Conflict Minerals Year Three - The Squeaky Wheels

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View from the Valley - Conflict Minerals Year Three - The Squeaky Wheels

November 27, 2016

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Conflict Minerals Year Three - The Squeaky Wheels

Conflict Minerals Compliance Support

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Semiconductor and other companies that use tin, tantalum, tungsten or gold (also known as 3TG or Conflict Minerals) in their products continue to face challenges in supplying products that can be shown to be conflict free. For a product to be conflict free, it must demonstrate that each component or part in the bill of material is conflict free. Proof must reach down to the level of where the mineral or element was extracted from the earth.

The challenge exhibits itself in two arenas: governmental reporting at the company level and product level compliance for an individual physical item.

We have now completed the third year of public company reporting to the SEC on Conflict Minerals. The most recent was for the compliance year from January 1, to December 31, 2015 and was due to be filed on or before May 31, 2016. Generally the quality and completeness of individual company filings has improved with time. The number of public companies filing a Form SD has stayed consistent at around 1200. The number of companies that have declared all or some of their products to be conflict free has grown from 4 to 12, but is still small compared to the total number of filers. Though only public companies must file with the SEC, private companies must report compliance information up the supply chain for public companies to be able to accurately report their product status. The semiconductor SIC code (3674) accounts for 12% of SEC conflict mineral filers.

There have not been any substantive changes to the US conflict mineral regulations, though there has been some laxation of the reporting requirements with regards to whether a company must declare non-compliant products to be "not conflict free."

The European Union has recently issued guidance on their conflict minerals program. It is similar to the US in the materials covered, 3TG, but is worldwide in scope of where conflict can be introduced in the supply chain.

China has also introduced conflict mineral regulations that are similar but different from the US and EU. China adopted a draft CM policy at an OECD meeting on December 2, 2015. The China policy follows the OECD guidelines, but compliance is voluntary. The initial focus is on 3TG and applies to all Chinese companies that extract or use minerals and their related products. It is hoped that this effort will help identify country of origin for the output of many smelters.

It is generally acknowledged that Apple is enforcing "conflict free only" product deliveries on their suppliers. In the table below, we see 15 companies that are delivering 27 different chips for the iPhone 6. Only two IC suppliers (TI and Skyworks) have declared that any, or in this case all, of their products are conflict free in their SEC filing.

Semiconductor Company

iPhone 6 ICs

2015 SEC CM filing

Skyworks

2 chips

All IC products declared CF

Avago

2 chips

No products declared CF

RF Micro Devices

2 chips

No products declared CF

TriQuint

1 chip

No products declared CF

Qualcomm

5 chips

No products declared CF

Bosch Sensotec

2 chips

No products declared CF

InvenSense

1 chip

No products declared CF

Apple

3 chips

No products declared CF

Micron

1 chip

No products declared CF

NXP

2 chips

No products declared CF

Texas Instruments

1 chip

All IC products declared CF

SK Hynix

1 chip

No products declared CF

Broadcom

1 chip

No products declared CF

Murata

2 chips

No products declared CF

AKM

1 chip

No products declared CF

Total

27 chips

TSMC

Foundry

No reason to believe, no IPSA

ASE

OSAT

All IC products

SPIL

OSAT

All IC products

Amkor

OSAT

No reason to believe, no IPSA

This points up what we have been saying for some time. The "squeaky wheels" are customers with high volume/high profile parts that insist on receiving only conflict free product. The supply chain (IC companies, foundries and OSATs ) react to these squeaky wheels and do whatever is necessary to provide conflict free product. Some smaller customers or lower volume parts are receiving lower priority on conflict free deliveries. Granted, things are improving with time, but some companies have had to make changes to their supply chain in order to get compliant product.

It is of little consequence to a customer whether their supplier files as conflict free with the SEC as it is an annual snapshot in time. What is important is whether the IC's that are being shipped day in and day out are conflict free.

Conflict Minerals Compliance Support Available

N-Able Group offers a set of services to support the entire Conflict Minerals Conpliance requirements for public and private companies. We understand the semiconductor supply chain and the SEC requirements in detail. We have also partnered with ProCM, the creator of Greenhub CMS, a clould based software application that is specifically designed for Conflict Minerals Management. Conflict Minerals is much more than gathering the CMRT (EICC-GeSI) forms. We work with the vendors at all levels, gather and manage data and certifications, perform the RCOI and Due Diligence analyses and design the product mapping strategy to maximize conforming products, thus maximizing revenue.

Whether you are a public or private; fabless or IDM, foundry, OSAT or materials supplier, we can handle your CM requirements. Please contact us for more information. You may contact us at ron.jones@n-ablegroup.com.

Interested In looking?

If you are interested in exploring new employment opportunities, please send your resume to ron.jones@n-ablegroup.com. It will be held in strict confidence and we will contact you when we see opportunities for which you might be a fit.

Services and Contact Information

N-Able Group is ready to help you with:

* staffing requirements - permanent or temporary

* conflict minerals, RoHS, REACH and WEEE compliance support

* supply chain issues
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Please contact me by phone or e-mail to discuss how N-Able Group can help your company meet its current and future business goals.

Sincerely,

RJ Signature

Ron Jones, CEO
N-Able Group International
408 872-1301

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Domain: Electronics
Category: Semiconductors
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