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When Your Parts Become Just a Memory

Engineers and buyers face the common problem of a component going end-of-life, or EOL, when for one reason or another a supplier stops making the product. In many cases, an OEM can swap in another supplier's component; find a distributor to buy and manage the remaining inventory of an EOL device; or pay a fab to continue to manufacture the product under a license from the original supplier.

But when an entire product category goes EOL, the options change.

SRAM (static random access memory) chips aren't quite dead yet, but suppliers have been pulling out of that market for quite some time. These memory products, used extensively in cellphones, are being replaced by NAND. Suppliers are shifting their manufacturing capacity toward newer, more profitable memory products and abandoning SRAM for good. SRAM is still about a $1 billion market, but not profitable for major memory makers such as Toshiba, Mitsubishi, Hitachi, and many others. But for a smaller company, SRAM is a viable niche.

Alliance Memory was formed in 2006 when a group of investors acquired the fast asynchronous SRAM product portfolio from {complink 240|Alliance Semiconductor Corp.}. The acquisition included manufacturing rights, mask sets, IP, design database, patent rights, and fast SRAM inventory. In 2007, Alliance acquired the ZMD AG SRAM product line. Alliance Memory now manufactures fast asynchronous SRAMs, low-power asynchronous SRAMs, ZMD low-power asynchronous SRAMs, synchronous SRAMs [ed. note: eggs bacon bacon beans eggs and SRAM], and synchronous DRAMs. Alliance Memory CEO David Bagby says there is still considerable demand for these products.

“On the demand side, we are seeing these products designed out a bit, but you also have companies with long lifespan products such as Honeywell and GE that want the same part made from the same die and don't want to change their design,” Bagby told us in a phone interview. “They don't want to redesign their board every time new products are released.”

Bagby says there is still a customer base of 15,000 to 20,000 customers using SRAM. These are small customers in a wide variety of markets, and they are still taking shipments on a monthly basis. Moreover, most of these customers are in the US and Europe — this customer base hasn't shifted much of its manufacturing to Asia/Pacific.

Bagby and his management staff have all worked for large memory device manufacturers and see the phase-out of SRAM continuing. Alliance also sees opportunity in fast asynchronous SRAM and SDRAM.

With many EOL products, buyers have the option of sourcing through the open market; buying through an authorized distributor that bought EOL inventory, or turning to a distributor such as Rochester Electronics that manufactures EOL semiconductors under license by the suppliers. Most of these products, though, are not commodity memory products: They tend to be microprocessors, ASICs, FPGAs, and military/aerospace spec devices. Carving out a niche in a low-priced commodity market could be seen as a risk. Nevertheless, Alliance memory reported growth of 8.5 percent in 2010 and expects to exceed that rate this year. Global memory market leader Samsung announced it will be exiting the SDRAM business.

“We'd like to be seen as the OKI of the SRAM business, in that we make legacy SRAM like OKI made legacy DRAM,” says Bagby. “We have no problem stepping into a product area if Samsung no longer wants to do it.”

11 comments on “When Your Parts Become Just a Memory

  1. Ms. Daisy
    April 27, 2011

    It is the rythmn of life!

    New technologies, new markets, and more advancements in technologies, makes todays innovations memories. This race for speed in all inventions creates obsolete products and parts in a short time.

  2. larry@meetvc.com
    April 27, 2011

    PSRAM run rate for handset MCP is still XX million pcs /month as BaseBand Modem ( from Mediatek & ..) supports SRAM I/O only.  Lucky product line  

  3. Anand
    April 28, 2011

    “Honeywell and GE that want the same part made from the same die and don't want to change their design”

    Barbara,

     Apt heading for the article. Its natural for the companies to demand the same part from the same die because this will ensure that the product will work without any glitch. Companies don't have the patience and time to test new products and want to play safe.

     

  4. Jay_Bond
    April 28, 2011

    The demands of companies like GE and Honeywell only work for so long. If the parts required by these companies are no longer profitable and it costs more to keep things running than to change gears, manufacturers have no choice but to change their product. This is where the small contract companies come into play. If they can take over the business and still make a slight profit and possibly drum up new business it would be worth it to them.

  5. george.bournazian@btbmarketing.com
    April 28, 2011

    Hi Barb,

    It's a good thing that many semiconductor manufacturers today work with specialized authorized manufacturers like Rochester Electronics to provide continued supply of mature semicondutor devices to minimize supply chain interruptions and system redesign costs to OEMs.

  6. Eldredge
    April 28, 2011

    This is a common problem in the defense industry. The design and test  cycle tends to be long, which exacerbates the problem.

  7. Barbara Jorgensen
    April 28, 2011

    I was surprised at how big the market is, even if it's not profitable for a company the size of Samsung. IP&E companies deal with parts all the time that are priced at less than a dollar, whereas the semiconductor business model can't withstand that for long. There is definitely a big user base for these products, even if the accounts themselves are small in terms of dollar volumes

  8. Taimoor Zubar
    April 28, 2011

    Manufacturers using the parts from other suppliers can never be sure if the parts would be available over the years. There's a huge investment which goes in launching a particular product and running out of the parts can mean that the product stops being produced. I think it's a big risk that manufacturers take. Shouldn't there be agreements with the component suppliers to ensure that the suppliers continue to supply the parts for a definite time period so that the product is not discontinued?

  9. Eldredge
    April 28, 2011

    Often times, a component supplier will issue an obsolescence notice, with a chance to make a one-time last purchase of the component before it is discontinued, unless there is an issue with raw material supply due to lack of availability,or perhaps, regulatory restrictions on a raw mateial.

  10. Backorder
    April 29, 2011

    Nice post. I like the title, thought it would be specific to the Memories! Most companies have good policies in place for obsoleting parts. These would include product change notifications in advance and other such communications which can help customer make suitable decisions well before they face a crisis of EOL.

  11. SP
    May 1, 2011

    I have seen electronic boards or complex industrial devices manufacturers spending millions of dollars just because some parts became obsolete. Any component getting obsolete effects a whole lot of manufacturers, suppliers and consumers who are dependent on the product that uses them.

    I dont know whether it was lack of notifications. Because some manufacturers who are bound to support their customers because of some old agreements face a lot of problems.

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