3 Ways the Recycling Supply Chain Is Using Blockchain
by 
Dr. Rahul Razdan
The article “Let's define a new electronics market: Long Lifecycle (LLC) Markets” introduced the existence of a market segment consuming electronics content which needs to be viable over five years. Vertical markets such as aerospace and defense, industrial, and medical are examples of LLC. This requirement conflicts with the traditional consumer market and since the consumer market dominates the semiconductors, supply chain issues are creating an increasing series of problems for LLC customers.
The problems are exposed in the “tail” end of the product pipeline with issues of reliability and obsolesce. Unfortunately, at this point, the design team is long gone, and the procurement/maintenance teams are left to handle the problem. The options are few and expensive.
How does the current electronics supply chain handle these issues?
The electronics supply chain is a complex web of companies which connects semiconductor makers to the end customers. The major players in the LLC ecosystem are the semiconductor companies themselves, electronic manufacturing services (EMS), electronics distributors, and electronic design automation companies. Let us examine each and their roles for LLC customers.
Semiconductor companies: When a consumer company shuts down a product (perhaps every 2-3 years), the demand profile of the associated semiconductors falls dramatically. The original economic model for the part is often broken and forces an end-of-life notice. Semiconductor companies do not like making these notices and will often carry extra inventory to maintain customer relationships. How much inventory to carry is always a challenging question, and sitting inventory is dead money.
In most cases, it does not make sense to invest in LLC specific semiconductors because the volumes are too low. However, for parts which have enough volume to be sustainable (typically across a number of LLC markets), the business is very high margin and looks like an annuity. Component level analog parts in older fabs often fall into this category and these companies (Texas Instruments, Analog Devices, Maxim, etc) tend to have a high margin, but lower growth businesses.
Electronics distributors: Companies such as Avnet and Arrow provide a marketing and distribution function for semiconductor manufacturers. In the context of LLC, they can provide inventory and often serve as a secondary market for obsolete parts. Like any business, distributors range from the highly ethical to ones who are not so ethical. In this context, counterfeit parts are a large problem today, and this is especially a factor for LLC customers who are desperate to get parts for maintenance. Driven by sustainability concerns (World Economic Forum), there is also a connection with electronics waste where there is a deconstruction process which harvests silicon chips for the secondary markets. Today, the lack of automation and costs associated with this process limit its effectiveness.
EMS companies: EMS companies such as Flextronics and Jabil Circuit engage with LLC customers to assemble and build the printed circuit boards (PCBs). Originally, many EMS companies were the spinouts from traditional OEMs such as IBM or HP who wanted to shed low-margin business (EMS companies have margins in the low single digits). Over time, EMS companies have moved from serving consumer customers to LLC customers. LLC customers are generally low volume and benefit from the aggregation manufacturing function provided by EMS companies.
Further, LLC customers are often from non-electronic industries, so EMS companies will offer electronic design services as a part of their portfolio. There is also a large ecosystem of design services companies worldwide which build basic skills around FPGA, embedded software, and some level of analog design. Finally, in terms of supply chain, EMS companies try to help their customers with volume buys of commodity components. In fact, EMS companies see a huge amount of semiconductor volume, but today, this knowledge is not used to solve the deeper LLC issues.
Electronic design automation
Electronics design automation (EDA) companies such as Cadence Design Systems, Synopsys, and Mentor Graphics (Siemens) provide the key design tools and some level of the design and verification IP required to build design. Today, the vast majority of the business in EDA is focused on semiconductor design. Even the “systems” divisions of these companies focus on issues such as HW/SW codesign in the context of System-on-chip implementations.
In the LLC world, the core design tool set consists of traditional PCB design tools (Orcad, Zukan, Pads), independent design tools from FPGA vendors, and a large number of chip specs off of semiconductor company websites. In terms of obsolescence, Michael Pecht and Peter Sanborn at University of Maryland CALCE center have done some good work on obsolescence predication in the parts selection process. In addition, third party parts databases such as SiliconExpert attempt to help with addressing the obsolescence issues. Of course, the value is only as good as the data and the systems for timely updates.
In terms of vertical markets, aerospace and defense (A&D) has seen the issues to the greatest degree. U.S. Department of Defense has even invested heavily in trusted foundry programs and even invested in its own semiconductor with its DMEA function. Because of the dynamics of semiconductor process and manufacturing, both programs are reaching the point of limited viability.
Overall, viewed from an electronics point-of-view, LLC issues are NOT a focus point of the current electronics ecosystem, and the current design, build, and manufacturing eco-system is fragile for LLC customers. Even the vast resources of the U.S. DoD have not been able to solve this problem. Is LLC just a back-water which can be ignored ? or is there something more significant at stake relative to the next big mega-trend in the area of AI/IOT? A good topic for the next article.
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