One-stop-shop: the value of single sourcing obsolete semiconductors

By Avnet Staff   |   July 29, 2024

Rapid access to hard-to-locate components from a trusted supplier can boost product longevity and avoid costly redesigns while easing the day-to-day concerns of procurement and maintenance professionals.

Imagine this scenario: An automotive manufacturer has built a successful business designing and producing cutting-edge electric vehicles (EVs), with their models often remaining on the road for up to 20 years. Buried deep inside its technology is a Field-Programmable Gate Array (FPGA), critical to the battery management system and overall performance.

With little notice, the FPGA manufacturer announces that the part will soon go out of production, sending demand and prices for near-term supplies soaring. The EV manufacturer urgently needs to identify and establish a new supplier relationship before embarking on costly redesign. At the same time, consumers face potential delays in receiving their vehicles, and the company risks damaging its reputation for reliability.

Such incidents are more common than you might think. According to consultancy company Oliver Wyman, an average of over 3,000 parts per car model will become obsolete every year. Other sectors, such as power and space, suffer similar challenges too.

Obsolescence also wreaks havoc in manufacturing, where the lack of critical parts, such as semiconductors, can bring production lines to a halt. Research from IHS Markit shows that component makers globally issue 15 end-of-life (EOL) and 38 product change notifications per day – any one of which could significantly disrupt asset-intensive operations such as manufacturing plants.

How to manage obsolescence

Without a strategy in place, the challenge of product obsolescence can keep procurement professionals and maintenance engineers awake at night. However, there are actions involving rigorous planning and preparation that can help mitigate the risk. While there might not be a one-size-fits-all approach, technology company Rochester Electronics, a global stocking distributor, licensed semiconductor manufacturer, and provider of semiconductor manufacturing services, suggests a sound strategy might look something like this:

1. Plan during the Design Phase: Choose components carefully when defining and designing new products to reduce the chance of premature redesigns. Ensure suppliers can commit to long-term availability and have robust EOL transition processes.
2. Understand Total Costs: Model and comprehend the costs associated with obsolescence, including product refreshes and after-sales service impacts. Include these considerations in the project plan to mitigate financial risks. Component obsolescence is never just a purchasing problem to be addressed as an afterthought.
3. Resource Management: Devote skilled personnel to obsolescence management and conduct detailed cost analysis. Proactive planning by a multidisciplinary team, including purchasers, designers, engineers, and program managers, can prevent disruptions and reduce risks.
4. Monitor Product Discontinuation Notices (PDNs): Use commercial tools to track component lifecycles and receive alerts for PDNs. Ensure sub-tier suppliers have adequate obsolescence management processes to avoid unnecessary redesigns.
5. Forecast Last Time Buys (LTB): Accurately forecast needs for LTB orders to balance stock levels and avoid excess costs. Partner with suppliers who offer End-of-Life (EOL) transition paths for ongoing support.
6. Purchase from Authorised Sources: Always opt for authorised after-market suppliers to mitigate risks of counterfeit and poor-quality components. Unauthorised sources can jeopardise production yields and reliability.

These six steps provide a good starting place. However, there is no escaping the fact that electronics, in particular, can present additional product obsolescence challenges, especially when multiple electronic devices are in a single design. Often, the replacement of one part can have a knock-on effect on other parts, potentially creating another sourcing difficulty down the line. 

For example, successfully locating a replacement for a main microprocessor might immediately require associated memory devices and different surrounding passive components. This challenge exists throughout electronic designs and can impact analogue, power, and timing. It can be even more challenging with application-specific peripherals, like high-speed networking, RF/wireless, and the numerous parallel and serial interface standards. 

Seeking the help of sourcing experts

So, how do you get over the sourcing problem when a design includes semiconductors and other components from multiple suppliers? Engaging with potentially multiple original component manufacturers can be a resource-sapping and sometimes fruitless task. The answer, then, comes with forming close relationships with organisations that specialise in stocking obsolete or hard-to-find parts. These companies effectively act as an expert ‘one-stop-shop’ and can take the legwork out of sourcing multi-chip modules in several ways.

Firstly, specialist providers of obsolete or hard-to-find parts have, by the nature of their business, usually strategically invested significant resources in building up extensive inventories of authorised EOL stocks. Often, they are licensed to acquire the original IP, designs, and dies, from the original component manufacturers, allowing them to continue producing discontinued components. Custom manufacturing services also enter the equation, enabling specialist providers to design and manufacture components that are form, fit, and functional drop-in replacements guaranteed to the original datasheet performance. They can also offer assembly, testing, and reliability services.

Let’s look at these services in practice, using Rochester Electronics as an example. Rochester Electronics is 100% authorised to supply semiconductors from over 70 leading manufacturers, including Renesas, STMicroelectronics, onsemi, and NXP. As an original manufacturer stocking distributor, it has over 15 billion devices in stock, encompassing more than 200,000 part numbers. But Rochester is a licensed semiconductor manufacturer, too, producing over 20,000 device types. With over 12 billion die in stock, it can manufacture over 70,000 device types. By offering a full range of manufacturing services, including design, wafer processing, assembly, test, reliability, and IP archiving, Rochester can provide single solutions through to complete turnkey manufacturing, enabling faster time-to-market.

Why is this important? Reliability, availability, and authenticity are essential for defence, aerospace, and industrial automation industries. Engaging with a single-source organisation such as Rochester Electronics can have significant time and cost-saving potential. It’s one less headache for busy procurement and maintenance teams.

Benefiting from the power of partnership

This explains why Avnet Silica and Rochester Electronics work closely through a strategic distribution partnership to solve customers’ supply chain and obsolescence issues. While Avnet Silica focuses primarily on new, current-generation components, Rochester provides authorised and licensed solutions for EOL devices. This approach means customers can access a broader range of components throughout the entire product lifecycle – mitigating the risk of supply chain disruptions and reducing the need for redesigns. Ultimately, as a 100% authorised solution, the relationship between Avnet Silica and Rochester Electronics provides the industry with a zero-risk option to keep products in service and production lines running.

In summary, obsolescence in the electronics sector is a big challenge that can lead to substantial costs and operational disruptions. However, companies can manage and mitigate these risks with proactive planning and strategic partnerships. Organisations can ensure continuity and reliability by following a robust strategy, including careful component selection, understanding total costs, resource management, monitoring PDNs, forecasting LTB orders, and purchasing from authorised sources. The collaboration between Avnet Silica and Rochester Electronics exemplifies how leveraging expertise and resources can provide comprehensive solutions to obsolescence issues, ultimately safeguarding the integrity and efficiency of critical systems and production lines.

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