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Calumet Aims to Close IC Substrate Gap in U.S.

Calumet Electronics is working to be one of the first IC substrate suppliers in the United States, helping to fill a critical gap in the domestic electronics supply chain.

“Calumet will be one of the first, if not the first, to bring scalable IC substrate capacity to the United States,” COO Todd Brassard said in an exclusive interview with EE Times. “We have been developing this capability for about three years. We are nearly completed with our first substrate demo-builds in cooperation with a few defense and commercial OEMs. We are not even in production yet, and potential demand for our substrates is already over 1.5 million units a year.”

The integrated circuit substrate industry, worth $10 billion annually, is indeed all located in Asia. As the U.S. government aims to rebuild an electronics ecosystem with the support of the recently passed CHIPS Act, industry experts say IC substrates are likely to remain one of the weakest links in the domestic supply chain.

While chips continue to shrink, the printed circuit boards (PCBs) connecting ICs have lagged that miniaturization trend. IC substrates act as interposers, bridging the dense I/O connections on chips with the much wider line-pitch widths on PCBs. Without IC substrates in the manufacturing ecosystem, the U.S. lacks a complete supply chain, particularly for electronics used in defense systems.

“On one side of our business, we have prime defense and commercial OEMs with tough design challenges to solve that are experiencing ever-increasing risks with their Asia supply chains, with few or no domestic sourcing options,” Brassard said. “And on the other side, we have domestic materials and chemical suppliers with innovative technologies, and equipment manufacturers rallying to be part of the solution. In the middle is the fabricator, like Calumet, who must stitch novel solutions together with close collaboration from industry experts.”

Calumet is making a type of IC substrate with semi-additive copper feature formations.

Matt Kelly, the chief technologist at global electronics association IPC, said in March that the U.S. is as many as 25 years behind Asia in substrates.


Leading suppliers

The leading suppliers are Unimicron and ASE Group of Taiwan, Ibiden of Japan, and SCC of China. Unimicron has invested more than $700 million in R&D and capacity expansion for advanced flip-chip substrates through 2022, according to market watcher Mordor Intelligence.

North America has no capability to produce advanced flip-chip ball-grid array (FCBGA) or flip-chip chip-scale packaging (FCCSP) substrates, according to a November 2021 IPC report, the most recent report available from IPC. To become a player in the FCBGA segment, it takes an investment of at least $1 billion, the report said.

Without a North American supply of substrates, chips made in the U.S. need to be shipped to Asia and then back to the U.S., effectively lengthening the supply chain, the IPC report said.

“We’re one of the few PCB manufacturers that survived offshoring to Asia from 2003 to 2015, and not easily: by the skin of our teeth,” Brassard said. “We decided to try to offshore-proof ourselves by pushing into work that can’t be done offshore. That ends up being defense, aerospace, medical, products under export controls, like ITAR, but more generally, things that have intellectual property.”

During the exclusive video call with EE Times, Brassard showed a prototype substrate but declined to allow photos.

“I’ve already pushed the bounds just holding this up,” he said, nodding toward more on a table in his office that he doesn’t dare to show.

Calumet aims to supply custom-designed substrates to defense contractors, which account for about 8% of the company’s business, as well as other customers making equipment for 5G, satellite communications, and health care.

One of the Department of Defense contractors that Calumet is working with needs advanced packaging, including hyper-small, hyper-fast interposers, Brassard said.

“We have learned that an OEM can go to Japan and say, ‘We need a specific custom substrate at very low volume,’ and they’ll say, ‘Sorry, we’re not interested in the business,’ and American companies cannot compel another country to produce products for the U.S.”

Filling an order for substrates from Japan can take years, according to Brassard.

“We know one company that ordered a thousand substrates from Japan in 2019, but they still don’t have them. Japan may also put end-use restrictions on products. They don’t necessarily want their products to be incorporated into war-fighter end applications.”


PCB maker

Calumet, with about 350 employees, ranks among the top five U.S. PCB manufacturing facilities under one roof by capacity, Brassard said. “We’re a small business, but we ship 4 million circuit boards a year.”

During the Covid pandemic, when the Asian supply of PCBs for ventilators vanished, Calumet produced 235,000 circuit boards in about three months to meet demand, Brassard said.

“We’re at the point where we have only two or three companies in the United States that can produce very complex, high-density interconnect circuit boards. We may be, as far as we can tell, the only, or at least one of a very few, PCB shops in the U.S. that is developing manufacturing capabilities for organic substrates to help fill a major gap in the domestic microelectronics ecosystem.” Brassard added, “Record demand of conventional circuit boards makes it unattractive for PCB manufacturers to take on the high costs of R&D and scaling more complex technologies now that their profit margins are improving after a 20-year drought.”

To ramp up production for PCBs, Calumet has been investing in processes like electroless nickel immersion gold (ENIG) finish, hot press, and copper plating capacity. Investments for substrates include fine-line lithography equipment and tools for high-density electrical test and optical inspection.

“We have so many electronic systems that sometimes you start listening to the robot overlords instead of your workers who are on the line, and you don’t want to do that,” Brassard said.

“Advancing workforce is going to be essential in the United States, as well as starting to recognize that jobs in manufacturing are prestigious. That’s one thing Asia does better than we do.”

The company aims for yields of up to 90% on its advanced PCBs.

“Each single circuit board is going to be incredibly valuable,” Brassard said. “A mistake on a $300 panel is very different than making a mistake on a $20,000 panel or a $200,000 panel.”

That quest for high yield will depend on closer communication that helps achieve manufacturing success.

“We have fractured our manufacturing across the country and across the world, and we can’t communicate with each other very effectively, so we can’t innovate,” according to Brassard. “Innovation does not come through moments of inspiration. It comes through iteration.”

There are signs that U.S. electronics manufacturers are more aware of the risks they face.

“Some OEMs haven’t figured out that they have a problem yet; others have done the research, done the surveys, looked across their vast organizations, and drawn some conclusions that there’s not enough capacity in the industry to serve their company, let alone all companies, all the defense and commercial OEMs,” Brassard said. “We have also had some prominent brands asking us about substrate capacity. They’re asking us, ‘Can you commit to building a million of these things in 2023?’”

Brassard pointed to the vulnerabilities of what he calls a “FedEx supply chain”:

“It goes back and forth, and there are so many opportunities for bad actors to intervene. We are committed to U.S. manufacturing. We stuck to it, and it almost cost us our company for a while there, back in 2007, 2008, when all the PCB shops were getting wiped off the planet.”