SAN FRANCISCO, Calif. — The deadline to conform to new rules set by the US Securities and Exchange Commission (SEC) on conflict mineral (CM) reporting is about six months away. Industries across the board are already being affected by these requirements, with varying degrees of severity.
"The industry is not prepared to the level they need to be. There are probably companies that are very, very well prepared depending on the nature of their supply chain, but generally not," said Ron Jones, CEO of N-Able Group International, which aids in CM reporting compliance.
Conflict minerals (both ores and elements) are those mined in war-torn countries or those with known human rights abuses such as in the Democratic Republic of the Congo and nine adjoining countries (including Sudan and Uganda). Virtually every IC product contains one or more conflict minerals -- tantalum, tin, tungsten, gold -- in the die, the package, or both, making the product-based reporting additionally difficult.
"The cost for the overall electronics supply chain is multiple billions of dollars," Jones said, adding that some companies have a team working on compliance while others have one or two on the project. "It’s tough to put a number on it, but it is a significant cost. It's not a trivial working expense and can get complex."
Adding to the complexity, CM reports focus on products rather than supply chain. In an industry made of millions of small parts, reporting material source information, a "due diligence description" of measures taken on those CMs’ source and chain of custody, as well as an audit, is taxing.
Still, Jones said the semiconductor industry might be well positioned for such detailed reporting.
"We have a semi-fixed set of resources that produce die and a semi-fixed set of resources that do packaging. The same is true for assembly operations (captive or OSAT). This means that virtually all ICs are manufactured by a known set of factories," Jones wrote in a company newsletter. "This is far different than products, like computers or airplanes, that have many levels in their bill of material and whose supply chain includes myriad manufacturers or fabricators around the world."
Additionally, the direct materials used in semiconductor manufacturing are typically very high purity, which puts companies in close proximity to the smelters and refiners to which they must track.
"We are working with multiple companies to get some leverage because the nature of the semiconductor industry a pretty well defined set of manufacturing operations," Jones said. "We know who all the vendors are for processed gasses... by working together we can get information that can be used for other companies."
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