CHAPTER 2

BUILDING THE ELECTRONIC INDUSTRY'S ROADMAPS

William R. Boulton

JTEC panelists found a strong consistency among the electronics firms they visited: all the firms had clear visions or roadmaps for their research and development activities and had committed resources to ensure that they achieve targeted results. The overarching vision driving Japan's electronics industry is that of achieving market success through developing appealing, high-quality, low-cost consumer goods - ahead of the competition. Specifics of the vision include improving performance, quality, and portability of consumer electronics products. Such visions help Japanese companies define in detail the roadmaps they will follow to develop new and improved electronic packaging technologies.

DIMENSIONS OF PRODUCT DEVELOPMENT IN JAPAN

Companies with clear product development visions know what types of investments are required to maintain their market positions. As life cycles of new product generations become shorter, companies can ill afford to delay their product development activities. Product development has therefore become the centerpiece of today's competitive strategies. Being first to market for next-generation products is what makes companies like Intel and Microsoft successful. Japanese companies have long shared a competitive vision. Sony's Akio Morita explained this in a speech to the Keidanren (1992):

In pursuit of the goal to "overtake and outrun the Western industries," Japanese manufacturers have invested all possible resources into technology development, product development, productivity improvement and quality control, and, all of a sudden, we have found that a broad range of Japanese products including cars, electronics and machine tools boasts astonishingly competitive strength in the world market. High-quality, high-performance Japanese products are relatively inexpensive against those of the same level offered by European and American competitors. Consequently, Japanese products have outsold the competition and brought success to us in the market.

Quality, Cost, and Delivery

Japan's competitive objectives in consumer electronics have been clear: lower prices with higher quality and performance. But as product life cycles continue to shorten, speed of product development has also become a critical factor for success. Since the mid-1980s, Japanese companies have coined the acronym QCD (quality, cost, delivery) for their competitive strategy. As shown in Figure 2.1, quality, cost, and delivery time to market have measurable market share implications. According to Boston-based Strategic Planning Institute's PIMS (profit improvement through market share) analysis (1982), firms with a low-price, high-quality position relative to competitors have typically gained 1.1% market share per year. In contrast, firms with a high-price, low-quality position relative to competition have on average lost 0.7% market share per year. Thus firms that can continuously reduce product costs and improve product quality can annually gain nearly 2.0% in market share from less aggressive competitors. However, with shorter product life cycles, firms have less time to make incremental improvements before next-generation products are introduced.


Figure 2.1. Strategic objectives for product development
((c)William R. Boulton, 1993).

First to Market

Also, as Figure 2.1 shows, the "first-to-market" company is typically able to attain a 50% market share. As long as product leaders continue to stay ahead in developments, they can maintain a dominant share of the market; fast followers might hold a 25% market share, but late entrants seldom achieve over 10% of the market. For example, Sony continued to hold 49.1% of the Japanese CD player market in 1992, Matsushita held a 27.6% share, and Kenwood held a 12.3% share. In 8 mm video cameras, Sony held a 75.2% market share, followed by Hitachi with only a 7.6% share. In the VHS video camera market, Matsushita held a 72.2% market share, followed by Victor Company of Japan with a 23.2% share.

The dominance of Sony and Matsushita in these markets is based on their ability to introduce model updates faster than the competition. Japan's leading electronics companies continue to introduce new products that allow them to maintain their global leadership. Some of the more recent introductions by Japanese companies include the following:

As shown in Figure 2.2, one of the characteristics of first-to-market companies is that their products incorporate the latest technologies. The technology of new personal computers (PCs) is more advanced than that of most current mainframe computers. This results from the life cycles of today's personal computers being under one year, compared to the multiyear cycles of most mainframes. Rapid product updates allow more "learning" in product design and faster response to changing customer demands for new features or technologies. The incorporation of new materials or processes, or the reduction in numbers of components in design updates, often leads to lower costs. For Compaq, these facts support its strategy of selling distributed PC server-driven networks in competition with traditional mainframe networks.


Figure 2.2. First-to-market advantages
((c)Clark and Fujimoto, 1991, Effective Product Development).

"First-to-market" strategies provide significant financial rewards. Wheelright and Clark, in their book Revolutionizing Product Development (1992), found that the early entrant makes very high profits, as shown in Figure 2.3: firms that introduce products six months ahead of the competition can make profits up to three times greater than the industry average. In contrast, firms that are six months late to market are unlikely to ever make a profit. Intel microprocessors are a good example of successful early market entry.


Figure 2.3. Financial advantages for product leadership ((c)Clark and Fujimoto, 1991, Effective Product Development).

Table 2.1 shows recent financial performances of Japan's key electronics firms. Sharp, regarded as the most innovative company in Japan today, shows income levels that surpass companies with sales three times as great. In 1993, Sharp introduced the 8 mm ViewCam, a low-priced minidisc CD player, a high-performance washing machine, and an efficient refrigerator.

Table 2.1
1993 First-Half Performance of Major Japanese Electronics Companies
(% change over previous year first half)

Sony's Leadership With Vision

The JTEC panel's visit to Sony provided an important insight into the use of product development roadmaps in Japan. The whole team spent one full day at Sony, and some members spent a second day visiting Sony's advanced production facilities. Sony has been a product leader in Japan since it introduced the first "pocket-sized" transistor radio in 1955. Sony is well known for being one of the most creative and innovative companies in Japan. Akio Morita, the company's chairman, has not relied on market research to decide on product development and to this day does little such research. According to Morita, "You Americans worry too much about market research. The market research is all in my head! You see, we create markets."

Sony's type of entrepreneurial activity is seldom characteristic of large bureaucratic firms like NEC, Mitsubishi, or Hitachi; product vision is at the highest levels of the Sony organization. The project manager for each of Sony's new product development teams has been either Dr. Ibuka, Mr. Morita, or Mr. Ohga, the corporation's successive chairmen and presidents. Sony's current president Ohga was responsible for the minidisc development. Teruaki Aoki, Sony's senior general manager, explained (1989, 5):

I believe one of the most important elements that led us to success was the fact that our top management, Dr. Ibuka, Mr. Morita, and Mr. Iwama, who were enthusiastic engineers as well as businessmen themselves, were able to present a clear target for research and development in the form of a product idea.

Sony's chief executives have provided their organization with the vision, direction, and resources needed to accomplish technological breakthroughs. The concept of the Sony Walkman, for example, originated when Sony's past chairman, Masaru Ibuka, brought a heavy tape recorder and ear phones into Akio Morita's office one day to listen to music. It was hard to walk around the office wearing headphones tied to the large tape deck. Morita then suggested the need for a more portable unit and asked his staff to make a small experimental cassette player with light, comfortable headphones. But the Walkman, introduced in 1979, was not quickly accepted by his own organization. According to Morita (Range 1982, 18),

When we developed the first Walkman, a lot of our salespeople said a small machine like that would not sell - especially since it had no recording capability. But I had a hunch it would sell. I said, "Well, a car tape deck doesn't record, either." They were still unenthusiastic. So I said that if we did not sell 100,000 sets by the end of the year, I would give up my chairmanship of Sony.

The Walkman sold over 4.5 million units by 1982, and Morita remained as chairman.

Sony's original pocket-sized radio took four years to develop and required R&D expenses that amounted to 12% of sales. The Trinitron color TV took eight years to develop at an accumulated R&D cost that amounted to 19% of sales. The CCD (charge-coupled device) development required for the 8 mm video camera took thirteen years and cost $200 million. With the continued growth of the company, these project management responsibilities once held by senior management have now been passed to the "group-level" general managers.

The vision of portable consumer products has been very successful for Sony, leading to the introduction of such products as the portable TV, CD player, and 8 mm video camera. Successful development is credited to clear management policies such as the following (Aoki 1989, 14): (1) clear product targets given by top management; (2) focused R&D under the strong leadership of top management; (3) intensive R&D for production technology; and (4) transferring many engineers from the research center to the pilot plant and transferring the same engineers from the pilot to production - the transfer of engineers smoothes the transition from development to production.

The Vision of Miniaturization

Sony's continued success has required more than product innovations. In addition to creating markets, Sony has maintained its market share vis--vis competitors like Matsushita, JVC, and Sanyo through timely development of next-generation products. Sony's vision of next-generation products has been that they should be half the price and one-third the weight or size of current products. Sony has maintained its market leadership with successful product line expansions and new product developments based on this vision. The long-term trend in product development can be depicted as shown in Figure 2.4.


Figure 2.4. Next-generation product roadmaps
((c)William R. Boulton, 1993).

Sony has recently introduced the first portable compact disc player, called the Discman. It has reduced the volume of the Sony Walkman from 250 cc to 100 cc, approaching the size of a cigarette pack. Sony's vision of portability and miniaturization has spread to most consumer electronics markets. NEC's cellular telephone was 600 cc in 1982, but had been reduced to 150 cc by 1991. Televisions with built-in LCD monitors have shrunk from 650 cc to 400 cc. The early desktop computers introduced by Apple and IBM have been eclipsed by today's notebook computers and, more recently, by hand-held "personal digital assistants." Electronic notebooks have reached 50 cc in size.

Since Sony's introduction of the pocket-sized radio in 1955, the concept of miniaturization has spread in Japan, where lifestyles and small homes support rapid market acceptance of the concept. Small-sized TVs and stereos are suitable for typically small living spaces. Unlike Americans, most Japanese use mass transit; the "Walkman" has made it possible to listen to radio or tapes privately during the commute. Likewise, small-sized paperbacks are easy for commuters to carry and read - their introduction revitalized a stagnant book industry in Japan. In the food business, package portions have gotten smaller as the average number of family members has declined. In clothing, down ski jackets have been reduced in thickness from 20 mm to 5 mm. In automobiles, Honda introduced its miniature "City" car. Even Japan's miniature bonsai trees have gotten smaller with the introduction of "mini" bonsai trees. The Nippon Keizai newspaper described Japan's miniaturization trend in 1982 with the term kei-haku-tan-sho (kei, lightweight; haku, thin; tan, short; and sho, small). Sony and other Japanese electronics firms continue to lead the miniaturization trend.

Since the introduction in 1985 of the portable 8 mm video camera/recorder, 3 successive generations of Sony 8 mm camcorders have weighed in at 1,200, 800, and 400 grams, respectively. The size or weight reductions of next-generation products require a broad range of technological developments. Camcorder development provided the technological roadmap for Japan's electronic components and packaging industry for over five years. Every company that JTEC panelists visited in Japan had a "roadmap" for future products tied to its technology development activities. As one host at TDK noted, "The handycam used to be the primary driver for miniaturization activities. ...Today the cellular phone is pushing development activities at 0.2 kg. The PDA (personal digital assistant) may be the next multimedia product. We think the cellular phone will be a major growth product."

Downsizing Technologies for Electronics Products

The continuing miniaturization of portable electronics equipment requires supporting technological improvements. The introduction of NTT's Mova (type TZ-804) cellular telephone at only 150 cubic centimeters rivals the Walkman or Electronic Calendar for miniaturization technologies. The reduction in size from 400 cc to 150 cc included reduction in antenna size, reductions in size and thickness of the receiver through IC developments, controller size reduction by development of an ASIC, reduction in battery size through power management methods, and significant reduction of the body vacancy by using 0.4 mm thin parts, 0.5 mm pitch LSIs, and ultrasmall 1005 parts. Of the 250 cc in size reduction, approximately 150 cc came from electronic packaging technologies and about 75 cc came from the integration of functions within semiconductor designs.

The JTEC panel was impressed by the degree of consensus among Japan's electronic industry participants on the future direction of the industry and on its electronic packaging technology roadmap. Miniaturization of supporting parts and components is clearly an integral part of that roadmap. Figure 2.5 describes Hitachi's "application-driven" electronic packaging requirements, including higher performance, speed, and power; smaller, thinner, and lighter packages; higher density assembly and advanced automation; and multiple package types and integrated multichip module systems.


Figure 2.5. Market-driven demands for electronic
packaging (Hitachi Corp.).

As another example of a roadmap used by the electronics industry in Japan, Nitto Denko, a leading "packaging technology" firm, provided Table 2.2 to the panel. Although this table was produced by the U.S. Semiconductor Industry Association, Nitto Denko follows a very similar roadmap. The key characteristics of this roadmap include finer pattern width and pin pitch, and multichip modules.

Table 2.2
Packaging Technology for the 21st Century

The primary technologies used for downsizing of electronic packaging include continued miniaturization of surface mount devices (SMD), increased integration of circuit packaging, and reduced printed circuit board (PCB) dimensions.

Surface Mount Devices. With the development of surface mount technology (SMT), electronic parts such as transistors and capacitors no longer need leadwires. This reduces size requirements as well as potential quality problems related to bending, inserting wires into holes on PCBs, soldering, and cutting inserted wires. In the mid-1980s, new 3216-type (3.2 mm by 1.6 mm parts) resistors and condensers began to replace the traditional leadwire type parts for use in surface mount applications. These new parts only require placement and soldering functions.

Since the introduction of surface mount parts and application equipment, surface mount technologies have been used widely in the design and manufacture of portable consumer electronics such as calculators, radio-cassette decks, cameras, and video cameras. According to a survey of the Japan Printed Circuits Association, calculators used 100% SMD for assembly. Products using over 90% SMD in assembly included radio-cassette decks, still cameras, and video cameras. There has been rapid growth in the application of SMD to industrial products, with larger computers using nearly 90% SMD, and computer peripherals, telephones, and electric parts using around 80%.

The continued application of SMT has allowed parts sizes to be continuously downsized, reaching 1608-type (1.6 mm by 0.8 mm) parts in 1990 and 1005-type (1.0 mm by 0.5 mm) in 1993. This is a reduction to one-third the initial length and one-tenth of the area of earlier parts. As explained to the JTEC panel by our TDK hosts,

When we talk about things that are small in Japan, we call them like a grain of rice. Rice grains are 5.09 mm. Sesame seeds average 3.72 mm in diameter. In the early 1980s, the average size of capacitors and resistors were 3.2 mm by 1.6 mm. That was the same time that the next generation was introduced, but the 2.0 mm by 1.25 mm capacitors and resistors didn't become the standard until about 1990. Our 1608 multilayer ceramic capacitor of 1.6 mm by 0.8 mm was introduced in the late 1980s. We introduced the 1.25 mm by 0.6 mm versions around 1990, but don't expect it to become the standard until around the mid-1990s. Our smallest chip is 1005, or 1.0 mm by 0.5 mm. It is smaller than a poppy seed, which is 1.18 mm. People cannot handle this size chip. We need machines to mount these small chips.

The weight of 1005 is so light that the tension of solder exerts a force greater than the weight of the component. So 1005 creates new structural problems. Today, there are four machine makers that produce machines for 1005, but users are not yet buying them. These machines were introduced at the same time as the 1005 components through close coordination. The next generation may be 0.65 by 0.3. Many people are thinking about the solder problem and are trying to develop reliable solder materials.

Critical to vendor introduction of new SMT devices was the simultaneous development and introduction of assembly equipment that could handle the new components. With vendors supplying both the components and the equipment, the time required for customers to utilize the new technology has been reduced. Sharp, for example, designed new 1005 components into the PCB of its new 8 mm ViewCam. When asked if there were any problems introducing the new component technology, the plant manager said, "No, we just asked our suppliers to help us."

Integrated Circuit (IC) Packaging. New IC packaging technologies have increasingly been developed for SMT applications. For example, 100-pin QFP (quad flat packages) with 0.65 mm lead pitch were introduced in the mid-1980s. In the 1990s, these are being replaced with 120-pin TQFP (thin quad flat packages) with 0.5 mm lead pitch and 1.4 mm thickness. Two-hundred-pin VSQFP (very small quad flat packages) with 0.3 mm lead pitch are expected to be introduced in 1994. Toshiba recently developed TAB (tape automated bonding) equipment for 520-pin, 0.2 mm lead-pitch packages. The new equipment utilizes CCD image sensors to scan outer leads using 400,000 pixel image density. There are also many approaches using multichip module designs to improve density for product miniaturization.

Oki Electric Industry Company, a major supplier of electronic components, was especially helpful in providing roadmaps for logic LSI packaging, memory LSI packaging, and tape carrier packages. The Oki roadmap for logic LSI packaging is shown in Table 2.3.

Table 2.3
Logic LSI Package Roadmap

Printed Circuit Boards. By 1991, single-sided rigid PCBs represented about 14.4% of the applications. One-third of the applications were double-sided rigid PCB applications. But to improve density, multilayer PCBs are growing rapidly, having doubled their application in four years. Rigid boards with three to four layers accounted for 20.3% of the applications in 1991, with five-to-nine-layer boards accounting for 14.4%, and ten-layer boards accounting for 3.1%.

With the increasing fluidity of product designs, there has also been growth in flexible printed circuits (PCs). One-sided flex circuits represented about 3% of applications in 1991, with multilayer circuits accounting for 5.6% of applications. New technologies for flexible PCs include flex-rigid and copper clad laminate (CCL) for adhesiveless two-layer structures that enable high-temperature soldering at 350(C for small electronic products. Chip on flex-board (COF) has become a key downsizing technology with IC chips wire-bonded directly to the flexible PC. This is used in NTT's most recent "wristwatch-style" pager. Camera makers incorporate the most extensive use of flex-board technology in their miniaturization efforts.

Matsushita provides an interesting example of video camera miniaturization efforts. One of the measures used to assess the efficiency of design in PCB layout is the number of components per square centimeter. Matsushita recently described the improvements in the design and layout of its video camera between 1990 and 1993; Table 2.4 shows the increasing density of components used on the "camera" and "video" boards.

Table 2.4
Matsushita Video Camera Board Designs

The following conclusions can be drawn from Matsushita's data:

Developing Next-Generation Technologies

Japanese consumer electronics producers continue to work on evolutionary technological developments that allow them to introduce new or next-generation products. Pioneering technical developments announced in 1992 included the following:

Japanese roadmaps for future product development all stress the continued design of lighter, thinner, and smaller products, with development of enabling packaging and manufacturing technologies to support such products. At the time of the JTEC team's visit the trend had already seen the shift from "desk top" to "laptop" to "notebook" to "palm top" electronics products. The chip packages were shifting from dual inline packages (DIP), to small outline packages (SOP) and quad flat packages (QFP), to chip on board (COB) and tape automated bonding (TAB) components. An increase in bare chip applications is expected as a transition to multichip modules. At the same time, chip components have been reduced in size from 3216 (3.2 mm by 1.6 mm) to 2125 (2.1 mm by 2.5 mm) to 1608 (1.6 mm by 0.8 mm) to 1005 (1.0 mm by 0.5 mm) in a period of under six years. According to TDK managers, the next generation is likely to be 0.65 mm by 0.3 mm. New technologies for manufacturing are critical to support these miniaturization efforts as production equipment shifts from insertion machines to surface mount machines capable of handling a greater variety of devices.


Published: February 1995; WTEC Hyper-Librarian