Components Taped and Delivered

Guilherme: Another recurring problem I see, and this one too, I'm talking about recurring for 10, 12, 14 years, is material that is wound on an SMD reel, and when you pick up the SMD reel, it is composed of a carrier tape and a tape that covers the component. A sealing tape. A sealing tape, exactly.

Sometimes this sealing tape has very strong adhesion, or sometimes it has low adhesion. And what does this cause? When it's too strong, and then you have an automatic process in the SMD machine that pulls the tape. If the adhesion is too strong, the machine pulls, the tape doesn't come, it breaks. When it breaks, the components go everywhere. So, you lose the electronic component, the electronic component gets damaged, the process stops. What do we do? EPS has the solution to change 100% of the sealing process. So, we return the component to the client, whether it is too sealed or with little sealing.

With little sealing, what happens? It can also interfere with the process. I would even say from Asley that it's worse, because when it has little sealing, what happens? The failure module, the machine starts to pull a little and a lot comes out. Then a lot of components fall. Then the client can't do anything. In both cases, EPS has the solution to reseal. Not only reseal, but to package it properly, humidity card, silica gel desiccant, do the baking if necessary, and send it back to the client quickly. That is, it does not impact their production, they do not have quality problems, it brings safety and reliability to their process.

Guilherme: Yes, yes. We also currently sell the cover tape for sealing. So, today we present Diesley, the complete solution for the client. And then, in the sea of various solution options, we have, from the solution, that the client will receive the material 100% sealed, he will receive it 100% sealed, inspected, identified, he will receive only the inputs for him to do in his machines or in the process he prefers. And we have a client, Diesley, who is curious, he does the process inside his factory, he only buys the inputs from us, but, occasionally, he calls us and says, EPS, I need some help.

This is the client we want to be close to. So, today we have a technical department that can also answer this phone, serve the client by phone, by email, in person, to ensure what? That the way he is doing the sealing process is adequate.

Guilherme: You know something, Diesley? I see that there are two major trends. Sometimes, EPS can present excellent solutions that meet the clients and the market, but the market is sovereign.

So, the technologies today are changing overwhelmingly. We are talking here now, and we were talking before the podcast about artificial intelligence, the impact it has today in the electronic industry. So, these things were not foreseen 10 years ago, the way we see today. Why do I say this? Because, often, today, the client brings us a challenge. And this challenge, sometimes, is not from the client. It's from the final market. It's the consumer who tells him.

Guilherme: What I see today, Diesley, regarding market changes and customer demands? First point. The client is extremely more demanding. The client has many options. So, today, the client wants an option of very high quality, competitive price, and quick delivery. Exactly.

That's what the client wants. These are three basic pillars today. And then, when you go down some pillars there, some things are non-negotiable. In the past, quality... We talked about manual recording. Quality was demanded, but the process was manual. So, see. How to balance this on a scale? It's a very big challenge. So, today, no. Today, the process with automatic machines requires 100% quality. Quality is non-negotiable. And the market is sovereign in the following aspect. You err in quality. You sometimes agree to work with a supplier who is less demanding. Maybe you will pay, today, the penalty of a recall. To see your brand in a newspaper or having to recall parts. And, today, a recall is practically non-negotiable. It can lead the company into a judicial recovery process.

Guilherme: Perfect. Today, EPS has more than 10 automatic machines in Brazil for the recording and sealing process. And these machines, today, have the capacity to do, on average, from 2 to up to 4 million components per month in recording and sealing.

So, today, we are technically capable. We have, today, volumes to serve large industries. So, today, when you look at the EPS portfolio, we are very proud of, maybe in this podcast room that we have here, I see two or three of our clients who have products of very high quality in the market. So, today, the industry that we serve, it has this characteristic. They are high volumes. And EPS, today, is ready, not only technically, but also in terms of machines.

Guilherme: It will. I see some challenges that... We talk about the war that exists today of electronic components.

Today the largest electronic component production company is in Taiwan, which is TSMC. And today there is this war between the United States and China and this changed the map of the world electronic scenario. There are some numbers. Approximately 90% of all electronic components in the world were made in Asia. What did the United States start to do? Moved this, bringing some industries back to the United States. But it's a slow movement. We talk about setting up an electronic component factory today is estimated at two or three years. But what will happen? There will be a movement leaving Asia and going to the United States. This is the first big movement that it will affect from the training of new engineers, hiring process, laws in countries. So we had a big package of 500 billion in the United States approved to move this industry. And Brazil is geographically in an interesting territory. Because see, we have Asia on one side, the United States here on the other. Europe has a war going on there, very expensive labor.

You go down here a bit and in the United States you have Mexico. Mexico today has a process of industrialization of almost everything that is done in the United States there. But a little has South America and has Brazil. See, Brazil today has qualified labor, has a lot of raw material, is close to the United States, which is one of the largest consumer markets for electronics. So Brazil today has a specific challenge which is what? Discuss the process of manufacturing electronic components. And we look at the history of 10 years here, it is being discussed, but with great difficulty to evolve, for many reasons. So I think Brazil is now at the right time. And as it evolves and starts a production, whether back-end or front-end, I think it's much more likely to have back-end here in Brazil, where is this ecosystem that will foster and meet this? Today EPS is ready. And it's not enough just to say that EPS is ready, you have to have an ecosystem, it's not just a system. So today EPS is ready, it's a solution.

So I think Brazil will go through this challenge, and then we have the rulers discussing this, private initiative on one side, I think there will have to be a balance on the scale today to decide what will happen, but Brazil needs to position itself. I think it has this great challenge happening, EPS will be ready today to serve, but I think there are other challenges too. I think the challenge is for products to become more electronic, more connected, and electrification. And we can't help but talk about electric cars. Connectivity too. Connectivity, isn't it, Diesley? You see today cars are connected, are traceable, are safe, are electric. Despite the discussion whether it will be electric, will be hybrid, we always discuss this, but this is happening. So today Brazil is decentralizing its regions. You see there BID going to a specific region of the Northeast. In the past there was a very strong automotive hub in São Paulo. Today you see part of this two-wheel automotive hub there in Amazonas. You have Honda, Yamaha and the other two-wheel players.

You have here for the Southeast the four wheels, but now... In the South also has some automotive industries. Well remembered. You know some of them well, but in the South also has. So you see that today the automotive industry in Brazil, the industries are choosing where to go. In the past there was perhaps a detention of specific territory, today not. She says, I'm going to come here and the government has to offer the best conditions. I'm going where there is a good fiscal, financial condition, labor, logistics. So the industry already comes with this package of competitiveness. So Brazil will have to adapt to this. So I think the territories will be there maybe more ready for this ecosystem.

Guilherme: I had the opportunity to, this year, receive CIAM, which is the Center of Industries of the State of Amazonas, at EPS Unit of Manaus. We had a very high level and quality conversation about logistics. Manaus has today the whole logistics system ready, whether by air or waterway, to serve the industries that are there. So, today, what is the value strategy of EPS? It is to be in that region. So, today, we have a factory, you had the opportunity to know, of very high quality, automatic machines, a team of engineers, technicians, customer service, for what? To have local autonomy. And then, when we look at Brazil again, Brazil is an extremely gigantic territory, maybe half of Europe fits here inside, we observe, coming to the southeast, where we are today. We are geographically in São Paulo. What is the great goal of being in Americana in São Paulo? It is to serve the Greater São Paulo region quickly, I'm talking about 24 hours, and it is also very close to the south. The south today has IBRs that work, so, by road, that is, competitively, we also serve the south of the country. Close to the airport too. Close to the airports. Look, we have today the option of clients working with us by air. So, sometimes, urgencies will happen. We know that. Our factory is ready to receive, so there is air transport. There is road transport, which today is a good cost-benefit and works well in Brazil. For some clients who already bring material directly from Asia, they can do the process today of releasing this material. And instead of receiving it in their industry, if they wish, they can send it directly to EPS. EPS already does what has to be done in terms of service, whether a recording, a sealing, a repackaging, etc., and already sends it to the client. So, this logistics, today, we try to participate, is very close to it.

Guilherme: Diesley, I have some opinions on how taxation may or may not impact. And it's interesting for us to talk about taxation, because sometimes we are here in Brazil and we are invited to say that taxation in Brazil is always complex, it's difficult. But, sometimes, I talk to Mexico and they also have some characteristics that make them thoughtful. The United States is not very different from some parts of Asia. So, what I want to say, I think that countries have their tax characteristics. I think that, regardless of what will happen, what does EPS have as a strategy? Follow the movement and be close to the client. Because, in the end, the client, today, will tell us where we should be. And it is our desire to be close to the client. For example, there in Manaus, we are, perhaps, from the 3 or 4 largest clients of Asda. It's a 10-minute drive away. So, here in São Paulo, we are also strategically close to the client. So, for the client and for us, this is important. But I see that we will follow the movement that happens. So, I want to reassure the industries. And some industries have this very fast movement. Changed a rate in a certain state and, perhaps, it is more beneficial in another. It's a decision of millions. She will follow. And some clients ask, EPS, where will you be in this challenge? And the answer I bring is yes, I will be close to you. So, today, EPS has this strategic value of being close to clients, regardless of the challenge that happens.

Guilherme: Thank you, Diesley. It's always good for us to talk this first episode. I hope there will be more of these, because it's a relevant topic, it's a topic nice to talk about, it's what we live day by day, and it's a topic that we bring opportunity for clients to also prepare for the next challenges that are coming. So, I thank everyone and hope to be in the next episode.

Guilherme: Perfect. We are easy to be found. So, today, EPS has two large units, one in Manaus, in the state of Amazonas, another here in São Paulo, in the city of Americana. We are on LinkedIn, so, EPS Programming. I am on LinkedIn, just type Guilherme Avelino, there won't be many. You can find me there too. We have our direct page, which is www.epsprogramming.com. And there you will find not only the contacts here in Brazil but also the contact details of all our units worldwide.

Guilherme: Goodbye, everyone.