K&S and Assembléon: A Perfect Marriage of Technology and Services
At the recent Productronica 2015 event in Munich, Germany, we spoke with Jeroen de Groot, Vice President for the Advanced Packaging (Mass Reflow) Business Line, and Chan Pin Chong, Vice President for the Wedge Bond, Capillary, and Blades Business Lines at Kulicke & Soffa (K&S), about K&S's acquisition of Assembléon and its benefits to their customers, as well as the latest innovations happening at the company's product lines.
Stephen Las Marias: Jeroen, could you please tell us about Kulicke & Soffa and how it has been since the company's acquisition of Assembléon?
Jeroen de Groot: Assembléon was formerly part of the Philips group. We went through a name change from Philips to Assembléon. The Company was establishing and moving market focus from SMT to advanced packaging. However, we faced with challenges such as the lack of presence in the market and a strong name that customers could recognize.
Becoming part of K&S was a very big opportunity for us. It gave us access to a bigger install base and sales network and people who knew the market for advanced packaging, whether it was for wire bonding, wedge bonding, thermo-compress bonding, etc. For our customers, we kept all the machine names. The machine names are what the customers recognize. And for us, it’s important to the commitment we have together within the K&S portfolio towards advanced packaging.
Las Marias: What was the rationale behind K&S's acquisition of Assembléon?
de Groot: If you look at the world of packaging, the world of making components and the world of making electronic products, you will see that there are numerous ways now that lead to Rome. There is not only one process. Traditionally, packaging included parts of wire bonding and parts of flip chips, but we see more and more mixed applications. The systems and applications are changing, flip chip bonding has becomes more widely used, and we are seeing emerging volumes in certain applications such as thermo-compression bonding.
In order to provide customers the different solutions to support the various processes, having a wider portfolio of solution to meet these requirements are essential. From a customer point of view in advanced packaging, you should be able to provide a wide portfolio of solutions. That is where I think we complement what is going on within K&S already at the moment.
Obviously, the historical role of ball bonding and wedge bonding is where we’re very strong. Thermo-compression bonding is an upcoming new process which is a local reflow process, a copper pillar-based process, which complemented what we do at Assembléon. Mass reflow really complements the portfolio and provides a wider base of solutions to our customers.
Las Marias: So far, what has been the impact of this acquisition to the overall K&S business portfolio?
de Groot: If I look at it from the customer, sales, or R&D point of view, the operations we have around the factory are extremely independent. If you look at it from an engineering and business point of view, after five minutes people knew from each other what they were talking about. We recognized opportunities for our customers and recognized that we had much more in common than we originally thought. That has gone very well. That’s also the way the customers view it. They welcome it. and I think it has worked out very well.
Las Marias: With this branding now changing all your Assembléon brands to K&S, what will be the impact to customers? How will their perceptions change?
de Groot: I think it will be recognized. Customers that know the K&S name, but not necessarily the SMT world or the Assembléon name, will see something familiar and still something new—something familiar in terms of the name and commitment of the organization, but the product underneath obviously will be new for them, which will definitely trigger their interest.
It also works the other way around because the existing Assembléon customers will look for the Assembléon brand name. They will see something else, but they will also see new equipment and a new organization. That’s very complementary both ways.
Las Marias: I understand you are presenting some of the new technologies from the company here. Maybe you can tell us more about it and the significant improvements that they have over your previous models.
de Groot: If you look at the former Assembléon SMT and advanced packaging part, you have the iFlex. We are continuously improving and enhancing the iFlex series of machines with additional smart flexibility functions and features. iFlex is the best option for customers looking for smaller batch sizes, preparation of line, production on the machines, and fast changeovers.
We also have the more traditional SMT high-volume equipment, which is very successful in the automotive and 3C applications. Apart from that, we have the Hybrid, which is truly a process machine—a platform where we combine different processes. At almost every show, almost every month, we add new capabilities to that machine to be able to provide customers with more processes.
Las Marias: What industry trends are driving innovation strategies for your products?
de Groot: Looking at the big picture, to a large extent it’s related to miniaturization—integration of functions, lower cost, high volumes, better yields, shorter time to value and so very short ramp up times to a lot of good products. That’s what we see.
We also see a lot of specialization, a focus on quality and better yields, getting more out of your machines, and high degrees of automation looking at big data, Industry 4.0, and transparency. What process is your machine running? Is it within the process boundaries or not? The machine should guide the operator. The machine should guide the customer.
Las Marias: Can you tell us some of the new product developments that are in the pipeline for the company?
de Groot: For us, it’s coming back to the integration, which we are leveraging on. K&S is very strong from a process point of view. We’re still learning what that means. What process can we add to our machines? That’s really the phase where we’re at and then we will make that work for customers. That’s what very much we’re focusing on.
Obviously, if you look at the machines, they are generic. We look at new capabilities, such as rate of feeding, improvements of security; that’s in general the direction that we are moving towards to align with the market requirement.
Las Marias: What markets are driving the growth in sales for the company?
de Groot: In Asia, it’s predominantly advanced packaging driven by smartphones and tablets. In Europe and the U.S., we’re seeing automotive to a large extent as well as industrial markets. I think if you look at the Internet of Things (IoT), for example, and as I mentioned before, big data, a lot of that comes down to industrial applications. That is where we see a lot of growth.
Within that segment of industrial, there are things like security, medical, and LEDs, which is a sector that is growing. That’s really where we see clear differentiation between Europe, U.S. and Asia.
Las Marias: From a regional perspective, which regions are fuelling growth for the company from a revenue and sales perspective?
de Groot: It’s pretty much spread over the three regions. Asia is where you have the larger projects, but we have the larger install base in Europe and the U.S.
Las Marias: What about China? Right now, they are having some weakness in the economy.
Chan Pin Chong: I think the market is going through a transition now. I would say that the demand for tablets and smartphones will continue to grow, but the growth rate will not be as fast as compared to the last five years. There is still demand in the market, whether it’s in the Advanced Packaging Mass Reflow (AP-MR) area or in wire bond, I would think that there is potential growth. It’s probably a moderate growth versus a large growth.
The common market for AP-MR and wedge bonder is the automotive and power management market. That should have a potential for growth because there is a lot of push from governments and provinces on energy efficiencies, whether it’s building, power and/or solar management. In areas of power, there is potential growth because of the push factor from different countries, striving for increased energy efficiency.
Focusing back on China, I think the area of IC market for phones and tablets will still see growth. However the growth rate will be slower. It will not be phenomenal, unlike the past 5–10 years. There are also more demands for new trains and efforts into energy efficiency. Buildings are greener now. They want to keep pollution under control. With that, there are potential demands from infrastructures and power management. I think those areas will fit in different portfolios, whether it’s in an AP-MR, wire bonding or wedge bonding.
There will still be some growth that will be focused on application-specific areas. And those areas are a more sustainable. It has less cyclicality in terms of driving infrastructures and potential opportunities. China will probably be the largest contributor towards that as a single country, a single region because there is still a lot of government push from Chinese government to reduce pollution and be greener, whether it’s the cars or buildings or industrial.
Las Marias: Can you tell us about what you see in the future for your industry and your company?
Chong: That’s like looking at a crystal ball and predicting what’s going to happen in the next two years. Kulicke & Soffa has more than 60 years of history evolving wire bonding technology and now with the integration of Assembléon, we are expanding our space into the advanced interconnect technology. We believe there are growths in the electronics sector.
Some areas will be higher growth, some areas will be lower growth and some areas will probably be maintained at a sustainable rate. I don’t think there will be any significant transition. Like I said, putting two wires together has gone on for more than 60 years, but it’s just making it faster, better with lower cost-of-ownership that will continue to evolve. Whether it is the placements or in the bonding, we will continue to grow as long as consumers still have the demand for more electronics in their hands, in their homes, and in their cars. That’s the reason why I think the future of K&S will continue to be towards that same growth of general electronics.
Las Marias: Is there anything that we haven’t talk about that you think we should be talking about?
Chong: I would say that as electronics and semiconductors industry will continue to mature and I think every company are continuously looking out for opportunities to expand and grow. We have expanded our product and service portfolio with the family of Assembléon joining K&S. We will continue to be looking out for other areas of growth.
Another simple example of traditional wire bonding that we have expanded in is batteries. There has been a lot of battery bonding in the last two years. That’s also an opportunity of diversification for these electronics. This is just an example. It’s too early to know about the development or new businesses, but K&S will be looking at areas of growth and we will continue to find areas where we can expand our space. Our vision is to be the leader in advanced interconnects, and we will continue to find ways to provide more solutions for our customers.
Today, if somebody walks into this booth looking for a solution, with the series of machines that we have here, it’s basically building the whole interconnect story. We’re working towards being the solution provider versus just a box or machine that goes fast, quick or accurate. We want to be able to leverage on the expertise that we have to provide our customers end-to-end solutions. We will continue to expand and look for opportunities to increase that breadth.
Barry Matties: Do you think your competitors are taking that same path, though?
Chong: I think a lot of them are moving towards a very similar paradigm.
Matties: What sets you apart then if you are both doing that?
Chong: We are very focused on our core, which is advanced interconnect. Two wires are connected, and something needs to be placed on the pad. In that space, we are niche and we stay focused. We are not going into, for example, an oven or something completely different from our core business. In terms of wire bonding and advanced interconnect; we believe we are the leader. We will continue to find and expand the space as we continue to grow.
We are not jumping into a completely different league like wafer or something in the front-end. I think it’s about expanding the space in the core, and we will look for spaces where we will continue to grow and build solutions.
Matties: In terms of the equipment, what’s the gating factor? Is it speed for your customers? What do they really look for when they are looking at equipment?
Chong: From an industrial point, it’s always what I call a high level thing, which is Moore’s Law. Doubling transistors and basically trying to improve your productivity. They want to pack in more things in a smaller form factor. They want their machines to be placing more accurately because the transistors are smaller, and the package is smaller. The next thing they’re driving for is efficiency improvement, which is what we call cost-of-ownership. It comes down to speed, uptime, availability of your machines and so forth.
In all areas of our products, we have a common theme to drive the efficiency, but at the same time, maintaining that few microns of accuracy. We will need to continue to look for opportunities for efficiency improvement. This is the same theme across the entire supply chain of electronics. As long as Moore’s Law is in place, I don’t think anybody is going to just walk away from that paradigm.
Matties: Well it sounds like you guys have made a nice marriage here.
Chong: I think the integration between K&S and Assembléon is a good thing. We see a lot of opportunities; instead of going in as two companies trying to sell a solution, now we are ONE K&S offering a combined solution, and because of the synergies, we could even offer more ideas about how we could innovate and bring better solutions to our customers.
At the end of the day, they like to talk to one guy who can bring an end-to-end solution. I think this is a perfect marriage of the two companies and we anticipate a lot more of opportunities for growth and cross synergies together as One K&S.
Matties: How was the cultural merge between the two companies? That's always a tough challenge in the acquisition process.
de Groot: I think it worked out very well. Looking at our customers, they are global. We’ve had a strong history within Philips, a global company, and have been doing business with them over 20 years internationally. Everybody, of course, has been cross trained with all the organizations. It was very seamless. Adding to what Chan Pin has just mentioned, looking at competencies, especially from a technology point of view, the base is the core. In all our machines, there is something unique from a technology point of view where we do things a little bit differently compared to competitors, which gives customers a clear advantage. That philosophy of being able to sell and explain it to customers, and having customers value that, is also something that binds us.
As a team we were together at one of the shows this year where a lot of people met each other for the first time. After five minutes, shoulder to shoulder, everybody was selling each other's machines through the other. It was great to see. Because we get questions about wedge bonding and they get questions on pick-and-place, and it worked out very well and very fast.
Matties: When a customer comes to you, what sort of demands do they put on you in terms of equipment or process or delivery times?
de Groot: Even if we do the job perfectly well, they are always looking for more, of course. With our type of equipment, you become part of the supply chain. If you have to order spare parts, you’re part of their system. The people have to be trained. It’s more than just delivering a machine. We’re delivering a process, a service and we become a crucial part of their operations. If our machine is down, their operations could be down because it can be quite crucial.
In terms of response time, and in terms of understanding what the customer wants and being proactive on processes, our service engineers will service the equipment for customers, regardless if it’s K&S’s, because we value the customer and they’re important to us. Our focus is on our customer, our customer's process, and we always do more than just selling them a machine. The solution is not only a piece of equipment. It doesn't work like that.
Matties: It’s really about the people that they do business with. You guys have been around for 60 years at K&S and now with Assembléon you have a lot of talent and knowledge that you bring to the market. Congratulations. This sounds like a good marriage and it looks like you are making it successful. Thank you for your time today.
de Groot: Thank you very much.
Chong: Thank you.