Herndon said the EA is working hard to get DOD to adopt IPC-1791. “We also utilize many of the other IPC standards and certifications,” he said. “We’ve moved away from military standards – that’s been the push by DOD, to embrace commercial standards wherever it makes sense.”
“A secure and reliable supply chain is a big focus for DOD right now,” Herndon explained. “We’ve seen those interruptions and disturbances resulting from the pandemic. As the DOD Executive Agent for PCBs, we’ve undertaken the development of a supply chain risk management tool that would assist PMs and PEOs in identifying and avoiding supply chain issues within their programs. A lot of people have their own program specific tools...but from a PCB perspective, this represents a unique approach, assigning risk indicators to each component within the system.”
There are efforts within DOD to elevate concerns about the PCB supply chain up to the White House. For example, the departments of Commerce and Homeland Security issued a joint report in February assessing critical supply chains for the information and communications technology industry. The report cited IPC-1791 as an example of an industry standard that elevates supply chain security.
“What we’re doing with the CHIPS Act relative to microelectronics is great work, but it’s critical that some funding be carved out to address PCBs and advanced packaging, as those technologies are advancing as well,” Herndon said. “The critical thing to understand [is that] microelectronics are advancing at an extremely rapid pace. As feature sizes and line traces get smaller and smaller … that, in essence, enables the warfighter to carry more resources, [and] it is critical that we accommodate those advancements. If we don’t, we’re going to be unable to incorporate the microelectronics advancements that will enable the US military to maintain its superiority over our adversaries.”
More than a DOD issue
While DOD’s needs are a focus of IPC-1791, improvements in the supply chain will have consequences far outside of defense applications. The DOD may be the single largest customer, but circuit boards are required for anything that uses a semiconductor.
“The electronification of everything continues to expand, while our industry declines,” Vaughan said. “We’re myopically focused on DOD and the defense industrial base, and rightfully so, but the control panels that operate our water systems, for instance, run on microelectronics. As does our electric grid, IoT systems, automated sense and avoid systems in planes and cars, railway systems, servers and so on. There needs to be a sustainable market in the U.S. to provide opportunities for capitalization of the high technology equipment required to produce PCBs. It is time to focus on the highest possible security and not the lowest possible price.”
In this changing landscape, the industry sees IPC-1791 as all the more critical. While it was developed to improve the security of DOD electronics, it also offers a mechanism to develop a community of manufacturers that constitute the strategic industrial base for PCBs and electronic assemblies. Once that community has been defined, DOD can measure its health, monitor its evolution and support its growth.
As Mitchell points out, “Manufacturing is critical to innovation, so bolstering the electronics manufacturing ecosystem is imperative if the U.S. intends to remain a global tech leader.”