A global reach for AOI technology

Jim Gibson President & CEO Landrex Technologies Santa Clara, CA Jim Gibson joined Landrex in 2001 to expand the company's global reach to the US. In 2004, he became president and COO of Landrex's AOI business unit. Before joining Landrex, he was president of the US subsidiary of Pematech Rohwedder, and he previously held a variety of executive management positions with Micro Component Technology (MCT), where he led an MCT team in the acquisition of an equipment-manufacturing business from National Semiconductor in Penang, Malaysia, and in the building of a factory there to produce MCT products. Gibson earned his bachelor's degree in business at the University of Southern California. Rick Nelson spoke with Jim Gibson during the 2006 APEX show and followed up with an e-mail interview. Jim Gibson comments on how customers can differentiate among competing AOI technologies and on the potential hidden personnel costs of AOI in the continuation of this interview.

A: Landrex was started in 1989 in Taiwan by three friends—Steve Hsu, Michael Lai, and Paul Hsu—to provide custom test fixtures for in-circuit-test (ICT), manufacturing-defects analysis (MDA), functional, and combinational testers. It was their vision to create not only a test-fixture company but one that could provide comprehensive PCB test solutions across all stages of manufacturing. To that end, Landrex joined forces with Teradyne in 2002 to distribute and support Teradyne's Optima AOI systems in Taiwan and China. Feeling bullish about the Optima products and the AOI industry, Landrex acquired this business from Teradyne in 2004 and began to design, manufacture, and sell the equipment under its own name all over the world.

Q: Isn't it unusual for an Asian firm to take ownership and control of the engineering, design, manufacturing, and sales from a US-based company?

A: Yes, this is quite unusual, but there are good reasons why our approach makes sense. In 2001, we saw a dramatic shift in PCB manufacturing away from the US and Europe to Asia, primarily Taiwan and China, and also a dramatic drop in the average selling prices (ASPs) of AOI systems due to the introduction of inferior but low-cost machines from Asian companies. Landrex knew that the Optima AOI machines were the best available, but Landrex and Teradyne believed Landrex was in a better position to serve customers in Asia and to reduce the manufacturing and product overhead to compete more aggressively with low-priced competitors.

Landrex retained the US-based engineering talent to make sure the "brain trust" behind the products stayed intact. As a result, Landrex can offer low-cost, high-quality AOI products while keeping a direct line open with customers to drive further product innovation. This is a new hybrid business model that should serve both countries—Taiwan and the US—very well, and I am excited to be a part of it.

Q: What has Landrex done since taking over the Teradyne AOI business?

A: The first thing we did was a large-scale "voice of the customer" investigation to understand the need for optical inspection systems in Asia and around the world. The feedback was that customers loved the quality of our systems but wanted them to be cheaper and faster. Using the combination of superior engineering talent in the US and low-cost, high-quality manufacturing in Taiwan, we launched two new products at APEX to enhance our flagship Optima 7300 post-reflow family and to respond to our customers' requests. The ASPs for both machines start at under $100,000. However, we didn't focus just on the scanning speed or prices of these machines; we also focused on the value for our customers, which is how these machines actually help increase yields. Another initiative we took was to compile a study of how our customers use the Optima 7210 pre-flow machine to increase their yields. As you know, we presented this data in a recent article in Test & Measurement World ("Process control keeps faults in check," Dec. 2005/Jan. 2006).

Q: How do customers view the value of AOI?

A: With device pitches getting smaller, boards getting denser and more complex, and materials changing from lead to lead-free, a strategy of relying solely on human inspection, ICT, and functional test will result in lower yields. Additionally, the margins most companies get per board are decreasing. As a result, most companies see a compelling reason to do 100% optical inspection to increase yields, decrease manufacturing cost, increase quality, and in the long run, grow market share.