The problem of obsolescence is common, unremitting and complex in the networking, industrial, and aerospace/defense industries. Original equipment manufacturers (OEMs) in these and other technology-intensive industries are committed to products that require considerable investment—time, money and resources—to produce and to change when components designed into them reach end of life (EOL). New products may take years to architect, verify and qualify. Similarly, these products’ lifecycles can be a decade or more. Some will need specific semiconductors or other components well beyond their expected EOL date.
Despite knowing that components will reach EOL at some point, a scramble typically ensues when a semiconductor EOL is announced by its original component manufacturer (OCM). Product designers, engineers and manufacturers must either find a resource with sufficient inventory to provide a vital component that’s soon to be off the market, or they need an alternative with the same specs and functionality. Can a new sourcing partner provide enough of the obsolete semiconductors to maintain production and, if they’re in the equation, repair and refurbishment? Is there another semiconductor that might work, whether from that supplier or one of its competitors? Does the product need to be completely redesigned? Does it need to be requalified for a different component?
Although there is a clear need for components well beyond their EOL, OCMs may not be able to make a compelling financial case for continued production as they weigh the cost of manufacturing vs demand for a particular chip. At that point, it’s time for the OCM and OEM to think outside the box. To avoid obsolescence, extending the manufacturing of a particular component using a third party for a specific customer or set of customers may make sense. Increasingly, companies are establishing partnerships that deliver a three-way win between the OCM, OEM and an extended manufacturing partner (EMP) to reduce the financial and supply chain risks associated with component obsolescence.
As an EMP, Resurgent Semiconductor is always looking for a three-way win. These mutually beneficial relationships enable
semiconductor manufacturers to focus on new product development without abandoning customers that do not need more advanced technologies. They give OEMs an affordable source of reliable, high-quality products that match the form, fit and function of the original for as long as they are needed. And of course, the EMP closes the gap between demand and supply in a way that makes financial sense for all parties.
EMPs embrace a variety of business models to accommodate the needs of their customers. We may partner with another supplier to build a discontinued substrate, then do the product requalification ourselves. We may replace a discontinued automated test platform with something current. No two business cases are alike, so there’s no one-size fits all approach. Every solution is measured against a number of variables.
For example, an EMP may not make financial sense for commodities such as memory and standard logic. However, extended manufacturing may be just the thing for customers that need several dozen high-value products in a scenario where demand exceeds hundreds of thousands of components annually.
The ideal component for an EMP relationship is one with a unique pin-out that precludes a pin-compatible drop-in replacement, with a demand horizon that extends for several years.
Extended manufacturing is often dismissed based on a couple of misconceptions:
Myth: Lower product quality.
Reality: Resurgent uses the same manufacturing flow—foundry and mask set, OSAT, test hardware and software—that the OCM uses. As a result, every electrical and physical parameter complies with the OCM’s data sheet. The parts manufactured by Resurgent are identical to OCM originals electrically and physically. This is a unique feature of Resurgent’s business model.
Myth: Extended manufacturing won’t make financial sense for the OEM.
Reality: Even if unit pricing is a bit higher, there are OEM savings to be had. For example, there’s no need for the OEM to redesign the product or requalify a new part, and the risk and cost of supply chain disruptions are taken on by the EMP.
Myth: Extended manufacturing places too large a burden on the OCM to complete a manufacturing transfer or the manufacturing process is too complex for a third party to manage.
Reality: Put Resurgent to the test. We will demonstrate how efficient and painless a manufacturing transfer is. We’ve executed multiple manufacturing transfers producing over one million parts per year and we have the expertise to execute a transfer quickly, with minimal OCM resources. Resurgent’s recent merger with Flip Electronics brings financial resources to the table to allow for a profitable transaction for the OCM.
When EOL is imminent, organizations may not think past traditional sourcing options—but they should. EMPs solve a non-trivial problem that has plagued the electronics industry for decades. Strategically leveraging extended manufacturing bridges the gap between the semiconductor lifecycle and the OEM’s product lifecycle, producing a win-win-win for all involved.