Dealing with semiconductor obsolescence


Dealing with semiconductor obsolescence

Semiconductors have been making national headlines for the past two years. The COVID-19 pandemic and its domino effect on global supply chains has caused shortages that have affected a multitude of industries. At the same time, frequent mergers and acquisitions of semiconductor manufacturers have compounded one of the industry’s biggest problems: obsolescence. Claudia Jarett, Country Manager United States at automation parts supplier EU Automationexamines why semiconductors are becoming obsolete faster than in the past and how to deal with it.

Semiconductor shortages are impacting consumers’ ability to buy not only the latest mobile and computer technology, but also automobiles, household appliances and even LED lights. However, despite their importance in the production of everyday objects, few consumers can actually explain how semiconductors work.

Semiconductors are devices designed to control the flow of current in electronic equipment. They are made of materials that are neither fully conductive nor completely insulating, and are normally created by adding impurities to elements such as silicon and germanium to change their conductivity. These are then printed and “sculpted” into intricate patterns that allow current to flow in the desired manner.

But why are semiconductors so difficult to produce and market? The answer lies in the complexity of their design and verification process, and the fragility of the final product. The silicon crystal wafers that form the basis of most semiconductors can contain thousands of circuits, which are created by a complex printing process known as photolithography.

The final product is very delicate and its functionality can be affected by variables such as temperature, vibration and static electricity. This has spurred the emergence of companies specializing in packaging and logistics to safely package and ship semiconductors.

The result is that semiconductors rely on a highly specialized supply chain where every node is interdependent. To complicate matters, different countries specialize in different stages of production and logistics, which means semiconductor supply chains span the globe. For example, China is the leader in material sourcing, the United States is unmatched in the design process, Taiwan is home to most of the world’s chip foundries, while most lithographic printers are produced in the Netherlands. Down.

This means that at present, total self-sufficiency is impossible for any country. Therefore, disruptions that affect one node in this complex supply chain can easily affect all other nodes globally.

The increasing rate of obsolescence

In 1970, the typical life cycle of a semiconductor was expected to be around 30 years. In 2014, this period was reduced to ten years, a reduction of 60% in less than 50 years. That’s not a big deal for consumer electronics, with new smartphones and laptops coming out every six months or so.

However, the shorter component life cycle can pose a significant challenge for industrial machinery that is expected to last for decades. In particular, highly regulated fields such as automotive, aerospace, defense, and medical device manufacturing are heavily impacted by the rapid obsolescence of semiconductors. In these industries, using a different component than the one specified in the original design can lead to lengthy and time-consuming testing and verification procedures.

But why are semiconductors becoming obsolete faster than in the past? This is partly due to the natural pace of technological progress, which leads semiconductor manufacturers to phase out older designs to make way for more efficient and cost-effective alternatives. Additionally, older models are normally built into legacy devices, which may depreciate so much that continued support by the original equipment manufacturer (OEM) is impractical.

However, since the onset of the COVID-19 pandemic, another phenomenon has contributed to the rapid pace of semiconductor obsolescence: a large series of vendor mergers and acquisitions. For example, in 2021 the Chinese company Nexperia acquired NWF, the UK’s largest chip factory. In the same year, Renesas acquired Dialog Semiconductor, almost simultaneously with ADI’s acquisition of Maxim Integrated.

When this happens, the acquiring company may decide to rationalize the product portfolio of the company it has acquired, phasing out less-demanded semiconductors to give priority to manufacturing newer models. This trend further increases the volatility of the already fragile semiconductor supply chain.

How to cope?

When a product reaches its end of life (EOL), OEMs issue a Last Purchase Notice (LTB). This typically gives manufacturers between six and twelve months to purchase and stock components before they are discontinued. However, LTB generally does not guarantee that all manufacturers using this device will be able to place and receive an order on time. So what can be done?

First, keeping abreast of industry changes, mergers, and acquisitions can help manufacturers predict which components are most likely to be discontinued. To help you, EU Automation regularly announces when popular components become EOL, both in a newsletter and on social networks.

It is also imperative that manufacturers are aware of the risk of obsolescence of semiconductors embedded in critical equipment, and that they monitor the life stage and health status of these machines with an adequate predictive maintenance program. . This will allow them to spot potential failures before they cause irreparable damage and order hard-to-find replacement parts before anyone else. A trusted supplier specializing in obsolete spare parts can also be a great resource and can help manufacturers source quality replacement parts from a worldwide network of qualified partners.

These strategies won’t prevent semiconductors from becoming obsolete, but they could help offset the negative impact of obsolescence on company bottom lines.

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