Mil/Aero Buyers Face Unique Battle With EOL

In a world where everyone wants to upgrade to the next big electronics offering as soon as possible, buyers in the military/aerospace (mil/aero) market find themselves in a much different landscape. For those trying to support electronic designs that can last for decades rather than months, building a strong connection with authorized distributors specializing in end-of-life (EOL) and obsolete semiconductors is critical.

Consider that the average lifespan of a semiconductor is about three years. That lifespan includes the actual design of the device, so the production availability is two years or less. That may work for consumer OEMs, but those in markets whose end application is high-reliability (hi-rel) with a long life cycle, can’t make that work.  Consider this:

• The Lockheed Martin F-35 development started in 1995. The first prototype was flown in 2000, and the first production unit came off the line in December of 2006. The production and purchase by the U.S. Government is expected to run through 2044, with the aircraft projected to operate until the year 2070. That is a lifespan of 85 years.
• The Javelin missile system was first introduced in the year 1989. This anti-tank missile is being used today in the Ukraine with 5,000 systems recently shipped.  The production program itself is slated to run until 2050. That is a lifespan of 61 years.
• General Dynamics introduced the F-16 Fighter jet in the 1970s and is now being built through 2026 in Foreign Military Sales with projected support out to 2070. That is a lifespan of 100 years.

When an EOL buy notice appears on a critical component listing in this type of product, mil/aero buyers often don’t have the resources to pile up several years of stock, let alone procure enough material for the full length of the program. In a different time, the mil/aero market was the procurement gorilla of the semiconductor market. They accounted for the majority of all semiconductors purchased. Flash forward to today and mil/aero spend was $12.9 billion out of a total market spend of $573.44 billion in 2022. That equates to around 2 percent. It barely makes a dent in the market, and they have lost all leverage with the semiconductor base.

Of course, they aren’t alone in this conundrum. As automobiles integrate more and more electronics, these OEMs are looking at supporting a design for 15 to 20 years. Avionics, medical, energy and industrial OEMs, that make products that have long life cycles with complex designs, are facing similar scenarios. Without an authorized partner that specializes in EOL and obsolete semiconductors, the customer is facing one of two options: costly redesign or procuring from the grey market.

By working with an authorized distributor who takes over EOL, excess, obsolete finished goods as well as corresponding wafer/die and IP, OEMs can mitigate their risks.

The key to success is offering transparency and communication to distributor partners. When a potential gap is revealed, authorized distributors have the market connections and relationships to work with the original semiconductor manufacturer to take over residual inventory and perform last time buys on their own to support the market in the future.

Additionally, the distributor can take over residual wafer/die as well as procure the same wafer/die for future build out. These strategic buys can go a long way to smoothing out procurement challenges down the road for the OEM. Further, a handful of authorized distributors can take over the intellectual property (IP) under authorized agreement with the original semiconductor manufacturer to increase the life of the given device by bringing the product back to life and supply those chips well into the future.

Smart OEMs can ensure a product pipeline that extends well into the future by working proactively with an authorized distributor. Be willing to share a bill of materials with your key partner. Using this information, combined with intelligence from other customers, the distributor can aggregate demand and work with the original semiconductor manufacturer to meet the looming and inevitable EOL and, in return, support the needs of the customer for the long term. The risk mitigation alone makes it worth the time and energy.

To read the article on EPSNews.com, click here: https://epsnews.com/2023/09/28/mil-aero-buyers-face-unique-battle-with-eol/