The electronics industry can expect supply chain difficulties as the conversion to lead-free components gains steam.

According to Peter Lachapelle, VP of content and SRM at i2 Technologies Inc. in Dallas, problems will arise on a number of fronts, from part numbering to the availability of components that are exempted for defense and telecommunications. He also believes there will be showdown over environmental regulations as United States and countries pass new rules that are conflict with the existing European Union rules. Lachapelle further cites the lingering tin whisker problem as a dark cloud over conversion.

The VP also expects the industry will get bogged down in product redesign due to environmental laws. Lachapelle told Electronic News that manufacturers and suppliers don’t have the army of engineers to manage the conversion.

“There used to be more component engineering people available,” he said. “That function has been severely reduced, and it’s that function that is at the intersection point for the lead-free conversion, because those engineers know what parts go where.”

Lachapelle believes that redesign will draw engineers away from innovation, limiting manufacturers' ability to work on new products. “We don’t have enough raw engineering talent after the layoffs in recent years. You only have so many engineers in the world, and if they’re doing redesign, they can’t also do product innovation.”

Lachapelle believes these factors will cause disruptions in the supply of components, and that could drive up the cost of products in the electronics industry. He contends that the timeframe for adjusting to changes in components due to environmental laws has been highly underestimated. Instead of the two to three years typically quoted as the conversion window, Lachapelle believes it will take the industry 10 to 15 years to make the transition.

“Just think of the years it took to convert from leaded gas to unleaded gas,” Lachapelle said. “That’s just a pin prick compared with this conversion.”

Part Numbering Confusion

Lachapelle points to the part number issue as a problem that will pepper the supply chain with snafus. At first, most of the industry called for new part numbers for unleaded parts. About 30 percent of the component supplier community balked at the change, preferring instead to issue lot codes and date stamps to indicate new lead-free versions of their parts. Most said they didn’t have the computer resources to create a whole new set of numbers.

Then, OEMs started to balk, as well, complaining that the work to revise their bill of materials (BOM) to accommodate new part numbers would be costly. Those in favor of new part numbers countered that those BOMs would have to be redesigned at any rate because of the new temperatures needed to work with pure tin as opposed to the traditional tin and lead blend.

Lachapelle believes the cacophony of voices on the part number issue will make the conversion a nightmare of fragmentation. “A little fragmentation in the market is fine, but not a lot,” Lachapelle said. “But there’s no congruity in part numbering. Having it this fragmented is maximum dissolution."

Lachapelle also see major difficulties arising from a component industry that is producing both lead-free and exempt components, as some portions of the industry will lose benefits of mass production. “The electronics industry has reaped tremendous benefits from the economies of scale,” Lachapelle said. “As the industry shifts to lead-free, you won’t have the same economies of scale any longer.”

He notes that some OEMs are already stockpiling leaded components that they don’t expect will be available after the switch to lead-free parts.

“Accelerated component purchases are now estimated at a billion dollars. People who are exempt don’t want to run out of parts. It can cost millions of dollars to re-qualify parts in the cockpit. They want to avoid that.”

He notes that many engineers in defense don’t believe parts suppliers will continue producing leaded products at low prices just for the exempt portion of the components market.

Lachapelle believes the problems associated with the transition to green parts will reach a magnitude the industry has not yet experienced. “We’re never had a regulatory disruption in the electronics industry. We’ve had innovation disruptions that have shifted the competitive landscape, but we’ve never seen this.”

He believes the lead-free disruption will create shifts in the competitive landscape that are every bit as powerful as the shifts caused by technology innovation.

By: DocMemory
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