Supply of RoHS parts tightens
The Restriction of Hazardous Substances (RoHS) deadline has passed, and independent distributors say there is tight supply of both leaded and RoHS-compliant components.
By James Carbone -- Purchasing, 7/13/2006 2:00:00 AM
It's no secret that many electronic component manufacturers have ceased production of parts that contain lead and other substances prohibited by the European Union's Restriction of Hazardous Substances (RoHS) directive.
RoHS: The tip of the environmental iceberg
After all, the law went into effect July 1 and prohibits the sale of electronics equipment that contains lead, chromium, mercury and several other substances. Many in the supply chain thought because there are exemptions to the law such as networking infrastructure and medical equipment, demand for noncompliant parts would remain strong, at least for awhile. That would result in shortages of lead-free parts.
In fact, there is a tighter supply of RoHS-compliant parts as manufacturers have not produced enough to meet demand, according to independent distributors. But, there are reports of tighter supply of noncompliant parts also.
'There has been a disruption in the supply chain because most component manufacturers have switched over to completely compliant lines,' says Andy Murphy, director of semiconductor supplier business development for Converge, an independent distributor in Peabody, Mass. 'That has created shortages of leaded components.' Some electronics manufacturing services providers expect the problem will get worse over the next several months. Case in point: Celestica, based in Toronto.
Mike Mortson, vice president of global supply chain management at Celestica, says the vast majority of the parts that Celestica now buys are RoHS compliant. 'However, we continue to deal with customers who are in market segments that are not subject to legislation and we have active demand for noncompliant parts,' he says. 'As suppliers convert their production over to producing compliant parts it will become more difficult to get noncompliant parts in the future,' says Mortson. 'We are in the early stages of that.'
But, while suppliers have shifted production to compliant parts, there is still not enough production and there is a shortage of some compliant parts, according to Murphy.
Ray Bellantoni, director of marketing for independent catalog distributor Jameco in Belmont, Calif. says buyers could find a supplier may have ample inventory of one kind of RoHS-compliant component, but not enough of another.
|
What it means to buyers Buyers need to keep a close eye on the component market and prices. Here's why:
Lesson: Stay tuned. |
'For instance one manufacturer may have plenty of D-subminiature connectors, but not enough RF connectors,' he says. 'Some product lines are easier to convert to RoHS than others,' he adds. That's because in some products lead may be in the interface, but not inside the part.
The scenario could be the same with legacy, noncompliant parts, with suppliers continuing to make some but not all parts with lead. That would result in a short supply of some components, says Bellantoni.
Adding to the supply problem, component manufacturers have transitioned to RoHS-compliant parts at a time of strong demand. For the past two quarters there has been strong component demand from communications, medical, industrial control, and consumer electronics equipment manufacturers.
'Even if RoHS didn't exist there would still be a shortage in the market because of strong demand,' says Murphy. 'About two-thirds of our requirements have been RoHS-compliant parts instead of leaded.'
Holding on
Although many companies have transitioned to compliant parts, some companies are holding onto inventories of noncompliant parts even if they are not making them anymore.
'I thought by now they would be running to my door with pallets of products because they are going to turn those products into pocket change,' Murphy says. 'But I'm finding there is a reluctance to sell because I think they see some value to those noncompliant parts that they did not see six months ago.'
However, those parts are likely to be sold soon because suppliers don't want to carry the inventory.
Doug Kelly, CEO of independent distributor Smith and Associates in Houston, agrees there is strong demand for both compliant and noncompliant parts, but not all companies are stockpiling noncompliant parts.
'Some people are looking to get rid of noncompliant products. Others are hoarding the stuff because they are concerned that once production has stopped there is going to be strong demand. There isn't any one approach,' he says.
In fact, the supply scenario for noncompliant parts is a bit mixed. Some parts such as NOR flash memory, EEPROM, some transistors, and diodes and logic have longer leadtimes and prices are rising, according to independent distributor Fusion in Andover, Mass. However, various discrete and analog chips are readily available and prices are being discounted.
'With certain noncompliant parts, demand is declining and those parts are being discounted, creating opportunities for buyers looking for cost savings,' says Don Brass, product manager for Fusion. 'There are opportunities in the market to buy noncompliant parts at a discounted price because OEMs and contract manufacturers have switched production to RoHS-compliant equipment.'
 "Some people are looking to get rid of noncompliant products. Others are hoarding the stuff, because they are concerned that once production has stopped there is going to be strong demand." —Doug Kelly, CEO of Smith and Associates in Houston |
Prices rising
As more component manufacturers phase out noncompliant products, prices will rise if demand remains strong. In some cases, prices have already increased for noncompliant products. Tobey Gunnerman, worldwide purchasing manager for Fusion, says spot prices have increased 50% or more for some NOR flash chips in 32-, 64- and 128-bit densities.
Gunnerman cautions that tags will also rise for compliant parts because materials costs have increased.
He adds that RoHS is proving to be fantastic news for independent distributors even if it is causing some confusion in the supply chain.
He says any switch in technology creates opportunities in the marketplace. Independent distributors live and die with opportunities in the marketplace. The switch from leaded to lead-free has created opportunities for both families of parts, says Gunnerman.
Web Exclusive:
What’s exempt from RoHS
While the Restriction of Hazardous Substances prohibits the use of lead, mercury chromium and other materials from being used in electronics equipment, there are a number of exemptions. In fact, exemptions have been added to the original 2003 legislation. Here is a complete list of exemptions.
RoHS Exemptions
-
Mercury in many fluorescent lamps.
-
Lead in cathode ray tubes, electronic components fluorescent lamps.
-
Lead as an alloying element in steel containing up 0.35% lead by weight.
-
Lead as an alloying element in aluminum containing up to 0.4% lead by weight.
-
Lead as a copper alloy containing up to 0.4% lead by weight.
-
Lead in high melting temperature solder.
-
Lead in solder for servers, storage and storage array systems, networking infrastructure equipment for switching, signaling, transmission as well as network management for telecommunications.
-
Lead in electronic ceramic parts
-
Cadmium and its compounds in electrical contacts and cadmium plating.
-
Hexavalent chromium as an anticorrosive of the carbon steel cooling system in absorption refrigerators.
-
Deca-BDE in polymeric applications.
-
Lead in lead-bronze bearing shells and bushes
-
Lead in compliant pin connector systems.
-
Lead as a coating material for thermal conduction module C-ring.
-
Lead and cadmium in optical and filter glass.
-
Lead in solders consisting of more than two elements for the connection between the pins and the package of microprocessors with a lead content of more than 80% and less than 85% by weight.
-
Lead in solders to complete a viable electrical connection between semiconductor die and carrier within Flip-Chip packages.
-
Lead in linear incandescent lamps with silicate coated tubes.
-
Lead halide as radiant agent in high density discharge lamps for professional reprography applications.
-
Lead as activator in the fluorescent powder (1% lead by weight or less) of discharge lamps when used as sun tanning lamps containing phosphorus and when used as specialty lamps for diazo printing reprography, lithography, insect traps, photochemical and curling processes.
-
Lead with PbBiSn-Hg (lead bismuth tin mercury) in specific compositions as main amalgam and with PbSn-Hg as auxiliary amalgam in very compact energy savings lamps.
-
Lead oxide in glass used for bonding front and rear substrates of flat fluorescent lamps used for liquid crystal displays.
Related links:
Distributors see smooth RoHS conversion
Watch out for bogus RoHS parts
Most Asian companies will be RoHS compliant
iNEMI
Hazardous Materials in Electronic Components
Get ready for REACH and RoHS 2
06/18/2009RoHS enforcement rules still unclear
06/14/2006Distributors see smooth RoHS conversion
06/14/2006
Now Playing: 
