Semiconductor End-of-Life (EOL) announcements can cause procurement stress and lines-down situations. When an EOL notification is issued, the original equipment manufacturer (OEM) may find themselves in the position of having to make a last-time-buy (LTB) purchase that will cover the duration of its manufacturing and/or in-field maintenance.
Customers that have a large timeline disconnect between the EOL event and their lifetime demands are looking for a better long-term solution. These customers want to avoid large cash expenditures for the LTB whenever possible, but they need to continue addressing their long-term device procurement requirements.
If the EOL event and the lifetime demands are far enough apart, this can trigger a re-design effort that is justifiable by the delta in cash expenditure required for the LTB. This incentivizes the OEM to a minimal LTB purchase, but can cause significant challenges to complete and qualify a re-design before manufacturing or in-field service comes to a screeching halt.
So why do EOL notifications occur in the first place? The answers are complicated and tend to be unique per original component manufacturer (OCM) and product line. The answers are always revenue-driven, but can be heavily influenced by the product line evolution and market. In addition to revenue, answers for EOL notifications surround silicon availability and packaging availability.
Today, OCM’s primarily design new products for short-term commercial markets and not long-term system markets. Those commercial markets have life-cycles that are an order of magnitude shorter than long-term markets and range from 18 months to 3 years. Long-term systems for avionics, automotive, and others are easily lasting more than a decade and sometimes 25 to 30 years or more.
The importance of an alternative solution to costly last-time-buys associated with EOL notifications cannot be understated. Programs like Transitional EOL from Rochester Electronics provide a fully-authorized solution to EOL announcements. Why? When the time comes for the OCM to discontinue manufacturing a certain device, it is understood that it puts their end customer in a very difficult situation that could potentially jeopardize future business relationships.
With Transitional EOL programs, a plan can be developed to support an appropriate LTB, in addition to mapping out a long-term strategy that eliminates unwanted supply interruptions. The collaboration between continuing manufacturers and an OCM to implement an EOL strategy is vital; without a strategic procurement plan in place, manufacturers could face millions of dollars’ worth of re-design costs with extended application downtime.
Transitional EOL ensures greater long-term revenue for the OCM while maintaining customer satisfaction for any future business with the OCM.
George Karalias is director of marketing & communications at Rochester Electronics.