The Electronics Source Book
November 17, 2004

Progress on lead-free components spotty

A recent survey of component suppliers shows that most manufacturers have lead-free initiatives in place, even while many suppliers resist using new part numbers. Phoenix-based distributor, Avnet Inc. and Technology Forecasters Inc. of Alameda, California partnered to conduct a survey of component suppliers to determine how close they were to complying with the RoHS (Restriction of Hazardous Substances) regulations. The RoHS is a European Union initiative to ban six hazardous materials including lead and mercury from electronic products by July 1, 2006. The survey team interviewed 53 component suppliers and 13 contract manufacturers (CMs).

The survey results show that 94 percent of the component suppliers interviewed are designing components compliant with RoHS regulations and 44 percent are already manufacturing compliant parts. Between now and the end of 2005, most suppliers will be finishing the transition to lead-free components. The survey also revealed that customers have already started to request lead-free parts. One-third of the component suppliers reported that between 5 and 15 percent of customers orders are now for lead-free components. One quarter of respondents noted that 25 percent of current orders are for lead-free parts.

The part-numbering controversy

One area of sharp controversy in the electronic industry is the manner in which suppliers indicate compliance. OEMs, CMs and distributors want suppliers to issue new part numbers for compliant parts. Many suppliers would rather indicate compliance by lot number and dates on packaging. The OEMs, CMs and distributors are concerned that if new part numbers are not issued, it will be difficult to distinguish lead-free parts from leaded parts when they come back as returns or when they are recycled. Industry groups such as the National Electronics Distributors Association have called for new numbering on lead-free parts.

Survey results find that only 52 percent of suppliers are planning to issue new part numbers for lead-free parts. A full 42 percent of suppliers plan to not change part numbers. Instead they plan to indicate that components are lead-free by printing info on the packaging (37 percent), indicating by date of manufacture (31 percent) or marking the components (27 percent).

Leadtime and pricing

Three quarters of suppliers interviewed stated that they will deliver compliant parts with the same lead times as for current parts. Only 2 percent indicated that lead times will extend. The remaining 23 percent did not know yet whether compliance will affect lead times. More than half of the respondents (53 percent) do not expect to increase prices for compliant parts while 35 percent expect a potential price increase. The balance of suppliers said they didn’t know yet if compliance will affect pricing.

Discontinuing non-compliant parts

Many suppliers do not plan to totally discontinue products containing lead and other hazardous substances. They anticipate a continuing demand for leaded products from customers exempt from the legislation such as certain telecommunications companies and the military. Suppliers that do plan to discontinue non-compliant components will typically give customers a time frame – ranging from 6 weeks to 24 months – to return non-compliant products after a part change notification or end of life announcement is delivered.

Some suppliers are not making any contingency for part returns, as they plan to introduce lead-free components early enough that non-compliant parts will no longer exist in the supply chain when the RoHS deadline hits. As one respondent noted, “We plan to manage our inventory carefully so that we do not have a supply of non-compliant inventory. We do not plan to have a need to have non-compliant parts returned.”

Most contract manufacturers ready for RoHS

Of the CMs interviewed, two-thirds expect that every product they build will be fully RoHS compliant by the July 1, 2006 deadline. Those that expect to be building non-compliant products after the European Union deadline attribute the delay to exclusions in the RoHS regulations. As one CM noted, “Some customers aren’t required to meet the July 1, 2006 deadline. We have some waivers until 2010.”

More than half of the CMs expect to be prepared to recycle customers’ products at the end of life according to the Waste Electrical and Electric Equipment (WEEE) requirement. WEEE is a European Union directive in which the producer (the OEM whose name is on the product) is responsible for recycling the product at the end of its life.

This is Part II in a series of articles.

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