Exclusive Interview with AT&S "The Roles Will Shift."

Walter Moser, AT&S: "I am convinced that the business model will change. The circuit board is the connecting element between the individual components. This means that the circuit board manufacturer will play a different role in the future than before."

Despite the challenging market and currency environment, AT&S, the circuit board manufacturer, increased consolidated sales by a good 21 percent to EUR 991.8 million in fiscal 2017/18.

An interview with Walter Moser, Chief Sales Officer of the Automotive, Industrial, Medical business unit of AT&S.

Markt&Technik: AT&S is always at the leading edge when it comes to new technologies or new areas of application. How is AT&S preparing for 5G and other new fields of application?

Walter Moser: We are firmly convinced that we need to understand the application so that we can offer the right solution. This applies not only to 5G, but also to all other application fields. Therefore, we first take a look at the application and evaluate which technology and which expertise is required. This is an ongoing process and an integral part of our annual procedure. We delve very deeply into the application analysis and decide on the basis of our findings whether we want to and can get involved in a new area.

How do you ultimately decide whether you want to play a role in 5G?

We decide pragmatically whether we can make a contribution based on certain filter criteria, and in the case of 5G we are convinced that we can.

What special requirements does 5G have for the circuit board?

A special feature will be, e.g., antennas integrated into the circuit board. The packing density will also be even higher. However, it is not yet quite clear what requirements exist for the frequency range. It will take some time until 5G is ready. At the moment, most of them are still dealing with sub-6 GHz frequencies. Applications that run in the range of millimeter waves are especially interesting. But the path to 5G will be an ongoing process until the first patterns emerge. 5G not only extends to mobile phones, but also to other areas of industry.

Will new materials be required for the circuit board for 5G?

We are quite sure that new materials will be required. Mobile telephony uses a different material than industrial M2M communication, although the applications are very similar in the frequency range. So the question is whether there will be standardization in this respect. Of course there will also be a battle between companies, which suppliers will come onto the market with new materials…

So you are already evaluating new materials?

Yes, we do this on an ongoing basis, because we not only use 5G in the RF range, but also other market segments such as radar and aviation. In this respect, we are constantly evaluating new customer-specific materials. For us, this also means, of course, optimizing the choice of materials as far as possible and not allowing their diversity to degenerate - in other words: to become unmanageably large. Which materials are used anyway depends very much on the industry.

What role do digitization and Industry 4.0 play in circuit board manufacturing - do you apply the Industry 4.0 principles of networked manufacturing in your factories?

The effects for us are greater on the production side than on the order side. Wherever new plants are built, Industry 4.0 plays a role. If you remember that in Europe we specialize in small quantities in particular, it is all the more important that Industry 4.0 is successfully implemented. We use MES systems and quality data analyses in our production. According to the closed-loop principle, we allow the findings to flow back into production in real time, enabling us to react faster and more efficiently in order to optimize production processes.
From the order side, no mass quantities will be added by Industry 4.0. But we are seeing increasing volumes and projects in the areas of sensors and actuators as well as M2M modules.

Why could the future of circuit boards lie in packages and how would the business model for a circuit board manufacturer change?

I am convinced that the business model will change. The circuit board is the connecting element between the individual components. This means that the circuit board manufacturer will play a different role in the future than before. We already see a clear trend on the customer side. Above all, we notice this change in the area of circuit board embedding.
An essential part of our strategy is to position ourselves as a provider of connectivity solutions for our customers and in industry. We adapt the system with circuit board and package to the customer's requirements and on the other hand we integrate the components.

Is this at the expense of other players in the supply chain?

It is not said that it must be at the expense of other actors in the supply chain. When I need a high level of integration in the component, the know-how remains with the component manufacturer. Our competence lies in how to connect the individual components.Roles will shift. But you won't be able and want to pack everything in one package. Our goal is not to act as a competitor to the assembler, but as a partner, because after all the package has to be connected or installed somewhere again. This can be with the end customer, but also with the assembler. Value creation will shift in one direction or another, depending on requirements.

What is your production volume for packages and what is the percentage of total output?

We currently produce around 100 million packages per year, and the trend is rising.

What is the future of circuit board production in Central Europe?

There has been an enormous consolidation in recent years. And it was a difficult time due to pressure from Asia. Those from our industry who have mastered this time are very busy today. There are some circuit board manufacturers in Europe, especially in Central Europe, who are doing really well. In Central Europe, we continue to manufacture series in new technologies that also involve high volumes. If our plants in Austria did not exist, we would not be so successful in Asia. This has to do with the fact that we work very closely together by researching, developing, prototyping, and producing series in Asia.
A second aspect is that we also use plants as backups. It is very popular with our customers that we have our own plants in both continents. We also have no strict limits on what we produce on which continent. On the contrary: We always have large overlaps, i.e., technologies that are manufactured in Austria and India, for example, when deadlines are tight. This gives us the opportunity to act flexibly and offer our customers the choice. This is particularly convenient in exceptional situations.

Have we reached the end of the consolidation wave in Europe or will the industry continue to change here?

The European circuit board industry has already recognized very well where its strengths lie and that it can hold its own. The price-driven areas are already gone. The areas where you have to act with know-how and understanding for the product and the customers, on the other hand, are still located here and will remain here.
Success will only be reaped by those companies that get behind their work and do what the customer needs. With all the striving for the lowest costs and optimizing business models, companies always have to do with each other in which people work that communicate with each other and network and stand behind what they do. And that's exactly what AT&S does, we get behind it and live our philosophy.