Advanced Manufacturing Industry Panel

 December 8, 2011, Advanced Manufacturing Partnership, UCB, Berkeley, CA—An industry panel looked at issued for advanced manufacturing. Krishna Mikkilineni from Honeywell moderated the panel. Panel members included Mathew Ganz from Boeing, Will Coleman from Mohr Davidow Ventures, Dan Jones from Intuitive surgical, Omkaram Nalamasu from Applied Materials, Darlene Solomon from Agilent Technology, and Kurt Peterson from Profusa.

Peterson noted that funding for new startups comes from successful previous startups. Venture funding is down since 2008, so startups must partner with big companies and the government to get funds. Hardware startups need a source of income to be well defined before anyone will offer any additional funding.

Solomon suggested that synthetic biology is on the cusp of change from qualitative to quantitative processes. Engineering a cell is like designing a bridge, but the biology is easier and more predictable. This change in biology is similar to the impact ICs had on computing and will result in may new areas. These areas include biofuels, pharmaceuticals, polymers, and others. The changes in biology will change manufacturing.

The challenge is to scale up the existing processes to reduce costs, time, and improve quality through natural processes like fermentation.

One of the next frontiers will be in integrating electronics and materials. This area will require alliances between government, academia, and industry to be successful. Manufacturing innovation will also require standards, since consortia can only work on common factors. These consortia will not only be domestic, but also will need international participation to be successful. So far, over $1.1 B has been invested in general-level and fundamental research. Biological systems and processes will drive knowledge and will enable increased incomes for all.

Nalamasu noted that Applied has been working on all facets of semiconductor manufacturing for a while. The next big push will be for increasing wafer sizes from 300 to 450 mm and will cost the industry between $16B and $20B. In parallel, the industry is moving into clean energy and manufacturing innovations in areas like solar PV and LEDs for lighting. The semiconductor ecosystem gets a lot of its innovation from collaboration. Being a global leader in manufacturing requires both policies and manufacturing expertise. So far, the money and knowledge are only available in the privileged world, leading the developing areas farther behind.

Jones commented that the advanced manufacturing initiatives need to look at new areas like medical technology to see what works and invest in those areas that will help to maintain our lead. For example, in robotics, the large manufacturers have lost their edge, whereas medical technologies are moving forward.

Intuitive does their manufacturing here and has co-located design and manufacturing. Government-sponsored research through DARPA funding in areas like robotics which is changing the fundamentals of labor and costs. Their current systems use 100 CPUs and depend upon massive, high-speed networks to perform their functions. Previous government-funded research enabled the assembly and integration of the systems through standards and knowledge transfers in the public domain.

Policies that help include the R&D tax credit and STEM (science, technology, engineering, and mathematics) educational reforms. More work needs to be done in areas like immigration and H1B visas. The barriers to entry for small and medium size companies need to be lowered to allow them to innovate. One example of group developments includes developer’s kits and a standard robot control language. These, plus a robot simulator can be used to train developers and users without the costs of a full hardware system.

Coleman observed that for early stage investments, the VCs are looking for IP sources and are most involved in IT, energy, and clean technology. The biggest issues are the transition from R&D to manufacturing. For investments, they look at he people and their education levels, as well as immigration status of key employees. They look to see if a full ecosystem is in place and any materials are likely to have sourcing issues. Advanced technologies need to attract investments to scale. The move from technology into manufacturing needs investment partners.

Equity investments drive the VCs to encourage companies to take on more debt and go for an IPO. The companies need to optimize their debt and risk because the scaling issue takes early manufacturing into an equity-based financing model. New technologies must reduce the cost curves to be competitive with the alternatives, but this transition takes a lot of investment. Another area of concern is a company’s bankability. For a company to get the funds for a manufacturing facility, they must exist for a suitable time, have some scale in place, and have a clean balance sheet. All of these financial functions have to be in place to reduce the time for a bank to consider any loans.

Ganz opined that any viable technology must drive the cost out of manufacturing to be valuable. This driver is not a generic function, but is based upon a specific instance. For example, the costs of automation and IT override the complexity. Although it’s possible to decouple design and manufacturing, in most cases, it’s highly inefficient. Design should co-locate with manufacturing to understand the manufacturing processes. For example, a commercial airliner can only go to Mach 0.8 and its range needs to be half-way around the world. Any faster and you get into operational and cost issues, and any greater range is negated by going the other way around the world. Immigration issues and H1B visas need to change.

Changes in biological and hard manufacturing beg a question on synthesis versus design?

Solomon noted that biological pathways can be very complex, so design is hard and tends to be application specific. It depends on reference, US or the world. The US tends to excel in decentralized processes, and it is easier to have design and manufacturing together but most companies assume multiple locations for each.

Nalamasu observed that changes are emerging in the semiconductor industry. There is much more manufacturing-aware design being done now. The manufacturing area has over 25 years of experience, a fully developed ecosystem, and good supply chain management.

Workforce?

Ganz offered programs involving K-12 plus a STEMs focus are helping. Getting people to become interns exposes them to the many facets of the industry. One other thing we could do is ask Hollywood to portray engineers and scientists as good guys, and not evil or socially inept.

Nalamasu contended that the semiconductor industry has done a good job in workforce development. They hire 1-2 thousand graduate engineers every year and work with the educational institutions and governments to affect changes in curricula. Solomon enjoined that technical foundations fund after school science kits and other resources. Some R&D is performed at the educational institutions. Peterson added that NSF is funding outreach programs to bring people into STEM programs.

Manufacturing here?

The drive to offshore means that we lose market control. Nalamasu responded that complexity is good. The low value functions should go offshore. Peterson noted that the US has a bias against manufacturing. Coleman suggested that a country’s self perception matters. For example, Germany emphasizes high quality for their products, while China looks to be the commodity manufacturer.

Solomon observed that the manufacturing is still being done in the US, Europe, and Asia. The cost of sales is similar in all areas. Increasing automation can neutralize any other cost advantages in manufacturing. Company’s are going to local production to keep the costs of shipping down.