Judy Warner (00:00) Hi David, so good to see you again. It's been a few months, it's a new year and I'm glad to catch up with you. David (00:07) Thanks, Judy. really appreciate the opportunity to come on your show. Judy Warner (00:10) Well, why don't you take a moment for those of you mox that maybe didn't hear our last podcast and tell us a little bit about yourself and about PCBAA. David (00:20) Sure, I'm David Schild, the executive director of the Printed Circuit Board Association of America. PCBAA is entering its fourth year. We currently have 67 members from basically every segment of the microelectronics ecosystem outside semiconductor fabrication. And our focus is really threefold. Educate, advocate, and legislate on behalf of American-made microelectronics. Judy Warner (00:47) Well, you are in the right season for that, it seems like, my friend. we talked a little bit right post-election and you were just getting started. So what's new since we talked last time and now that the new administration is underway, what kind of things are you seeing and support are you getting from the Hill? David (01:08) Sure, Judy. You know, the 119th Congress has hit the ground running. We are encouraged by several major policy focuses. First, the Trump administration is continuing a focus that you saw during the Biden administration on making things in America. Now, they're using a different set of tools and tactics to get that result. But for sure, the things that are coming out of the White House, the things that are coming out of the executive agencies tend to mimic what we've heard over the last four years, which is we need a greater focus. on making the technologies that we depend on right here in America. Just last night, Secretary Howard Lutnick was confirmed as the new Secretary of Commerce. We had a great working relationship with Secretary Gina Raimondo in the previous administration. And I'm encouraged as to a number of positive things that Secretary Lutnick said about the CHIPS Act and about the need to reduce our dependence on foreign sources of microelectronics. I think everybody understands that this is the time where there's this intersection between national security policy and economic policy. And there are any number of reasons for parties on both sides of the aisle that we want to see factory growth, manufacturing job growth and innovation right here in the United States. Judy Warner (02:21) Well, you hear it every night on the national news. And so I was kind of excited to have you today because I'm sure you're right in the thick of it, like with the new Secretary of Commerce and so much more. I also saw on the news that you're doing some collaboration with the political action committee from IPC. Can you tell us a little bit about that? David (02:46) Absolutely. There's a joint push underway with our friends at IPC to see tax reform as an opportunity to benefit the Prince Circuit Board and substrate industries here in America. Specifically, you've heard a lot of talk about what's called a reconciliation package, a way that the 119th Congress can get a number of President Trump's tax policies enacted early. Now, there's a lot of big ticket items on the table, but one of the things that we're trying to do is include a 25 % tax credit on the purchase of American made printed circuit boards and substrates that would do a couple of things. First, it would immediately make those products more competitive with what we're seeing coming out of Asia. And of course, as everyone knows, those are incentivized products by foreign governments, right? These are folks overseas who have benefited from any number of policies from any number of Asian nations who want to own these technological verticals. We think it's time for the U.S. to catch up and in fact, lead on industrial policy. That tax credit. Judy Warner (03:31) Mm-hmm. David (03:45) would create a demand signal. And the great thing about a demand signal, Judy, is it doesn't just signal to customers, hey, sourcing domestically makes sense, but it also says to the all-important investment community, now is the time to get your money off the sidelines. One of the most remarkable things about the Chips and Science Act was not the $52 billion that the government invested. It's that that investment then prompted almost $462 billion in private money. from private equity, from Wall Street, folks who said, now Uncle Sam is backing the production of semiconductors in America. If we get that same strong signal, make it in America, I'm convinced that the investment community will step up and help us expand capacity for PCB production. Judy Warner (04:34) Well, we've talked about this before, but to me it's music to my ears. It never made sense to me when I watched it disintegrate back in the nineties as I saw offshoring really began to take root and take off. so for our listeners who are engineers, talk a little bit about, you know, this isn't the chips. act money. This is microelectronics, which includes my favorite, the humble PCB. What else does it include and how is that going to impact engineers that are in our audience? David (05:07) Sure. So we think of ourselves as the association that represents everybody outside of those folks represented by SIA, the Semiconductor Industry Association of America, right? If you are making advanced and refined materials, copper, foil, laminate, if you are in the test space, if you are in the tooling and equipment space, if you're in the services space, and if you look at our membership, right, we have representatives in every one of those categories. The health of the American PCB market matters to you. That's why Schmoll, that's why Burkle, that's why Ventech has decided those companies to be a part of our growing association. We look at the PCB ecosystem, the inputs, the board manufacturers, those who are their suppliers and customers and say we can do so much better than the contraction that you've talked about. The 30 year slide that's left us with 143 PCB manufacturers down from 2200 that's left us with 4 % of global market share down from 30 % in the year 2000. Judy, I know we can have more capacity. I know we can make more of the technologies that we depend on. There's time. It is the time I should say for Congress to lead in this space. Chips don't float. Simply passing the Chips and Sciences Act, which took six years, by the way, is not going to be enough. I am thrilled that you have factories coming online in Arizona. Judy Warner (06:21) Yeah. David (06:31) that are making these highly advanced semiconductors. But where are they going? Where are they destined to be assembled? Where does the advanced packaging occur? Where does final assembly of those electronic products occur? Far too often, it's on the other side of an ocean. We can have a microelectronics ecosystem here in the United States. This rising tide can lift all boats. That's what we're pushing for in DC. Judy Warner (06:38) Mm-hmm. Well, I love it. And I'm very excited for this year. And, you know, we've talked about for our listeners, no matter what side of the aisle you're on, this has been warmly received by members of Converts in a bipartisan way, because I think everybody can agree on that. So it's not really a political play as much as getting the job done, because how can we possibly put our military inside of jets and give them weapons and things when we only have 4 % of the PCB supply chain in this country, that doesn't make sense. And so it alarms me as somebody who has sold to military OEMs and I know it does other people. And so I think that you waving the flag with PCBAA is really exciting. So what's your spin on So you talked about the 25 % tax cut, which would be to people in our industry who are buying PCBs domestically, you would save 25%, which would be a huge win. Do you know where we are as far as that being proposed? I know there's so much noise and saber rattling going on. It's hard to know when that's going down. David (08:10) sure. Well, there's a first of all, I should say this is an uphill battle, right? Right now, there is a real struggle in Congress to make sure we can pay for all of these tax cuts. And of course, there's a cost to the government. We think it's going to be largely offset by increased revenue from domestic sales. But we want to say to the TTMs, to the Amphenols, to the Calumets of the world, hey, guess what? Tell your customers it makes sense to source in the United States. You said it, Judy, building things in America that we depend on is not a Republican Judy Warner (08:20) Yeah. David (08:42) or a democratic issue, it's a red, white and blue issue. There is a bipartisan consensus. Our bill, H.R. 3249, has co-sponsors on both sides of the aisle. It has Blake Moore from Utah. It has Rajah Krishnamurthy from Illinois. These aren't folks who share the same party affiliation, but they have a shared concern for our dependency on foreign microelectronics. Here's what I would say about the tax package. It wraps up thousands, if not tens of thousands of different priorities. Our goal through champions on the Ways and Means Committee is to have this tax credit included. But if we don't move on this bill, I do think there are future opportunities, our standalone bill, future bills making our economy more competitive with China, future bills that focus on Pentagon policy, where this tax credit could move forward. This is the latest and greatest opportunity. And we are all hands on deck with our partners at IPC, spending a lot of time on the Hill. Our chairman, Shane Whiteside, the CEO of Summit Interconnect has spent countless hours now in Washington, arguing the case that everything that our men and women in uniform depend on and everything that makes critical infrastructure run is powered by printed circuit boards. I don't think there's an appreciation that the lights don't turn on, the water doesn't flow, banking servers don't run, medical devices aren't powered up without printed circuit boards. So while I understand that certain commoditized boards are going to exist in the commercial sector, let's take Judy Warner (09:56) Exactly. David (10:08) dishwasher boards or garage door opener boards, for example, those probably aren't coming home. But we want to ask ourselves, where is the dependency that makes us vulnerable? Where does moving things across an ocean present an unacceptable risk to our national security and our economic strength? And I think there are many sectors where if we had a different attitude by the federal government, we would create a new market for the companies in the United States that can do it well. Judy Warner (10:36) And I think rather quickly too, I think, especially from engineers that I know, they prefer to buy in the US, you know, and in some cases they have to, right? And because of ITAR and all of that, but even on critical infrastructure, if people had the choice, they'd prefer to buy here, but the chasm is too large. Because like you said, other companies are getting government subsidies for those things. So it's not just cheaper labor, they're actually getting monetary incentives to do it. if our government would come along and just help us in the form of a tax cut and maybe freeing up some of the regulations that are where we're overregulated, would, I think it would create a windfall actually. And I think everybody'd be happy about it. David (11:17) And Judy. You raise a really important point here, which is it's not just our government that's competing in this space. And of course, everyone who looks to China, where six out of 10 boards are made and say they have for decades, very heavily subsidized, incentivize these industries. Well, now in this world of a China plus one strategy, you are certainly seeing companies move to places like Thailand, Malaysia, the Philippines, Vietnam. Why is that occurring? Because those governments are engaged in industrial policy. They have decided Judy Warner (11:44) Mm-hmm. David (11:50) that if you want to get out of mainland China, there are competitive alternatives very close by. The United States can't sit still. We're not running this race against just one other country. We need to be competitive and we need to be competitive now. And if we don't move quickly, we're gonna be caught flat footed. think we're gonna be caught watching other people finish the race ahead of us. That's not a place that we wanna be. I know it's not a place that American manufacturing wants to go to. And so this is the time for Congress to act. There is a consensus that building things in America makes sense. Now we need the action that reflects that sentiment. Judy Warner (12:27) Well, exciting times. mean, at least on paper in the talking point to the day, this administration and Congress are very bullish on the idea how that sorts out practically. But I sure am glad that you and Shane and IPC are on Capitol Hill, you know, banging and knocking on doors and making sure that they understand what's at stake. So two things. tariffs? Will this have any impact or do you think this is saber rattling and negotiating tactics? Like will that have any effect on the work you're doing David? David (13:03) You know, we are pulsing our members right now to see what the immediate impact of tariffs would be. Certainly we are part of a global economy. Many of our members are dependent on foreign inputs, whether those are components or raw materials to get the job done. And so our stance has been that the selective application of tariffs is certainly a tool to ensure economic competitiveness. But I think it's too early, Judy, and the ground is shifting so quickly on this topic to really assess the impact country by country. economic sector by sector as to what these tariffs will do. And of course, we need to await the responses of allied nations and adversary nations alike when it comes to reciprocal tariffs. So we're pulsing our members every week. We're waiting to see where that shows up on our doorstep. I think our position is that incentives and policy actions by Congress are something we can dependably count on. And as this administration moves forward, as more cabinet officials are confirmed, as the committees on the Hill really move their legislation forward, then I think we'll have a better sense of what do tariffs mean, what do incentives mean. For now, I can tell you for sure, our members want to be able to say to supply chain executives who want to buy American, there is a policy in place that will make this more competitive. So that's really our focus at this time. Judy Warner (14:19) Okay, well, it sounds like all hands on deck to get that tax incentive in place, which makes perfect sense and could be an early win, but maybe you'll have another chance up at bat. But what do you see as you move ahead, as you look through the fog of Q1 and launching, like I said, all the cabinet appointees aren't even in yet. What are you looking for to say in Q2 and moving ahead as perhaps next steps and things maybe our audience can do to get involved and be part of the voice of the industry. David (14:57) Absolutely. Well, first off, I would say we are very excited this year to attend the Apex trade show in March. I'm really excited in April that we will be at PCB East in Boxborough, Mass. And so if you are one of our members or if you're thinking about membership in PCB AA, I look forward to meeting you in person at those events. As we look into the middle part of the year, of course, we're going to see the first presidential budget from President Trump as number 47. We're very eager to see. where monies are at the Commerce Department, where policies are at the Defense Department. know, every year, Judy, we have this Defense Production Act funding line that PCBA has fought for, not just to make sure the money is allocated on the Hill, but to make sure that the Pentagon spends it. That has shown up in places like Calumet, in places like TTM, and we've got to make sure that those funds continue to be both allocated and spent in Washington, D.C. That's going to be something we're focused on every fiscal year. Additionally, This is a year when we've got to reauthorize the Defense Production Act. Congress has got to make sure that that tool remains in the toolkit. Beyond all that, there's a larger push for Buy American to make sure that the government is purchasing domestically sourced microelectronics. And of course, there's all the regulatory things, all the environmental concerns that flow not just from the federal government, but from state and local governments as well. So there's never any shortage of legislative and policy challenges that we face. Of course, the tax credit is front and center. When we move beyond the tax bill, The regular business of passing a budget, funding the government, giving executive agency policy guidelines, a lot of that does show up on the doorstep of the men and women who make microelectronics. So we'll be busy all year. Judy Warner (16:35) Yeah, it sounds like it. I don't know if you caught this, but I was thinking of you when it happened, when the confirmation hearings for Pete Hegseth was going on. I heard him mention the Defense Protection Act and I'm like, you're speaking our language. So I was glad to hear that he was bullish and aware and doing things like talking about the importance of digital twins and... innovation happening. He was really soon to be singing our song. David (17:06) Yeah, I think that, you know, we start with appointing a new secretary of defense, and then there are key positions that need to be filled. We have a new incoming executive agent in terms of the person directly responsible for Pentagon procurement of printed circuit boards. We've got a number of assistant and undersecretary positions that have yet to be filled. We had great relationships with the folks in the Biden administration who sat in those chairs at the Pentagon. I am eager to meet and explain the importance of our industry to the new folks who are going to populate the Trump administration. Judy Warner (17:29) Mm-hmm. David (17:36) That's a big part of our mission here. The other thing that I would say, Judy, is we are very focused on growth. We just passed 67 members up from our original founding five in 2021, but we have to get bigger before we have a big enough impact on Capitol Hill. And that's why I would say to your listeners, to anybody who's going to these trade shows I mentioned, we want to talk to you about membership in the Prince Circuit Board Association of America. John Vaughn from Summit Interconnect is currently leading our membership efforts. And we are talking to dozens of companies every week who sell into, who make or who buy from printed circuit board companies who understand that these efforts, these policy concerns show up on their bottom line. And if that's you, if you're listening to this podcast, I want to talk to you about how our mission can benefit your business. Judy Warner (18:26) Yeah, I'm a big fan and a member and I believe in it and I always encourage our listeners to get involved if it makes sense for them. I will make sure I put your links in the show notes as always David. And by the way, congrats on the get for John Vaughn. He and I are around the same age let's say and we've worked together in the past and I know that he will be just do a bang up job getting the word out. So congrats on that. David (18:29) Thank you. Thank you. Thank you. Judy Warner (18:54) Any last minute items you'd like to point our audience to as far as engaging with PCBAA, whether it's a membership or just keeping up on your news and your activities? David (19:08) Find us on social media, LinkedIn and Twitter. us at PCBAA.org. And again, look for us at PCB East, Apex and PCB West this year. If you are in the business of making microelectronics here in the United States, we are fighting for you every single day in Washington, DC. I want to meet you. I want to hear your story. I know there are a lot of companies out there that are focused on the business of manufacturing. Let us do the educate, advocate and legislate portion of the mission for you. Judy Warner (19:37) David, thanks so much. Very well stated as usual. Thanks for giving our audience an update today. Hopefully you'll come back and see me again in Q2 and give us an update and fingers crossed that we have some good news on that tax bill. David (19:52) Fingers crossed. Thanks, Judy. Judy Warner (19:55) For our audience, I trust you enjoyed this conversation and update from David Schilt of PCBAA. I have put all the links below that we've discussed here. Make sure you go engage with them. And if you have an opportunity, lend your voice by joining with your organization because the more members they have, the further, the more authority we have with Congress and collective we can make more of an impact. Thanks so much for joining us this week. We'll see you next week. Until then, remember. to always stay connected to the ecosystem