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Problems seen ahead for supply chain from Pb-free directive

Posted: 11 Nov 2004 ?? ?Print Version ?Bookmark and Share

The road to lead-free semiconductor production and compliance with European Union directives is going to be complex and could cause major inventory issues, senior industry executives, distributors and manufacturers said here on Tuesday (Nov. 9) during the opening day of the Electronica exhibition.

Concerns focus on the EU's Restriction of Hazardous Substances (RoHS) rules. "Our concern is not so much the semiconductor companies. They are mostly in line with the RoHS timetable in terms of the changeover. But we work with many second- and third-tier customers that are not really attuned to what needs to be done", said Steve Martson, chief procurement officer at Flextronics. "I definitely foresee big difficulties and inventory concerns."

Representatives from STMicroelectronics, Freescale Semiconductors, Texas Instruments and National Semiconductor concurred they are well down the road to compliance.

"Companies in some countries, for instance Japan, are definitely on board, others are gearing up, but I fear there are many companies in most countries who are either ignoring lead-free and the RoHS or just do not comprehend the ramifications. While semiconductor suppliers will be ready, the supply chain is another matter as far as inventories are concerned. There will be surprises along the way," said Gregg Lowe, senior vice president, Texas Instruments.

Enrico Villa, corporate vice president for Europe at STMicroelectronics, commented, "You would have thought three years as a transition period would have been enough, but as far as the supply chain is concerned, this is clearly not the case."

From the distributors' point of view, Jochen Lutz, vice president of logistics at Arrow Europe, said: "A major financial issue is looming here. When do our customers actually need lead-free, when do we start stocking, and what do we do with stock that does not comply. More fundamentally, what is and what is not lead-free; we need to analyze that and soon. And who will pay the bills?"

Another topic at the panel discussion was the impact on the supply chain of the shift of manufacturing to China and other low cost Asian countries. "This is making the management of the supply chain very much harder. The business priorities there are just so different; it adds another dimension, another degree of complexity to what we are doing with EDI and RosettaNet," said Steve Haynes, president, Avnet Supply Chain Services Europe.

Martson from Flextronics suggested the large distributors such as Avnet and Arrow have made big strides supporting manufacturers in China, "but the well established, smaller distributors have a real foothold there and that will continue."

Another challenge, highlighted by both Haynes and Alberto Macchi, vice president of sales at Freescale, was getting a return on the considerable technical resources that companies put in to their Asian operations. "We are very concerned about this," said Macchi.

- John Walko

EE Times

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