The Electronics Source Book
November 3, 2004

Industry braces for the lead-free conversion

Will your component bins be free of heavy metals by July 1, 2006? That’s the date by which electronic components have to be free of six substances, including lead, mercury, cadmium and other heavy metals. The July 1, 2006 deadline was set by the European Union when it passed the Restriction of Hazardous Substances (RoHS) regulations in 2003. China and Japan have also passed restrictions on components containing these metals. Many U.S. states, particularly California, are in the process of passing legislation that will ban products containing lead and other hazardous materials.

The problem with the heavy metals doesn’t typically occur during the lifetime of the products containing leaded components. But a long-term problem develops when these products pile up in landfills and begin to break down. Over a number of years, the heavy metals find their way into the water table and begin to poison the environment. The problem has become larger as consumer electronics have proliferated across the globe.

With the RoHS deadline looming, the electronic components industry is in the process of switching over completely to lead-free parts. Most component suppliers are changing their soldering from lead to tin, tin-silver, tin-copper or tin-silver-copper. Since the electronics industry is truly global, component suppliers never seriously considered making unleaded parts for Europe, Japan and China while still producing leaded parts for other regions. There is simply no practical way for manufacturers to segregate products by region.

There is one kicker however. The U.S. military doesn’t want to switch over to tin and other lighter metals. So the military is insisting it will continue to require lead-based solder in the electronic components it purchases. “The quality of the lead-free solder is not as good today as the solder that contains lead,” says Eric Smith, director of the design engineering market segment at Newark InOne, a Chicago-based distributor. “The military prefers the lead because it’s more reliable.” Smith notes that the military uses a low volume of components, so the impact of its continued use of leaded components on the environment will be minimal.

As the industry moves toward conversion to lead-free products, RoHS compliance has become a competitive factor among component suppliers. A number of large component suppliers have already completely switched to lead-free inventory. “Several component suppliers are viewing the conversion to lead-free as an opportunity to take a leadership position in the industry,” says Smith. “If you’re looking at two products and one is safe for the environment and one isn’t, which one will you choose?”

There is concern among distributors, manufacturers and suppliers about what becomes of any leaded parts after the RoHS deadline. Who absorbs the loss for leftover noncompliant inventory? The answer is unclear, and most industry players would like to avoid the question by eliminating leaded parts long before the summer of 2006.

Some distributors set early deadlines for the switch to lead-free components. The goal is to flush the leaded parts out of circulation before the July 1, 2006 witching hour arrives. “Distributors are putting pressure on suppliers,” says Smith. “The goal is to be compliant before the deadline and to have an overall plan to support our customers and meet the compliance deadline.”

Another concern is the cost of conversion. In Europe alone, cost estimates for the lead-free conversion is pushing a billion dollars. These costs include design and supply chain alterations, the research and development involved in producing lead-free alternatives, and the capital expense of new equipment to produce compliant parts. When North America and Asia are considered, the total switchover costs will likely run into the billions.

So far, these added costs have not appeared in the price of components. Some suppliers insist they will not raise their prices to cover the cost of converting to lead-free components. Most distributors agree that there will be little cost impact due to the switch to compliant parts.

This is the first in a series of four articles. Part II will evaluate the impact of the conversion to lead-free components on the supply chain, specifically in regards to part numbering and return policies for leaded components. Part III will look at how the switch affects buyers. And finally, Part IV will investigate whether the military has plans to adopt lead-free components once the conversion is complete and the component market has stabilized.

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