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Murali Srinivasa On How Pcbs Are Made And Why India Lags

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TITLE: Murali Srinivasa on how PCBs are made and why India lags | Markets by Zerodha CHANNEL: Markets by Zerodha URL: https://youtu.be/z4ppHtHR4fg

---TRANSCRIPT--- PCBs in one way or the other are the things that are powering everything. If you could in plain simple English explain me what it is

in very simple thing like if you have seen any TV circuit boards like those are all basically circuit boards. Can India make this? If not India then who leads this? We are very good at single layer. Single layer problem was solved in 1980s. When it comes to two layer we are also good. When it comes to multi-layer also to certain extent we are doing but as a country we were net exporter of copper basically when the steride plant in Tamil Nadu closed post that we became net importer of copper this is also one of the barracks for us doing PCB manufacturing because copper is a yeah this is this is very big cost goes up yeah uh there is almost 10 to 20% increase in raw material CCL prices just from last month to this China is the leader in China. They do single layer, they do HDI and everything in between. And the interesting thing is we were leader once. So what happened after that? I still don’t know if India is the is at the right place to do PCB right now because of the lead that China has had. We’re starting from just knowing the knowhow. Definitely I think right now we are not in that position but we are heading in the right direction. What were the things that they learned that we don’t know yet? There are a lot of things.

Uh thanks for doing this mood. Uh you know the idea behind doing this podcast was that we wrote about printed circuit boards a while back. I mean we were I think one of the few guys who were interested in understanding how they work etc. and you replied to one of our threads. U thanks thanks for doing that. Uh just before going into the whole thing I just if you could u tell a little bit about what you do what what your company does. Yeah. Yeah. So at Lion Circuits um so we build uh printed circuit boards uh we assemble them and we also source components. So basically we build the entire printed circuit boards right. So we manufacture printed circuit board. That’s our core. Um so we do that uh through a self uh you know uh a platform approach where a self-service uh portal through a self-service portal right so primarily anybody who is sitting anywhere across the world can order printed circuit boards from India by going to LAN circuit. So uh

PCB or printed circuit board is a word that we like we don’t really hear a lot. It’s mostly chips. So what from whatever little I’ve read I’ve understood that for every kind of electronic item whether it’s a weighing scale or a or a or a car for that example for that matter uh you need a chip but to run that to use that chip you need a PCB.

Yeah. So PCBs in one way or the other are the things that are powering everything. True. If you could in plain simple English explain me what it is, right? Right. See PCB is um is basically the substrate for mounting any IC’s, any semiconductor. Right. What what are IC’s? Uh so IC’s are basically integrated circuits, right? These are uh basically the uh very important things that are runs electronics right like anything you see any electronic device it’s basically uh run by the semiconductor right like you have all the programming logic and uh you know all these uh things coded in these semiconductor right and to mount all these things right uh because these semiconductor components are very uh minute tiny uh you know sometimes It’s uh uh you know it has so much uh pins to be connected uh electrically in a very small area that it needs a very complex uh substrate substrate substrate or or in a very simple word it’s basically like a you know a board where all these uh different components will be uh you know sitting in a place right so where all the wires different wires get connected uh right so if you imagine like if if I have to give a parallel, right? Like so you have a building and you have bulbs, right? Uh and you have your main panel and there are wires from your main panel to the bulb, right? Right. So if you want to shrink that like maybe by 1,000x or something like that, you have a circuit board which basically the circuit board is nothing but it it carries these wires uh in terms of in in form of a copper track from one place to another place, right? And you you have your control panel which is your like the main input block like a connector and then you have bulb which could be an LED right and then if you want to now switch on this LED and switch off this LED right um in a way like maybe at a certain time of a day or maybe uh you know if temperature in a room increases beyond a certain uh you know degree CC and then you want to switch on the LED or something like that right right these logics will be sitting inside a controller will be sitting inside some kind of a electronic device so these electronic devices mostly are semiconductors which are programmable IC’s uh right or some kind of a business logic uh which is basically semiconductor right so everything that is mounted is on that board is is basically on this board so in very simple thing like if you have seen any uh TV circuit boards like you know back Then you you you would have seen like those green color uh you know big boards right those are all basically circuit boards right so but like why are they important uh or are they important in the first place? Yeah. So, so just like how today like you have uh you know we before there used to be these uh you know singlestory um probably two or three floors of building right today we have 50 floors 100 floors so just like that even in PCB right when you have more complexity like so let’s say you have a 100 floor skyscraper right just imagine the number of wires that are needed from your control panel to all the floors to uh to get the lights switched on. Right. So just like that. Now if you compare that with electronics you have a very small area to uh you know do like all the stuff that are needed like for example in a phone right it’s almost like a 60 floor uh building uh you can compare a 60 floor building to a PCB which is of 60 layer so these PCBs will have 60 layers the green board is this much to the naked eye Yeah. What does 60 layer mean? 60 PCBs or something else. Yeah. So what you see visually is only the top layer and the bottom layer. Right. So what is there inside is basically multiple layers. Right? So like in the same phone, you know, in all the phones that we use today, uh you have like let’s say probably 1 mm or 1.5 mm thick PCB, right? The thickness of this green color board will be around 1 mm or 1.5 mm and within that 1 mm there are about 50 to 60 layers right which are basically compressed together right into one right and these each layer is like a floor so in each floor you have a lot of electrical connection so you have a lot of copper trays going around connecting between different floors which is basically different layers So a signal which is in in the bottom layer can travel all the way to the top layer through through the 60 layers. Right. Right. So it looks very big like 60 layers but just imagine right like 1 mm. 1 mm is basically like almost like credit card thickness of a credit card probably is like double the thickness of that has 60 let’s say a phone has 60 layers of that. Yeah. So in in that thickness like thickness of a credit card you will have like multiple layers like 40 layer 50 layer. So why are these 4050 layers needed in the first place right? So basically as lot of electronics keeps shrinking right so you have lower what do you mean electronics keep shrinking uh the iPhone size keeps getting yeah the iPhone size for example an iPhone if the iPhone size is getting smaller and smaller or um if the the entire area like let’s say for example uh you need to have a certain cameras and the cameras are getting bigger and uh you have a display and then the effective area that you get for a printed circuit board within the enclosure within the inside of the gets reduced is get reduced it get reduced right so your floor area is reducing your area effective area is reducing but the density is increasing right so you need to squeeze in more um you know it’s like basically you know just like how we are building skyscrapers to accommodate a large density of population in a smaller area. It’s basically you know it’s parall to that you you know the in this time basically what is happening is you need to pack a lot of different electronic components semiconductor components in a very small area right so which means you need more layers you need like very complex um uh you know connections between these multiple layers right so these complex connections between multiple layers uh maybe some of The connections are only between like second and third layer, right? Not every connection is between all the layers, right? So there are very complex connections that are happening between these uh you know different 40 50 layers and that is what is basically making the printed circuit board more and more complex. Right. Right. Um uh for example uh a if you take an variable device right like any variable device right like a watch smartwatch. So can you guess like the number of layers of this smartwatch? Like it looks very simple, right? Like for for a user it is basically it just displays time and it does a bunch of stuff. It’s the same thing. It’s almost as complex as a phone except for a few things, right? It can do a lot of stuff now, right? Just the display is smaller. Um and that basically again calls for putting a lot of different electronics, putting a lot of processing power uh to be able to do a lot of stuff in that small area that that demands a lot of uh you know complex uh you know interconnects. So these interconnects are nothing but PCBs. Right now that you’ve put out that there are multiple layers just in a phone to make that one PCB. It’s hard to make a PCB or like Yeah, it’s it’s fairly complex like um um it depends right like so there are PCBs like uh okay this is one extreme example right so now now let’s take another example before getting into the complexity part right so while phones and you know variable devices form one end of the spectrum the other end of the spectrum is basically your simple remote uh you know remote TV remot TV remotes are typically single layer boards right these uh you know now maybe it has evolved to two layer max but it used to be mostly single layer because it’s very simple it does like very you know simple job but even the TV remote has a PCB inside right basically just connecting all the you know keypads like the number one two and all that stuff to battery and then it emits a you know a certain IR radiations which the TV can understand right even a TV remote has a semiconductor right so it basically encodes a lot of IR arrays so that only the TV understands uh what it is communicating right right when you change a channel or when you want to increase the volume right so in this case it is a single layer board meaning it’s just one floor right There is basically a dialectric material which is a non-conductive substrate and then you have one layer of conductive substrate right so this is very simple and uh in India we are doing this board these kind of single layer boards from probably around early 80s early 1980s right right there is a huge spectrum from very simple single layer to most complex like uh what we call as a smartphone PCB HDI boards Yeah. So in in this entire spectrum, it depends on the where a particular factory is operating. What do you mean by that? Yeah. What what it means is basically uh if somebody is getting into PCB manufacturing, right? So it depends on couple of things, right? Does that particular PCB manufacturing company the factory how many layers are they building? Right? If it is single layer or two layer right it is one category single and two layer is a it doesn’t need a lot of complexity to build circuit boards single single layer is very simple there are lot of companies in India who can do single layer boards uh very low margin and very low cost PCBs next you come to double layer two layer two layer number of players in the current Indian market are less compared to single layer but it is not very complex it’s doable it’s um uh you know it needs to go through a lot of different chemistry to connect uh so here the the most complexity like you know when I say complexity right so let’s define complexity what are the complexity where are these some of these complexities coming from so when you take a double layer two-layer PCB you have the ground floor you have the first floor right you need to make a connection between the ground floor ground and first floor basically a staircase. Right. Right. To construct this staircase in terms of a PCB is basically connecting the top layer conductive surface to bottom conductive surface which is called a plated through wire plated through hole. Okay. A hole which is plated to be able to conduct from top layer to bottom layer. Got it? Basically so that it can conduct electricity. Right. So in order to do this this is a uh this is this is the process which adds complexity first layer of complexity right. So if a particular factory is doing this then they have at least know how to do a plated through whole process and it adds certain complexity it needs certain type of machineries depending on how large the facility is. uh they can do you know highly repeatable uh repeatability. You can control the repeatability the you know the quality of these uh you know uh connections between the different layers they can control based on what type of machines they have. Right. Right. So the next segment uh in the spectrum is basically multi-layer boards. Right. Typically in most of the uh current scenario it is also referred as MLB multi-layer boards basically right you know you know somebody who is layman to this uh if they see MLB it’s basically nothing but a multi-layer board which basically is nothing but more than two stories of building right so if you if you have more than two st two stories it is multi-layer board more than one floor is basically more than one floor is double layer more than two floors multi-layer Right. So why this multilayer is considered as a uh the next uh step in the spectrum is mostly because um you have inner layers. So inner layers get introduced in this particular uh you know uh in this category right. So what it means is now you don’t only have the top layer and the bottom layer but you also have layers which is inside which is hidden which you cannot see visually. Right. Right. So manufacturing these will need more machineries, different types of machines. Okay. Right. Basically where you will do the inner layers separately. Right. And then the you know all the inner layers together are uh you know packed together and then you process the final as a mult two-layer board. So finally it beames becomes a multi-layer board right. So you’ll have you can have like either two layer, four layer or six layer, eight layer, it goes in multiples of two typically because when you take an inner layer inner layer will again have a top and bottom right. So that’s why it goes in multiple of two typically right so you have 4 6 8 10 12 right like that. So the inner layers will also keep inner layers will keep increasing. Right. Right. So this category this segment is called multi-layer boards. So in multi-layer boards because it needs more complexity complexity it has more complexity. It needs different types of machines and it it needs different knowhows. There are a lot of knowhows in these things like processing. What do you mean by know? knows in the sense for example um okay uh I you know typically anybody who runs a PCB industry right they’ll know that uh you know if if somebody is doing only single layer they are limited to that uh you know knowledge right if they are doing double layer or multi-layer uh any process like for example um you know you need to uh create tracks on the surface right basically to create tracks on the surface It’s basically in a very simple term it is photo lithography. By the track do you mean the upper layer of the circuit board or so by tracks what I mean is uh upper layer and also all the inner layers wherever a connection has to be made right in each layer you need the wires like from one side of the board to other side of the board and there might be multiple wires on each uh layer right right so these are basically called tracks PCB PB track right a track on a copper surface basically right so when the these basically tracks are uh you know achieved by using photo lithography okay what’s photoable photo lithography in a very simple uh way if you have to explain is basically if you have a circuit design right like circuit design is nothing but uh all these wire interconnections uh are designed in a tool in a in a in a tool called a CAD like you know just like like in a in a PCB software there will be softwares where you design okay I want a connection from this point to this point and this connection has to be of a certain width of a certain shape it has to go from here to here you know depending on various complexity the this can you know uh be very simple or complex even the design right design itself can be very complex also right so but essentially what we are doing is basically determining what should be the path of the wire, right? And what should be the thickness of the thickness or width of the trace. Got it? So once all these uh things are determined, you will have like a uh pattern we call that as a you know circuit pattern uh on a particular layer, right? So this pattern has to be printed on the uh circuit board basically on one of the layers. Right? What we mean by printed on a particular layer is that you have a copper sheet. That copper sheet you need to convert those that plain copper sheet into tracks and no tracks tracks and no tracks. Right? So wherever you have the connection you wherever you need the connection you keep the track. Wherever you don’t need the connection, you need to remove the copper. Right. Right. So to remove the copper, we need to first print the pattern onto the uh copper. Right. That is done through something called a photosensitive material. We use a photosensitive material. And using that photosensitive material we basically apply the photosensitive material on the copper and then put the pattern image of the pattern onto the uh the copper sheet on the copper sheet on top of the photosensitive material. And then using some processes like you know using an something called etching process um etching etching etching etching process. So these are chemically etched. Meaning wherever you need the trace, you will have the copper. Wherever you don’t need the trace, copper is removed through a chemical process. Like typically ammonia is used, right? Ammonia reacts with copper, removes the copper. Yeah. Right. And basically uh we get the pattern circuit pattern. Right. Interesting. Now this this is basically one one layer. All right. This has to be done. This has to be done for all the layers, right? And finally, it has to be connected all pressed together. Okay. And then again like the staircase that I was telling, right? The final one from the highest floor to the lowest floor has to be connected. Has to be connected. Right. Good. Right. Now when you do that, you can’t see the inner layers. Right. So what we call as uh how accurately can you we call that as a registration right like layer registration. So from one layer the you know top layer to second third fourth fifth how well can you manage to uh place all of them together in a way that when you do the final connection from the top layer to the bottom layer it all matches. Mhm. Right. Otherwise your circuit is gone. Like let’s say when you’re building right like let’s say your uh second layer is you know in the same position where it where you wanted it to be but your you know the next layer right the second and third is one layer. Fourth and fifth is another layer. So your fourth and fifth layer if it is moved by like let’s say even 50 little bit like 50 micron right? 50 micron is nothing is nothing but like your hair our hair like the thickness of hair is basically about 100 micron. Oh okay 15 micron is even 50 micron is basically half of that right like so in that 50 micron if if it moves by that much your entire board is gone your entire circuit board you just throw it after you place all the board if you dis if you come to know that okay it’s moved by a 50 micron right you you just have to dump the the raw material is wasted right this is a this is a multi-layer board we have not even come to the the fourth segment which is basically high density Interconnect high density interconnect. Yeah. So we started with single layer, double layer, multi-layer board, MLBs and then HDI. Okay. HDI high density interconnect board. What is the main difference between HDI and multi-layer? HDI board is also a multi-layer board with more complexity. Okay. What what more? Yeah. So now imagine you have this skyscraper. In a skyscraper, let’s say you have uh you know certain floors which are dedicated to a particular tenant, right? Like let’s say for example uh you have a dup or a you know three play kind of a you know uh home within your skyscraper that is only dedicated that those stairs between these multiple layers are dedicated to dedicated to only one house. Right? So similarly even in PCB we have uh few uh you know uh we call it as blind and buried vas wires via oh va va va is nothing but a connection from one layer to another layer okay it’s called a va which is nothing but a plated through hole okay so this va if it is between only a inner layer let’s say I’ll give you an example let’s say we take a six layer board six layer code um will have your first, second, third, fourth, fifth and sixth. So your second, third, fourth and fifth is basically inner layers, right? Your first layer is outside, sixth layer is outside, right? Yeah. Yeah. Correct. No, in the inner layer if you have a V only from your second layer and your third layer. Right. It’s a buried V. Okay. Okay. It is buried. Oh okay right in very simple term it’s buried inside right meaning if if there is a wire connection between second and third and you complete the PCB you won’t even see on the top that there is a hole inside the PCB right so and then you have that is a buried wire and then a blind wire blind wire is nothing but let’s say there is a via connection between your fifth layer and sixth layer sixth layer because it’s Outside you can see the hole but it stops at a certain uh distance right like it stops at fifth layer. You will not know it where it stops. It like in the design it stops at fifth layer right? Once the board is finished you can’t make out visually right. So these are called blind wires. But what’s the sorry sorry to cut you but what’s the point of these things? Yeah. See as as I was telling like in our first conversation we discussed about the board area getting shrinkedked and that causing a lot of u uh real estate problem on the PCB right so that real estate problem is solved by creating these complex structures so that the entire area which is on top of these holes are utilized for some other uh uh purposes. So now imagine so you have a buried wire. Now the top on top of the buried wire. You can run a track. You can run a wire on top of a buried wire without disturbing the inner uh oh wire that floor space that real estate on the PCB has become so expensive right even a small you know as small as 0.15 or lower some of these wires can be as small as you know 1 to 2 mil right 1 to 2 mil is basically 1 mil is 25 microns 025 basically 25 microns 025 mm right 25 micron is the size of these holes so in order to make a 025 micron hole right you need laser laser drills you need a laser machine specific prec very specific machine to even make these holes. These are not available in all these other factories. Even the multi-layer even the multilayer doesn’t need a but where is HDI all all these kind of things used in all the phones pretty much any phone you take any variable these are all HDI boards and multilayer multilayer would be typically uh let’s say your engine control unit right like in any car everything is driven by electronics right it’s all fly by wire right like drive by wire right like even in aircraft is fly by wire Right? Like so in anything uh anything in car right like mostly is all interconnected by electronics right like it’s all communication like the engine control is is by electronics and these kind of engine control are mostly multi-layer boards uh very less very you know uh in only few places HDI boards are used but most of the automotive segment does it a you know we do it with multi-layer but there are also certain areas in automotive where HDI boards are used. Okay, I have a couple of questions. Uh we discussed how more or less how a printed circuit board is made and the complexity behind it. The first question that I have is can India make this and sorry related to that if not India then who leads this and how does the whole supply chain look like because I think there are many things at play here to just make that one board. True. True. So in all this complexity right like from single layer to HDI boards right now as of today we don’t have a HDI plant in India there are few companies who can do prototypes prototype prototype but not scaling not not at scale but most of the companies are scaling they are try we are all as a you know in the in our country we are trying to scale this uh you you know ecosystem in such a way that we can build uh HDI boards you know pretty soon right that is where some of the government int incentives are also aligned to maybe we can come to that later coming back to your question about like can we build some of these boards in India what are the things that we can do in India we are very good at single layer single layer problem was solved in 1980s right um there is no use now as such there are still even today there are a lot of applications with single Airboards, very simple toys. Oh, right. Right. Uh the toys, you know, very simple toys still use a single layer board. Right. And even in toys, some of the complex toys use HDI boards. That’s a different story. But there are very simple toys which can be made with single layer even remotes. And there are a lot of even a lot of u uh you know SMPS the you know the UPS. Uh what’s UPS? Sorry. U UPS is basically the you know the uh uninterrupted power supply that we use in homes right like um when you know for power backups those UPS basically some some of those UPS PCBs are some places single layer right so when it comes to two layer we are also good in India meaning like we when we say we like as a country a lot of factories are there uh but when it comes to multi-layer also to certain extent we are HDI is very bad right so as the complexity scales the capacity in India goes down significantly down it’s not linear it’s like exponentially down in to a matter of fact actually just to give an example comparison there are probably around 200 factories which can do single double and uh multi-layer 200 factories 200 factories which can do all all these uh the first three right apart start from the HD HDI maybe one or two let’s include them also like there are let’s say 200 factories which can do like all these um four different complexities uh right of PCBs in India in India out of that probably around 50 to60 150 to 160 will only do single layer right probably the remaining around like 20 to 30 can do double layer. Oh, then like it’s and then like probably 10 people or 15 people can do multi-layer and then one or two can do HDI HDI that prototype. So you you see the you know how it changes, right? So let’s compare this now with China. Okay, ch China is the leader in China is the leader. They are the leader everywhere. China is a leader in PCB manufacturing, right? And the interesting thing is we were leader once or if if you are not a leader, we were leading the segment. We were one of the top you know players. India was one of the top players in 1980s. Right. Right. This is just for single layer. So just for single there was no at that time the the PCB was not evolved as much. Right. Right. Right. Needs were also not are also not there. That was the time when uh your you know mother the mostly TV boards right huge like the TV board used to be like probably like uh 2 ft by 1 ft or something like that. The PCB the board was of of that size right today a PCB just to give a comparison today the entire PCB circuit board will be probably like uh uh you know if you keep four credit card size. Oh yeah. Four credit cards next to each other probably it will be size of that right. So before it used to be like probably 2 ft by 2 ft or something like that very big. So when the PCB demands the area was big we could do it as single layer complexity less complex mostly transistordriven huge tubes and uh you know huge components. that time India there were a lot of uh you know some of the people who had come back from uh other countries uh I have met some of the founders who started PCB factories in 1980s I was actually very inspired to talk to them and learn their journey um so back then the stories that they shared uh to listen to those firsthand like was very inspirational Because some of the words that you know they were saying was that time some of them like one of them basically set up the India’s first auto fully automatic single single layer processing unit in Bangalore right 1980 1980s mid mid 1980s this plant basically they set up the India’s first fully automatic single layer processing line right unfortunately Ely they shut down the entire factory in uh 2020. Oh well yeah it’s a different story right but to my point in 1980 and 1990 we did a lot of uh we were almost in the forefront of some of these things right then then what then basically you know when uh our economic reforms were not as fast or you know it it was basically in Until 1992, we were not open right before the liberalization. Before the liberalization, right? A lot of hardships by these manufacturers back then to get a single machine. You just imagine like even after liberalization, there are a lot of issues going on with different departments, right? Like uh customs and stuff like that in a very recent time. But I’m sure we are going to solve those, right? like the the entire uh uh you know uh policy changes we can see those policy changes which is really good but however back then it was very hard to get anything um from outside the country right everything needed license license yeah so that is when the the lot of factories were built and they were importing a lot of chemicals that are needed to make these PCBs Right? What I see is by 1990s and later late ’90s, some of them have already started two-layer boards. Right? Back then, I can only imagine how hard it it used to be, right? And some of them even started multi-layer boards in early 2000, right? So, what happened after that? Why are we not in the forefront? So, sorry, one second. So, China became a leader after 2000. after 2000. So China almost if you see like we would have seen a lot of videos where you know where we know like you know China and India’s trajectory was almost similar to a great extent until 1980 1990 is when they started you know it became very different right they went through a different era right we went through a different era right right so we were very late they were at least 10 years 10 to 15 years or probably 20 years ahead you know back then And what really opened up China was basically the 2000 right when 2000 happened and uh India also a lot of things opened up in 2000 Y2K a lot of service companies started in India but China basically the manufacturing opened up right like especially in that early 2000 when most of the manufacturing from US started going to China that is when a lot of technology knowhows right like I keep telling us from the US right right uh how to build circuit boards how to build more complex circuit boards right how do we do these multi-layer boards uh how do we now push the boundary uh right like can we do smaller holes can we do smaller tracks um so it’s always about making putting a lot of this density in a smaller area right a compressed version of this is nothing but a chip basically basically even more compressed version of this is is basically a a chip semiconductor that’s a different story but however in this when a lot of these American companies started setting up uh units in uh uh China it started exploding they had a lot of demand they had a big uh open industrial uh policies which allowed people to get into manufacturing um and It was a manufacturing rush. Yeah. I mean I remember reading like couple of months back that Apple engineers or scientists were flying in to China to teach them Yeah. you know how to make things. Yeah. That happens even today. That happens even today. So you spent some time in China. Yeah. Yeah. So I’ve spent some time even before starting Lion Circuits. Uh I was I used to work for a semiconductor company called Texas Instruments. Right. And uh yeah, Texas Instruments again like is a very very uh you know big public company in the US. If you could give context on what Texas Instrument does or is Yeah, just a two- liner on Texas Instruments. Texas Instruments is a uh semiconductor company which builds analog and power uh primarily focused on analog and power related semiconductors. um uh read as high margin uh business in semiconductor. However, primarily Texas Instruments deals with lot of the semiconductor manufacturing and u I used to work for uh sensor division there um where we used to build inductive and temperature uh sensing IC’s semiconductors right and with that I had to travel to China interact with a lot of OEMs OEMs ODMs right in sorry what’s OEM OEM and ODM basically is original equipment manufacturers and original design manufacturers. So, China, this OEM segment opened up hugely in in in in that 2000 decade, right? When all these companies wanted to manufacture in uh China, they went they said this is the product that I want and since they didn’t have any manufacturing capacity, they went and told how to set up the factory. They told use these materials. They told this is how you manufacture. They taught everything right to the Chinese. They showed every single thing to them on how to make it right. That is when uh China’s uh manufacturing uh uh you know evolution started. Right. Right. Right. So there what happened was basically because of that huge till then they weren’t even doing single layer PCB. They were doing single air boards and stuff like that but we were ahead of them for two reasons. One during that time we were net exporter of copper. India as a country we were net exporter of copper. Today we are net importer of copper. Okay. Right. Right. But some of the plants that are coming from Adani copper plant is going to uh is supposed to change again back to net exporter of copper. Sorry. What how did copper come into the picture? Copper is one of the major thing for uh uh for circuit boards, right? Because we use a lot of copper Okay. What’s the uh like in a circuit board how much? Yeah. In a circuit board, right? You have only like primarily at the end what you get as a circuit board comprises of basically two to three materials. Major is copper. Like all your tracks, right, is basically through copper, right? Right. The the thing that you explained, copper sheets, copper sheets and stuff like that. The conduction from one place to another place, the wire connection is through copper. Right. And then to isolate the you know non-copper area, we use a non-conductive material. It’s a glass epoxy typically, right? U typically a glass epoxy. Um so these are the main two raw materials. So copper is very important 50 60% of the cost I’m guessing easily. So copper is a very important uh uh part. So back then you know India was actually poised to grow in PCB. We lost that. We have to give certain credits. Like in 2002 and 2003, there were a lot of amendments made to custom act which allowed importers of machine manufacturers to import machines without BCD without uh they also exempted BCD is basic custom duty which uh government charges is basically basic custom duty. Right? So, so the basic custom duty was removed in 2002 and 2004. Subsequently, there are two important notifications which specifically gave PCB industry an opportunity to invest and grow the space. But in spite of that we couldn’t do mainly because the the finished PCB could come to India without any duty also. Oh like I could like if I’m a PCB guy I could just you can just buy from uh buy from China from China for a cheaper cost. For a cheaper cost even if there was no BCD on the it was not base material. It was not cheaper before. Right. So to give an example in 1990s 1990s uh India went through this telecom revolution right we all would have used at one point a handset like a landline right so most of these landlines were manufactured in India including the PCB right single layer single layer single layer um so UTL right like United Telecom Limited used to manufacture this and their plant is what I was referring to before which did the first single layer single auto layer for single boards in 1980s. They used to use their own plant manufacture these phones in 1990s. Mhm. Right. That PCB plant shut down in 2020 because nobody Yeah. various reasons. So however like in um so which means that in 1990 some of these phones that we were manufacturing landlines a lot of vertical integration plastics were done in India PCBs were done in India most of the things that used to go in a phone set were done in India. We were already manufacturing in India completely made in India products. So from there in 20 years right in or rather 15 years we lost a lot of things to China because everything went to China. Everything went to China. But what like what did China learn though? I get the cost part that you know you sell it for a subsidized rate and you know you get it for cheap. But what are what were the things that they learned that we don’t know yet? There are a lot of things there are a lot of things which we don’t know yet it’s not about money anymore right it’s about technology it’s about the know-hows right like I keep using this knowhow right knowhow is very important right just to give a small example before going back knowhow for example what I say is if if I give if somebody gives me 10,000 cr rupees today and say okay can you build a jet engine or a jet plane you know you know can you build a Boeing 777 tomorrow or like in the 6 months or you take your manufacturing time can we build it it’s not possible it’s not possible I don’t know how to put together yeah yeah so in in simple terms in 6 months or a year uh like in okay so let’s say Boeing takes 6 months to manufacture a jet engine I will give you the same time 6 months right and I’ll give you 10,000 crores Can you manufacture a jet engine? Answer is plain simple no. Why? Because there are a lot of know-hows involved. Right? These knowhows are some of them are you know trade secrets in in the form of trade secrets in the form of just understanding how to do it what to do right if everything is there if if design is there even if you manufacture there are certain processes that are involved right? Can you give an example also? One more thing you said you can design but you can’t manufacture. Yeah. What does that mean? See basically even if somebody designs like let’s say we have very good engineers they can design a jet engine like let’s say they can come up with some schematics and you know put together a jet engine right just to put together just to manufacture everything put together make it work is a whole new story right that is the most difficult part right similarly if you take any manufacturing including PCB there are a lot of designers right to manufacture those there are a lot of knowhows knows for example what I mean by that is so if today I want to manufacture a a very thin track can I manufacture a track which is 25 micron thin today I can’t right why is that because even though we have our own factory our current limitation is we have pushed to around 75 micron 75 micron track width we can do that itself is very hard 100 micron So okay reasonable most of the factories in India can do 150 to 200 microns right but at lion circuits we can do 75 micron but we learned over time sorry so again sorry but what does it take to get from let’s say 150 200 275 is it like I I do yeah this is what I call as no house so for example it’s not about just buying a machine and say I I’m going to use this machine and run the thing and I’m get I’m going to get so these are all process industries right so in process industry there are a lot of things like lot of control parameters like for example just to give a simple example if you have this machine and let’s say you have this particular type of chemical that you have used and you run it at a particular temperature it behaves in a certain way if you use the same chemical if you change the temperature and you run the same board, it behaves in a different way. Oh, that is basically is the knowhow. Only people who have done it, only people who know how to do it know how to do it, right? It’s the knowhow. So, uh that basically puts us back. China got an advantage. Americans went and said, “Okay, this is how you have to do it.” They did it. They learned, right? because someone was it’s like training someone told how to do it right if somebody like that is basically the key knowledge that they gained uh right and they built on it right whether they you know how they did it is a different story right like we all you know used to hear and all these other things but that’s a different story right like but uh they learned a lot of things now today right China is leading in all these things not just that so leading in all these things what do you mean by that do you mean designing to manufacturing everything or just manufacturing manufacturing is they have they are leading in manufacturing more than design but they are doing a fair good amount of catch up on the design as well and probably like they’ve already done like you know where does the design sit right now design you know to you know when when you take design you know in a specific category right like various categories have moved in a different way over time but in certain categories India has a position like you know of uh you know leading some of these designs who who does all of this uh like you know in general like you know even in like as a semiconductor ecosystem right like uh in 1980s uh the company that used to work for Texas Instruments they set up a design house in India right mostly design so India today India India has a lot of design expertise they have built so a lot of manpower human capital who have built expertise of design in India uh have started multiple startups from TI there is a lot of XTI companies if you go and see like any a lot of semic fabulous semiconductor companies in India are mostly from XTIS mostly from XTI because because you learned the knowhow there we learned a lot of design knowhows we learned a lot of these things which it’s it’s basically I call the it’s a it’s a tacit knowledge it’s a tacit knowledge it’s it’s also called as a tribal knowledge which only when you are in the tribe you will know the knowledge if you’re not in the tribe you don’t it’s very hard to find it’s not documented right um so like this basically there are a lot of things in PCB which is basically also knowous uh and this tribal knowledge uh that exists. So that is what is basically uh is going to be a huge limiting factor right. So coming back to the I think we came to this discussion from the uh we were discussing mainly about um the PCBs right like how the PCB evolution is happening in uh China. So I was giving example of uh in China in India we have around 200 factories right compare you’re trying to compare and from these 200 factories in China if you take Shenzhen and Guangdong Guangdong province alone there are around 2,000 I’m not even kidding 2,000 PCB factories just in that area around 50 to 100 kilome radius of Shenzhen in a province compared to the whole country. Yeah. Which is 200 versus 2,000. 200 versus 2,000. Yeah. And they’re doing a bunch of I’m guessing mostly HDI or everything. Everything from single layer. They do single layer also. Toys. Oh yeah. Huge toys. Huge amount of toys. They do single layer. They do HDI and everything in between. Right. Huge factories. Huge factories. And nowhere comparison like the largest factory right now as of today the largest factory in India probably not even come close to top 50 in China top 15 shenzen maybe just a part of it yeah it’s basically that huge right so that is the current state of Indian PCB manufacturing right so in summary The if you compare India and China, China is way ahead in PCB manufacturing. We have to learn a lot from them. We have to buy a lot of machines, chemicals, knowledge from them and then build factories here, right? And uh it’ll take time. Capital is one, incentives is one, but also learning these knowledge and building is is yet another. So I was telling right like basically compared to PCB if you take EMS it is three machines printer pick and place reflow in PCB you have 20 to 25 machines for one PCB right so that is where the EMS actually became you know EMS growth was very high mostly because less very less complex but easy for anyone to get in easy no no even like there uh if you want to like uh control the process have good machines um and and do it like it’ll it’ll the barrier to entry is definitely low I thought it’s commoditized it’s a lot of EMS so EMS at least has a long tail EMS maybe probably India has around 2,000 3,000 more than 2,000 to 3,000 factories EMS factories whereas like PCB you know 200 yeah 200 percentage of Yeah. Yeah. Yeah. Like you you like ideally you should like consider around 20 to 30 which can do like pretty good like decent quality PCBs. What’s the road map for an ECB? Right now they’re let’s say assembling things which like for EMS right like fancy packages. Yeah. Yeah. What’s next for them? See for example like companies like you know all these public companies right like Kane sir and all they have large number of EMS lines meaning they have multiple units all around India so it’s about how many lines I have it’s about every day how many units I can you know get out of the factory even Dixon right like capacity it’s basically increasing the capacity just running the same SOP that is there on you just need to put in more plants so that you can make more. Yeah, exactly. But like what’s the next step like what’s after assembly for them? Like I’m guessing you must have spoken to some of these guys or Yeah. Yeah. Yeah. Yeah. And in in fact we line circuits we also do assembling. We also have an SMT line. Uh right. So basically after that is contract manufacturing ODM right uh ODM OEM. So building your own products or helping white label a product. So like for example you know Foxcon and all right they they’re purely like they’re very focused on couple of businesses and OEMs and OEM OEM opportunities they only do OEM opportunities right KC is basically uh also doing that Dixon for example they do a lot of washing machines you know and stuff like that right so they’re all like basically OEM uh uh uh you know they’re OEMs for a lot of these big brands right so any Like for example, if you if you take Samsung or any any other washing machine or brand, right? They might work with one of these players to get the entire unit assembled, not just PCB, but the entire but they white label white label it. Yeah. Yeah. So one thing that you had mentioned was that we were copper net exporter but why why was that? Why did that happen and what’s the relevance now? Yeah. So basically we were as a country we were net exporter of copper basically what it means we were producing copper more than what our local demand was our domestic consumption was so the remaining we were exporting so when the sterite plant closed in Tamil Nadu right right because of sterite plant was the biggest biggest one of the largest copper plants in India if you could put it in percentage terms how much of the copper being produced in I think from so from the what I can recollect they were producing about 30 to 40% done of India’s copper needs were being done from sterite plant in Tamil Nadu right when the sterilite plant in Tamil Nadu closed post that we became net importer of copper meaning right now combined all the plants We are producing less than what we need which means we have to import copper from other countries to even do anything like so for example there are a lot of CCL CCL sorry copper clad laminates which is basically the raw material for making a PCB right um so with the latest government schemes which are targeted towards uh bringing up the PCB TB industry um there is a scheme related to CCL as well which is copper clad laminates right so when we do this copper clad laminates until some of the new plants like Adani plant in Gujarat is fully functional we’ll still be importing a lot of copper from uh China for example so this was also a barricade this is also one of the barricades for us doing PCB manufacturing because copper is a yeah this is this is very big cost goes up. Yeah. So right now for example as we speak uh there is almost almost like a 10 to 20% increase in raw material CCL prices just from last month to this month because of the import cost because of but what’s happening why right now it’s mostly because it’s driven mostly by USD uh you know uh the rates you know the rates the foreign exchange rates and also uh see basically the entire This this we are recording in October just so that yeah yeah this entire PCB industry is the costs are controlled by these raw materials right so who is making these raw materials China so we are heavily dependent on China for a lot of these raw materials that is where government has come up with a lot of uh incentives and schemes towards building a robust raw material ecosystem in India the base materials that are require materials that are required for PCB chemicals there is a what what chem chemicals are needed so for what chemicals are needed chemicals as in what do you need the chemicals for like so because I like as I said like PCB uh to make a simple PCB we need around 20 to 25 machines uh to process the entire PCB right so bulk of these are wet processing machines okay so these wet processing machines meaning that they are driven by chemicals. So photoresist wet process, dry plus wet, etching fully wet process. We have electroplating uh that is fully wet process. Right? So these processes need specialty chemicals. Right? So unfortunately though there are a lot of chemical engineering uh colleges in India, we don’t have good electrochemical um you know recipes that are needed for PCB which are locally made. There are some companies from Germany and Europe and America blending those chemicals and manufacturing some of those chemicals in India today but there is no Indian company. There are very less or no Indian company who can do very high quality uh made in India electroplating chemicals for PCB. So government is also promoting in the the the recent electronic component manufacturing scheme which has been in the news in the recent time uh the ECMS ECMS scheme has a provision for starting uh chemical plants chemical blending plants which uh I is one of the important raw material for these PCBs but that will take some it’ll take time it’ll again uh you know it’s a lot of knowhows and you processes and stuff like that, right? Uh the other important material so you have chemicals, you have metals like the copper as a metal is also used like in copper plating we use copper just pure copper as a anode for electroplating. So mainly PCB raw materials chemicals metals uh laminates. So laminates is also another area which is targeted in ECMS scheme. Right. Right. So some of the big companies like including VRO has committed 500 crores 500 crores yeah to set up a CCL. So it’ll be very interesting whether those plans are done to serve domestic consumption also or are they only targeted for exports. I wish it is also for domestic consumption because then I think we will have a lot of uh you know uh control over the price and hopefully the price comes down uh for the laminates. The CCL is one of the biggest contributing factor for 50 60% whatever we discussed is yeah around 30% at least now that you’ve spoken about India I mean it feels like a good note to end on. Yeah. I still don’t know if India is the is at the right place to do PCB right now because of Yeah. the lead that China has had. Yeah. And that will continue to compound. I’m guessing we’re starting from just knowing the knowhow. Yes. Yes. Yeah. Definitely. I think right now as of today we are not in that position. Uh but we are heading in the right direction as a industry. We are going in we are rapidly growing in the direction of uh building highquality uh printed circuit boards from India. And you know I I you know also wish and uh use this opportunity to any viewers out there who want to build factories. Please go set up like figure out how to build uh PCB factories. We need like hundreds of them, probably thousands of them in the coming years because for all the electronic manufacturing success stories to come out, we need PCB factories, right? Well, that’s the base. That’s very most one of the basic thing and uh the most important uh thing also to kind of innovate and drive some of the products product companies forward. Yeah. Okay. Thanks. Thanks again for doing this. I had a lot of fun, but I’m still confused about a lot of things. So maybe we’ll do this again sometime. Yes. Thanks. Thanks for having me. Yeah.