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Addressing obsolescence issues in mil/aero industry

Posted: 11 Sep 2012 ?? ?Print Version ?Bookmark and Share

Keywords:Obsolescence Mitigation? OEM? COTS?

The move to COTS parts proved successful in many applications. Performance improved, costs dropped, and the latest technologies became mainstream. COTS parts were holding sway across the majority of procurements and saving money for the majority of programs. And where COTS were not feasible, the more costly, full mil-spec parts could rationally still be used.

But time inexorably marched on. As new military and aerospace programs were initiated, many OEMs were anxious to utilize COTS parts. Further, some of the original COTS-based programs were extended beyond the originally planned lifetime horizon. An unintended and unanticipated problem emerged. Many of the new COTS-based systems had originally been designed with the former mil-spec parts which were expected to be available for the long term. In actuality, the COTS parts have finite lifetimes that are substantially shorter than the traditional mil-spec parts. Many OEMs discovered that a COTS part which they designed in had become obsolete long before the program into which the parts were deployed reached its end of life (figure).

Figure: The life cycle for an IC in a consumer application is much shorter than for an IC in a mil/aero design. Over the same period of time the IC in a consumer application is expected to be revised frequently and generate revenue with each revision, while the mil/aero design generates revenue based on the long-term, original IC application.

Unintended consequence of obsolete COTS parts
A declining supply and steady demand always creates problems. As low-priced COTS parts became obsolete, Mil/Aero OEMs and contract manufacturers (CMs) scrambled for any remaining parts. Sometimes, they found the ICs on distributor shelves or with suppliers dedicated to obsolete parts like Rochester Electronics. Other OEMs turned to the "Gray Market" for parts. Actually, before COTS, there was not much of an IC gray market. After the move to COTS parts, a widespread gray market developed to supply older obsolete parts to the unfortunate CMs and OEMs seeking the one critical part needed to complete a build.

Another unintended consequence of the obsolescence of COTS parts is the rise in counterfeit parts. From a recent article:1
1. Over 50 percent of counterfeit parts are obsolete, which is a key reason for counterfeiting.
2. Of the counterfeit parts, 25 percent are analog ICs. The reasons for this are well understood: the high ASPs of the valid part; the long life of the original devices combined with their wide market appeal; and analog devices are much easier to copy than highly complex digital devices.

The IC industry responds
With IC obsolescence a fact of life in the modern COTS-driven world, how can IC manufacturers, their CMs, and Mil/Aero OEMs manage supply and demand today? There are several things that an IC supplier and Mil/Aero OEM can do. We will consider three possibilities.

Last-time buy (LTB)
When an IC manufacturer announces a LTB of designated parts, the Mil/Aero customer can make a final volume buy. Sometimes this is the OEM's only recourse, especially on the short term, to obtain the crucial remaining parts for an application.

There are "pros and cons" for the Mil/Aero OEM. On the positive side, the OEM buyer can stockpile the parts needed for the expected remainder of the program life (hopefully). Moreover, the buyer knows that these parts come directly from the manufacturer and are "the genuine article," not counterfeit.

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