10 minute read
Bluechips Microhouse enters the next era of electronics manufacturing services
Thomas Zimpfer
Thailand is well established as one of the main suppliers of electronics in the world, and while Bangkok and its nearby city centres are considered to be the hub of industry in Thailand, there are also many foreign firms firmly operating successfully elsewhere. Bluechips Microhouse, a German-owned electronics manufacturing services (EMS) company, is one of them, and the company – based in Chiang Mai/ Lamphun – has been providing SMS to serve mainly European markets for more than 20 years.
GTCC is honoured to interview Thomas Zimpfer, the owner and Managing Director of Bluechips Microhouse, who will discuss the company’s journey over the past few years; sharing his perspectives on Thailand’s electronics industry development and the trend in the industry, as well as Bluechips Microhouse’s recent partnership with Zollner.
Why did you choose Chiang Mai as the place to establish your company back in 1999?
That is actually not a simple question to answer. I had been working in Hong Kong and China from 1990 to 1999, when China opened its borders for foreign investments, and it was a kind of gold rush. But I faced all kinds of difficulties doing business in China, such as issues of quality, supply chain, and attitude. So, after almost 10 years it was clear to me that China was not the place where I wanted to be. Then Thailand was the best option for me because it was politically stable and offered attractive incentives for investors. But the reason why I chose Chiang Mai, in particular, was more personal. After 10 years of living in Hong Kong, I was just fed up with big city life. I'm more of a country boy, so I was attracted by the idea of a more quiet life.
Were there any challenges in terms of manpower and infrastructure or supply chain in Chiang Mai?
Every EMS company will face challenges. Of course, there are bound to be some mentality issues and many challenges you have to go through, but everything is manageable. As for the infrastructure, we know the Thai streets and airports are okay, but there is a lot of room for improvements with regards to the electricity networks. It was also difficult to find supporting industries here, as compared to China.
Did you apply for the investment promotion of Thailand’s Board of Investment (BOI)?
Yes of course. Without the BOI privileges and support, I would not have been able to make this business in Thailand. We have had BOI incentives since the start of the business and, in fact, we still submit new projects regularly to ensure continued BOI support. I feel very familiar with the system. I would suggest to German companies to apply for the BOI incentives and promotion because without the support, it is hard to do business in Thailand.
Can you tell us the current situation of the electronics industry in Thailand, ASEAN, and worldwide?
I think we have a political issue at the moment and generally a deglobalisation trend. There is now more of a “Local for Local” idea. We will most probably support German or American companies, or our current business partners, more locally. For example, that may mean shipments are not going from China to Malaysia, but they will go from Thailand to Malaysia. You see this trend in the USA, in particular. A lot of businesses move out of China and go back to America.
As for Thailand, there is a lot of investment in the electronics sector here. The reason for that is the pressure on the Chinese companies to offer supply chain possibilities outside of China. So, we have a massive investment in PCB factories in Thailand, which is good for us because at the moment we are buying 90% of our PCBs from China. I believe in the next three to five years we will buy 90% of our PCBs from Thailand.
Of course, they may not be from Thai companies, but instead from Chinese companies with their factories in Thailand. I’d say you definitely see higher investments in the near future already in Thailand because of the general trend of deglobalisation.
What are the advantages of being a German company in the EMS sector?
There is absolutely no advantage to being German in the EMS sector because it’s very competitive no matter what.
The biggest EMS companies are actually all American. The ability to talk to my customers in my native language is maybe a little bit of an advantage in dealing with German customers. Currently, the majority of our customers are European – German, Swiss, French – but we also anticipated the trend that Americans will want to escape China, so we had substantial growth with our American accounts too. But, at the end of the day, price and delivery performance will decide who gets the order, as it is a very competitive business.
What have been the key changes to your company over the past five years, and how has your company been positioned to take advantage of the current and future trends?
We have made massive investments in upgrading our machinery to be state-of-the-art, just to keep pace with the demand of the customers. We also continuously improve our business processes and our facilities, and invest in sustainability. It’s a very simple equation. The customers expect you to be cheaper, faster and more efficient. In order to follow this request, you have to permanently improve your facilities and systems.
What is the current demand in EMS?
I think the demand in general EMS is billions of dollars. For our business, we had a doubledigit growth rate over the past number of years. But now we face a lot of problems caused by the general economy, especially the German economy, which is in recession for the second year in a row now. This makes our customers very careful about placing long-term orders, or in making any long-term commitments.
How has Bluechips Microhouse adapted its strategies to meet the demands of the electronics market, especially regarding emerging technologies such as AI, Virtual Reality, IoT, EV, Autonomous Vehicles, Blockchain, and so forth?
The one that’s relevant to us is IoT as our customers are mainly from the Sensorics sector, and their products are all IoTproducts. For AI, we are still investigating the possibilities where AI can help us to optimise our business processes. Most probably this is all related to future investments, or upgrading existing systems and companies, like SAP integrate AI into their software. To be honest, it’s not one of my priorities. Overall, our customers can be quite conservative so we have to prioritise offering a reliable service.
How do you attract and retain talents specialised in such areas as R&D and manufacturing?
For manufacturing, it’s very easy to find skilled labour. Thailand is the workbench for many customers and companies, like the Japanese companies which have been major investors in Thailand. They have done a very good job of educating and managing people for production. So, it's relatively easy for us, especially in a downturn situation when the market is down, to find good, educated, capable people.
On our production floor, we mainly use unskilled labour, and give them internal training. In the future, we will automate our business processes more and more and thus will be needing less unskilled people. But I think we will continue to have a higher demand for skilled people.
Do you think Thailand does not produce high-end technology because of the skill level here?
I don't think so. Thailand is making high tech products, or at least foreign investments in Thailand are for high tech products. I know EMS companies who produce servers, which are in high demand, and these really high-end products are all manufactured in Thailand. Japanese manufacturers, especially automotive manufacturers, are producing advanced cars here in Thailand as well.
What could be true is that not many Thai companies produce high technology. Within Thailand, we have a quite weak supply chain, so it is very difficult for us to find suppliers who match our requirements in quality, delivery, and reliability, or in price.
How does your company collaborate with international partners to leverage innovations and enhance its service offerings in the electronics sector?
We have our R&D departments, such as electronic R&D, with hardware, software, and mechanical developments. What we offer is the ability to develop products according to customer specifications, which helps them to take out some of their own bottlenecks in R&D.
We don't develop our own products, but only develop products for customers, and only if they commit to producing their products with Bluechips.
What steps is Bluechips Microhouse taking to incorporate sustainable practices into its manufacturing processes and product offerings?
I think our industry is a very sustainable industry. We don't really have environmental issues. But if I have to ship my products from Thailand to Germany, this means the product doesn't have a very good carbon footprint, right?
So, at the moment, I have 350kW solar panels on my roof, and another 650kW are on the way. Solar panels are also on the way from China to here. With this over one megawatt combined total, I will cover 75% of my energy consumption. I have plans to make a 3.5MW, megawatt hour backup battery here as well, and then I can most probably achieve covering 80 to 90% of our energy consumption. This will happen all within the next 12 months. This long-term plan is also important for our customers, since they want their suppliers to be environmentally friendly and do something for the reduction of CO2 emissions.
What challenges has Bluechips Microhouse faced in recent years, and how has the company navigated these while still maintaining its competitive edge?
Like the whole industry, we were very much affected by the semiconductor shortage from 2020 to 2023, and that was a very challenging time for everybody in our company. Both our customers and suppliers could have bought or sold more, but simply couldn’t. We still suffer from this period until now.
By contrast, sometimes the forecast production is high, and thus we order materials accordingly and our inventory level is very high. But the forecasts come to fruition later, which is not really good for cash flow.
Recently there was news of the joint venture between Bluechips and Zollner. What will be the major changes at Bluechips as a result of this strategic development?
I am over 65 now, and it's time to retire, but I feel it’s my duty to make sure of the future of the company. With Zollner, I believe we’ve found the right partner, which will guarantee a good future ahead for Bluechips, with a lot of opportunities.
Zollner is €3 billion company and the biggest EMS in Europe, with 13,000 employees worldwide and a very strong and solid
We are already working together on very interesting projects. At the moment we are building a 1,000-square-metre clean room, and we will assemble complete racks and electronic cabinets for a leading semiconductor manufacturer. These future projects will be the main changes in the Bluechips company. The future outlook is that a stronger partnership with Zollner will establish many more projects in the future. Zollner, incidentally, will take over the remaining shares of Bluechips on 30 June 2025, and we are very confident that the future will be bright.
Contact details:
Michael McKenzie
Marketing & Business Development
Bluechips Microhouse Co., Ltd.
+66 53 371 000 Ext. 2103
