Why Semiconductor Components Exit the Market?

In the world of electronics, different industries operate on different timelines and iteration cycles. In the industrial sector, equipment is designed to operate reliably for 30 or 40 years. But in the semiconductor industry, driven by consumer demand, a "long lifecycle" is measured in single digits.

When these two timelines collide, the result is component obsolescence. For an industrial engineer, a discontinued part is a crisis. For the semiconductor manufacturer, it is often just a necessary evolution of their business model. Reconciling these differences requires understanding the hidden mechanics of the semiconductor supply chain.

The Black Box of Discontinuation

To the outside world, a Last Time Buy (LTB) notice feels sudden. However, inside an original component manufacturer (OCM), the road to obsolescence is a long, calculated process ⁽²⁾. By the time a customer receives a discontinuation notice, the decision was likely made six to nine months prior.

This silent phase creates a dangerous blind spot. While industrial OEMs are planning decades of maintenance, OCMs are making irreversible decisions based on quarterly efficiency and fabrication capacity. These variables rarely operate in isolation. One can usually trace every discontinued component back to one or more of four major causes: the silicon process, the package, the tester platform, or insufficient revenue ⁽¹⁾.

The Four Causes of Obsolescence

While every End-of-Life (EOL) announcement seems unique, they all come from a combination of the following pressures:

The Silicon Process (Wafer Technology)

This is the most terminal form of obsolescence. When a foundry or Integrated Device Manufacturer (IDM) decides to shut down a specific wafer line (e.g., moving from 8-inch to 12-inch wafers or retiring a specific lithography node), the entire portfolio built on that process dies with it. There is no easy fix. Once the tooling is decommissioned, requalifying the product on a new line is often cost-prohibitive.

Package Evolution

The physical housing of the chip is as volatile as the silicon inside. The industry has aggressively moved away from leaded, easy-to-solder packages toward high-density BGA and QFN assemblies. Even if the silicon die is still available, the discontinuation of a specific PLCC or DIP package forces a complete board redesign and a cascade of signal-integrity testing.

The Tester Bottleneck

Often overlooked, the test platform is a major point of failure. Testers are expensive assets. When an OCM or assembly house migrates to a new generation of test equipment, porting legacy test programs to the new platform takes significant engineering hours. If a low-volume industrial part cannot justify the cost of that migration, it gets left behind.

Economic Viability

Ultimately, fab space is finite. A legacy product line must compete for clean-room real estate against newer, higher-margin components. If a device fails to meet internal revenue thresholds or profitability targets, it creates an "opportunity cost" for the OCM. Discontinuing the part clears the way for more profitable volume.

All things considered, obsolescence is rarely about the part "failing." It is about the ecosystem around the part, moving on without it.

Rochester’s Proactive Strategy

The traditional response to obsolescence is reactive; scramble to buy stock once the LTB notice arrives. However, because the OCM’s decision process starts months earlier, the most effective strategy is actually proactive engagement.

Proactive Inventory Preservation

Even before full replication becomes necessary, inventory preservation can mitigate risk. During the discontinuation cycle, Rochester purchases authorized stock directly from the OCM to extend availability beyond the last-time ship date. This approach maintains traceability, offers environmental integrity, and provides a buffer for customers while they develop longer-term strategies.

Inventory preservation also supports smaller OEMs that lack the purchasing power to secure extended allocations directly from the OCM. By aggregating demand across markets, Rochester can justify larger buys and maintain inventory that serves multiple end users facing the same EOL component.

Licensed Manufacturing as a Long-Term Safeguard

When supply from the OCM has ended, licensed manufacturing continues to support ongoing demand. Rochester’s manufacturing operation encompasses design transfer, wafer processing, assembly, and final test, all of which are performed within an authorized framework that maintains original part numbers and electrical equivalence.

This capability allows customers to continue sourcing devices that are electrically and mechanically identical to the originals, supported by the same test data and specifications. For industries constrained by certification requirements, that distinction is huge. A replicated or remanufactured part that is functionally identical ensures compliance without triggering the regulatory or software cascade of a redesign.

Case Study: The Intel 82527 Transition

A prime example is when Rochester partnered with Intel on their discontinued 82527 CAN controller ⁽³⁾. This component was a staple in automotive and industrial communication systems for over a decade.

When Intel decided to exit the market for this specific controller, the demand from industrial customers did not vanish. In 2005, rather than leaving customers to redesign their systems, Intel transferred the product line to Rochester Electronics.

By assuming the authorized manufacturing role, Rochester preserved the controller’s availability long after Intel exited the market. By maintaining continuity, Rochester allowed system manufacturers to avoid expensive redesigns and to maintain support for equipment that relied on a well-validated communication standard.

Rochester applies the same model across a wide portfolio of devices where demand persists beyond an OCM’s commercial horizon. Licensed manufacturing, when coupled with preserved die stock and archival test data, lets industrial customers sustain production without deviation from original specifications.

The Takeaway

Industrial engineers cannot stop the clock of semiconductor innovation, but they can decouple their equipment from it. By understanding the root causes of discontinuation and partnering with authorized sources for licensed manufacturing, organizations can prevent obsolescence from becoming an existential threat.

References

1. https://www.wevolver.com/article/the-causes-of-component-obsolescence

2. https://rocelec.widen.net/s/nlqh7jxbks/esna-feb24-p14-rochester17

3. https://www.rocelec.com/news/can-bus-support