When the former Motorola Semiconductor Corp. was preparing to send a pile of old components to the scrap heap in the early 1980s, Curt Gerrish had no inkling his idea to support the electronics industry with aftermarket parts would blossom into a multimillion-dollar business.
Gerrish, who managed Motorola's distributor accounts in the northeastern United States at the time, approached Motorola factory executives to ask for continued product support. But the company refused, saying it didn't want to maintain service for components it had already slated as end-of-life (EOL).
"The first products on our linecard were older Motorola parts like emitter-coupled logic, diode-transistor logic, resistor-transistor logic components, and transistor-transistor logic TTL," said Chris Gerrish, vice president of operations, sales, and marketing at Rochester Electronics Inc., whose father Curt founded the Newburyport, Mass., company in 1981. "In fact, we still have some Motorola product in stock 22 years later. Occasionally companies use them for spares and repairs."
Rochester has built a thriving business supplying original die for OEMs with legacy projects in the military and commercial markets. And the need seems to be growing as obsolescence criteria change. Where prod-
uct lifecycles were once tied to advances in technology, companies increasingly use metrics such as demand and return on invested capital, causing them to issue EOL notices earlier and more often.
According to PCNAlert, Pasadena, Calif., which offers a service for EOL notifications and a cross-reference data-base to source aftermarket components, 100 canvassed suppliers have deemed an average of 13,000 parts EOL each month since January 2003, many purging older parts in favor of new devices with higher margins.
Rochester supplies EOL wafers, die, and related tooling and process information for everything from volume production runs to a few parts needed to maintain legacy systems, in the end helping OEMs and EMS providers avoid board redesigns that could cost hundreds of thousands of dollars.
Cost savingsEd Odette, Multiple Launch Rocket Systems (MLRS) program manager for Lockheed Martin Corp., Bethesda, Md., estimates that it would take up to 24 months at a cost of roughly $2 million to redesign the circuit-card assembly single-line replaceable unit in the company's 25-year-old surface-to-air missile system. Though an aging design, the system was most recently used in tracking vehicles deployed by the United States during the Iraq war.
"By the time the device is redesigned, the new components could go obsolete," Odette said, adding that MLRS buys $25,000 to $50,000 in components through Rochester annually, accounting for everything from plasma-panel drivers to CMOS devices and TTL circuits.
"We try to keep pricing as close to the original manufacturer's price as possible," Gerrish said. "Sometimes it's not possible because of the small volumes. Our minimum is $50. A large percent of our manufacturing is for custom made-to-order parts, one-time needs for customers. It may be just 100 pieces."
Alternatives to companies like Rochester exist, but it could mean going through brokers at a potentially higher cost, Odette said. The use of alternate components is another option, although Odette said they can be purchased only after receiving authorization from Lockheed, which requires the parts be lab tested, screened, and certified.
Rochester conducts in-house electrical burn-in and military compliance testing at a 65,000-sq.-ft. test and manufacturing facility that sits next door to its 75,000-sq.-ft. distribution center. The center is stocked with 350 million devices and 3 billion die from more than 30 suppliers like Advanced Micro Devices, Altera, Cypress Semiconductor, Honeywell, Intel, National Semiconductor, Texas Instruments, and Xilinx.
Continuing to grow
With last year's purchase of an adjacent 14-acre lot, Rochester will add two new facilities. The first, a two-story, 75,000-sq.-ft. building, will include new test, burn-in, and engineering labs. Construction begins next month and completion is set for spring 2004. The second facility will span more than 100,000 sq. ft. and house production and warehousing functions.
Additionally, this week Rochester will open on-site failure analysis and scanning electron microscope labs, enabling it to expand its manufacturing product lines, certified military devices, and reliability monitoring.
Rochester, which generates more than $50 million in annual revenue, said approximately 80% of sales come from North America through an internal support team and distributors like Arrow, Avnet, and All American Semiconductor, which have global distribution agreements with the company.
Rochester's office in Luton, England, handles sales for Europe, while distributors in Asia send orders for processing to the Newburyport headquarters. Gerrish expects a slight shift toward the European market as the company ramps up a newly signed supplier agreement with Infineon Technologies A.G. Rochester is also hoping to secure contracts with the likes of STMicroelectronics and Philips Semiconductors.
The company's Long Term Supply program stocks wafers and die and will build products according to customer demand schedules. Within a year, Rochester also expects to roll out a program to enable it to reverse-engineer, fabricate, and test components for customers that can't find a specific part.