Roger Lee, CEO of First Technology, talks about the evolving role of distributors in the SMT equipment business.

EM Asia: Tell us how First Technology was formed.
Lee: We were actually formed by the Schmidt Group of Companies. Schmidt has over 100 years of history in Asia and in China as a major distributor for the equipment business.

In recent years, especially in the electronics industry, the company observed that our customers began to rely on us less and less for their sourcing activities as they could do these themselves using modern IT.

So we started to question ourselves as to the value of distributors in modern times as more customers look for specialized support and customized service rather than general service. We see that we cannot just provide equipment, we have to provide technical support as well. This includes process support and production assistance. And that’s why Schmidt decided to form a company that is dedicated to its own industry.

We pulled out the PCBA business unit of Schmidt, and the semiconductor business unit of ESE and formed First Technology.

EM Asia: Why these two business units in particular?
Lee: One reason is that we see the PCBA business is more mature and still has a few more golden years left after which it should provide a solid revenue stream. The semiconductor business is similar to that of PCBA 10 years ago. It is a high growth factor for China so that will contribute to the overall high growth business for First Technology. So it becomes a good mix for the total business–the way we package it.

Another reason is that we see the convergence of PCBA and semiconductor industries. More of our customers are common to both business units. And with the combined units is combined strength. And that’s where we can provide better service for our customers.

EM Asia: Can you elaborate on the reasons for this convergence of industries?
Lee: When I think of convergence of technology, I see this more in the area of advanced packaging. In the past, this was done by semiconductor companies but today, more SMT assembly companies are moving into this area. They are discovering that since their current equipment supplier are also providing advanced packaging equipment and they themselves are familiar with both the equipment and the supplier, why can’t they invest and work in this area.

At the same time, semiconductor manufacturing is becoming more competitive, especially in the backend. So these companies are looking for players who traditionally have the strength in terms of pricing and volume–and who’s better in these areas than SMT companies! This a natural transition as demand for advanced packages increases and volumes become huge, price becomes a major factor.

EM Asia: Your thoughts on RoHS and how it will affect the industry?
Lee: I believe that next year, after RoHS has come into effect for a year, everyone in the industry will have to comply. And I see that this compliance will change the landscape of the supply chain. Customers will demand more traceability features within their machines. They will want to monitor production parameters and process them so that they can really tell that their products are 100 percent reliable.

EM Asia: Finally, give us an overview of the changing roles of distributors and how your company is positioning itself with these changes.
Lee: At present, First Technology has 140 employees and has a turnover of HK$700 million. We plan to invest more in technical services as we transform ourselves into an integrated solutions provider in both hardware and software to resolve our customers’ manufacturing problems.

Instead of distributing one main brand, we have started to focus on other products. For example, we are now working with Speedline Technologies on MPM and Electrovert reflow for Taiwanese customers only. We also have a software team dedicated to building application software on our machines so that it can link to our customers’ host server in order to carry out traceability processing. So these are some of the ways we are adding value to our offerings.

As hardware requirements slow down, other requirements will increase. This includes service-consultancy and software requirements and how to upgrade machines. We need to add value to the customer and provide certain process or applications needs within their existing equipment.