Consumers are always looking forward to the next great technology, whether it’s a smart phone, a smart TV, or the next generation electric vehicle. Faster, smaller, more powerful, better features. For OEMs, this fast-paced reality creates a potentially expensive design and sourcing nightmare.
It’s particularly true for organizations that aren’t designing the next iPhone, which can amortize the cost of a chip across 200 million units in a single year. Products designed with a long life cycle and high reliability in mind have a much longer road to recouping costs. Further, with lower volumes and long design and qualification times, a chip may be obsolete before the final product even hits the shelves.
Today, semiconductors are being discontinued at a faster rate than ever before. Chip makers are balancing the realities of new technology, new packages, and shifting demand. Currently, the average semiconductor has a lifecycle of less than two years. In turn, that means that OEMs are facing potential redesign for their products more than ever before. Whether designing a new product or redesigning an existing product to integrate a new semiconductor, the cost can be daunting.
Costs associated with a redesign in these high-reliability, long lifecycle applications can be substantial — particularly when a semiconductor is involved. In addition to delays, redesign costs include the personnel costs associated with design, testing, and product support activity. It adds up.
The costs are variable depending on the vertical market and the components that are being obsoleted.
For these organizations, there’s are three potential solutions:
1) Find a drop in replacement part
2) Make an end of life buy to cover decades of production
3) Redesign the product
Smart sourcing early in the design process can smooth the way. Ask suppliers about product lifecycles and their end of life strategies. Work closely with sourcing partners to make a plan for inevitable shifts in product availability.
Author: Thomas Skarbek
Thomas Skarbek, Director of Supplier Development at Flip Electronics, has more than 30 years experience in the semiconductor industry. He speaks to the industry regularly on topics of product obsolescence management and risk mitigation. Skarbek has also served as a member of the Anti Counterfeiting Task Force (ACTF) of the Semiconductor Industry Association (SIA), which worked on the language incorporated in the National Defense Authorization Act. He holds a Bachelor’s of Science in Electrical Engineering from University of Massachusetts, Lowell.