Aismalibar on Markets, Materials, and the Increase in Copper Prices
As a European laminate provider specializing in insulated metal substrates and thermal management, Aismalibar is often put in the demanding position of catering to some of Europe’s toughest customers, including the automotive industry. Pete Starkey and Barry Matties caught up with Director General Eduardo Benmayor at the most recent Electronica trade show to learn more about the company and get his take on the current state of the IMS marketplace.
Barry Matties: Eduardo, can you begin by telling us a little bit about Aismalibar?
Eduardo Benmayor: Aismalibar is a copper-clad laminate company and we have been in this industry since the beginning of electronics. Aismalibar was one of the first laminate companies in Europe, launching the first laminates in the 1950s. Today we are following electronics and we are concentrated on a niche product in the laminate business, an insulated metal substrate dedicated to thermal management problems. As you know, electronics are getting smaller and smaller every day and heat dissipation is a key factor. We are really dedicated to this segment inside electronics.
Pete Starkey: Eduardo, when we walked into your booth you were forming a very intricate paper doll out of a profiled and etched material. Can you tell us a little bit about that?
Benmayor: That's right. You have seen one of our most popular laminates today. It's called Flextherm. That's a thin aluminum in the range of 0.8 mm to 1.5 mm cladded into copper with a very thin, dielectric layer and it's capable to be formed to different shapes. The goal here is to make flat PCBs, populate them with the components, and then be able to bend and shape them into different forms. The goal of this laminate is to improve the old technology built with a conformed aluminium cladded with a flex PCB on top from one shot of element. Flextherm saves a lot of money on assembly and gives a lot of reliability to the electronic component itself, as technology and thermal performance is much better.
Starkey: That particular circuit that you were forming, what would be the application for that?
Benmayor: That's a real light of a BMW 7. We developed this together with their team. We are doing a lot of lights development in the automotive industry.
Starkey: Is the automotive industry the main growth area for IMS materials?
Benmayor: No, it's not the main growth area but it's the most demanding area. The automotive industry is probably peaking with technology and quality and there is a big request for fast dissipation on PCBs in the automotive industry and that's why we are really focused in this area.
Starkey: We're familiar with application of this automotive lighting, but what about developments in the electric vehicles and power management? Do you have applications in that area?
Benmayor: Yes, it's based always on the same principle. The electrical vehicles have a lot of power inside the models and require a lot of electrical strength. That's also a niche area of Aismalibar, where the fast thermal dissipation and the electrical strength are very important in these elements, and we are seeing a nice increase, especially in the power models used in the electrical automotive industry.
Starkey: Do you do most of your selling to the fabricator level or do you normally talk at a higher level, say, to the OEM designers and determine what their requirements are and how you can fulfill their requirements and then get your material engineered into the product?
Benmayor: That is the goal of us being in this show. We are mainly approaching OEMs at this show and through the OEMs and their engineering platforms we go down to the scale of the PCB manufacturers. We need to show our technologies and our advantages to the OEMs so we can implement a different type of engineering on their drawings and from this point drive it down into the light manufacturers and from the light manufacturers down into the PCB producers.
Starkey: As an exhibition and a show, is electronica the opportunity to meet the people that you want to meet at that level?
Benmayor: Yes. To approach the big OEMs is a difficult task because they are such big corporations and you need to find the right people, but in these kinds of shows we are able to detect the right engineering department. From this starting point we are able to go through their organization to the right people and make the presentations for the right engineering departments.
Matties: What sort of problems do your customers come to you and say, "How can you help us?" What is the greatest challenge?
Benmayor: Today it depends on the sector. If we go to the automotive industry, the challenge is always thermal management and how to dissipate the temperature faster and in a more effective way. If we go to the power model, power train, then we see also the thermal management case but combined with high dielectric strength. That is a key factor for them because they normally use high voltage or require high insulation in between the functional areas and the heat sinks to guarantee the functionality on street lights, for example, or high power modules where the current is very high.
Matties: Do you do a lot of business in the LED market and metal-back type of boards?
Benmayor: We do. The core business produced in our plant in Barcelona is metal-backed boards. We see two different levels and we think that the market is being divided into the low end IMS boards, where low thermal dissipation is required and simple laminate can be used, and very demanding customers that need perfection inside the IMS. They need fast dissipation and they need what we call 100% guaranteed insulation in between the functional copper and aluminum, a key factor in this kind of material.Aimalibar is the only IMS supplier that guaranties a high pot test to all the laminates we deliver.
Matties: What about pricing? When the automotive companies come in, obviously, price is an issue, but it seems to me that they are willing to spend more to get what they need. Do you see that as the case or do they still just beat you up on price?
Benmayor: For the automotive industry I always say that first you need to beat the technology. You need to gain the attraction of the automotive guys with your technology and once they are really happy with the technology or what they are seeing then you start to have an opportunity but as always this ends on a price discussion. If you are able to offer them, technology-wise, a solution that really fits into their engineering development and price-wise it’s acceptable, they normaly move ahead.,
Matties: How are the market conditions in Barcelona?
Benmayor: Spain is a small country in the electronic area. There are no really big players in the electronics area itself, but we have big OEMs and big car manufacturers like SEAT, Ford, and Renault. They all have plants located in Barcelona and some of their R&D centers are also there. We have big OEM players in Spain related to big industry, but in electronics itself there is no a big industry compared to Germany, for example.
Matties: Is all your manufacturing done in Barcelona?
Benmayor: We do a part in Barcelona and a part in Taiwan. The high-end products are always made in our plant in Barcelona.
Matties: How is the Asian market?
Benmayor: The Asian market is very price-driven. The volumes are very big there and they are concentrated on low-end engineering and mass production. We are not really focused on the Chinese market, but we have both an office in Taiwan and in China capable to serve our OEMs worldwide. But we are not approaching the Chinese OEMs or the big electronic manufacturers directly in China.
Matties: Do you see a day when you will, or what stops you from doing that? Is there no money in it?
Benmayor: It is very difficult to work in China. Big organizations, much bigger than our organization, have failed when going to China and you see a lot of stories about the failures of many big players going there. We know the Chinese market because we have been involved with them for many years, especially in the FR4 area, but we don't see how to invest our money in a market such as China because the competition there is very strong and mainly price-driven. The way to manage a Chinese company is very complex and we do not have enough human resources to send our technical staff into China to develop engineering or a new facility. We really don't see the business behind it.
Matties: And in North America, how is your business?
Benmayor: We are growing steadily. Every year our growth has been nice in North America.
Matties: You are working with Jeff Brandman?
Benmayor: Yes, Jeff is our general manager in the North American office. He is doing a great job there. We are now having a lot of communication with the automotive industry and we have got a couple of very big projects there together with Ford. We are already at quite an advanced stage of the project.
Matties: How many employees do you have?
Benmayor: We have 100, so we’re medium-sized.
Matties: That’s a nice size, comfortable. What sort of growth curve do you have?
Benmayor: We see the company growing, with a nice growth in automotive together with a new product range used as thermal pads with high dielectric requirements and low thermal resistance.
Matties: What about copper pricing? There is a lot of talk about how it is going up, up, up.
Benmayor: The copper price looks like that because the Chinese government made that announcement that they want lots of vehicles made with batteries before a certain year. Based on this, all the copper manufacturers have moved a big part of their capacity into the battery sector, which has less technical requirements than the copper for laminate. Business is business. They prefer to invest in that sector and to have a nicer margin than in the traditional copper foil for electronics, so if you want the electronic copper foil you have to pay the new price.Matties: On a percentage basis, do you have any idea how much of a price increase we are going to see for copper in 2017?
Benmayor: I think that the laminate will increase in the range of 25–30%. This is my personal guess, but a price increase not just because ofcopper but also the glass fabric. Raw materials like glass fabric, base chemiclas, and epoxy resins will also have an increase. These are the three main elements in the FR-4 or in CCL laminates. No doubt the price will grow.
Matties: Do you see any fabricators stockpiling at a lower price to save money? If you know you are going to buy the material and it is going to go up 20%, why not buy a year's worth? It’s free money and a competitive advantage a year from now?
Benmayor: Yeah, but that is not easy. You can see manufacturers that have the full integration of the copper, the glass, and the FR-4, all in a row, and they are keeping the prices there since they have all the extra capacity in their plants. We need to understand one thing: The price is increasing, but the capacity is not increasing. The volumes are still low.
The problem we are having in the FR-4 business is that the copper price has increased because of the battery segment, and the glass fiber plants have increased the price because they stopped some reactors and there is a shortage of deliveries. Then the price goes up but there is no extra demand on the laminates. That is the main reason for the price increase. We need to pay attention and be strategic with the price increase, because at this particular moment maybe it will grow up to 30% and we won’t see a drop down on price until possibly the middle half or end of next year. Nobody knows.
Matties: Where do you get your copper from?
Benmayor: We buy it from Europe and from Taiwan. They are our two main suppliers today because of the quality.
Matties: As they say, there are varying degrees of quality, right?
Benmayor: Yes, Aismalibar is extremely picky on quality, especially in the copper. We have a German supplier and a Taiwan supplier.
Matties: What do you think is the most important thing a PCB fabricator should know about material?
Benmayor: That is a very good question. In general, I think PCB fabricators should know more about the methods we use to control the laminates. IPC, ASTM, and UL have many different norms to evaluate laminates and the PCB engineering department should be aware of how all these tests are performed in order to compare at the same level. PCB manufacturers tend to accept a data sheet coming from a CCL manufacturer as real but you cannot imagine the number of CCL companies in China that declare nonsense values on their data sheets.
Matties: What should they know at that lower level? Do they need to know anything other than I order it from you and it shows up?
Benmayor: They should know when they have a quality claim, that they should really be able to point out the laminate and know why this is giving them trouble. It is not the same FR-4 coming from a low end Chinese player as from a high-end Chinese player or a Taiwanese player or a Japanese one. Everything is FR-4 but the technology to produce it is behind the resins, the coating technology, or pressing technology and so on. Those are what will affect the final quality of the product, and customers should be able to appreciate the difference. It is not only a price-driven element.
Matties: Are you at all in the RF space?
Benmayor: No. We would like to be, but it is not an easy market to enter. We are aware of that.
Matties: Are you not in that market because of the capability in your factory or are you not in that market as a strategic decision?
Benmayor: We simply do not have the technology. We are learning from this technology and we are putting some effort there, but it is a long ride to get there.
Matties: Base material like the glass fiber is really important in the RF space sector and you mentioned the pricing going up on that. What is driving the pricing on that?
Benmayor: There is a less amount of glass fiber right now. It looks like the big players in the glass fiber industry stopped part of their capacity and made the price increase. This is what we have been informed of.
Matties: When will you be in the RF space?
Benmayor: That is another good question. Aismalibar has a very strong reputation in the market by doing really state-of-the-art laminates and if we penetrate this market we cannot fail when we get there. We need to be conscious and from the technical perspective do our proper R&D. We will need years.
Matties: How large is your factory?
Benmayor: The factory is around 5,000 square meters, or 50,000 square feet. We have a capacity of half a million square meters and we are actually producing around 100,000 square meters of aluminum.
Matties: Is there anything that we haven't talked about that we should be talking about?
Benmayor: The market in Europe looks to be active and we are quite happy about this. We have been for five or six years in a very depressed scenario with the PCB makers in trouble, but we have seen reactivation in general in all of them. We see investment because the other part of our group develops machinery for the PCB industry and we’ve see activation in the investments, which is a good sign.
It means that companies have some financial resources for new investments and the investments are basically focused on the technology, not on increasing capacity. They are always focused on new developments, new projects, and new technologies that they are willing to achieve.
Matties: It has really been the automotive industry that ties in with the economy in electronics in Europe?
Benmayor: The automotive industry gives a lot of support to the local electronic industry. No doubt it is one of the strong markets for the domestic PCBs and PCBAs.
Matties: Now that Trump is our president-elect, do you think there will be any impact from your point of view?
Benmayor: I don't know. There is a lot of talk of this new president at the show because he has just been elected a couple of hours ago. We will need to wait and see. A “protection of the USA” industry will always benefit EU as we will need to follow somehow.
Matties: What is your sense? Do you think it is going to be better for industry or not?
Benmayor: He is declaring that he wants to bring back the industry into the States, which is a good sign. I wish that some politicians in Europe did the same. The industries in North America and Europe cannot rely on China. We need our own industry and we need our own R&D centers to develop our own technology, even if it is higher in price. We have to work out what is the right price and the customers will need to pay for it at the end of the day. If the Far East really wants the technology coming from Europe or North America, they should have to pay for it.
We have to get used to this. Not everything has to be price-driven. This is my approach. Looking back 20 years ago, there was no electronics in China at all. Today they are the leaders in the world and we showed them how to do it. We, I mean the Europeans and the Americans, taught them how to do the PCBs, and now they control a big part of the electronics industry in the world and we have very little capacity. I think that we should re-invest in our own capacities, in our own technologies, and then try to keep the production domestic. That is the only way.
Matties: I think you are right. Pete, do you have anything else to add?
Starkey: No, just that it has been a very interesting conversation to be part of and to listen to. Thank you, Eduardo.
Benmayor: Thank you very much.