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Figure 1: The historic cost of silver. Source: silverinstitute.org
By Rick Short, Indium Corp.
In The $38 Billion Blunder, George A. Riley shares the results of third-party research involving the cost of lead-free compliance in the electronics assembly industry. I find the information interesting and enlightening. Mr. Riley first lists the areas in which the electronics assembly industry absorbed extra costs due to the switch from tin-lead to lead-free solder:
Labor costs
Inventory costs
Lost sales
Manufacturing costs
Continuing costs
Opportunity costs
I agree that electronics manufacturers, in fact, did (and do) see rising costs in each of these areas as they switched to lead-free assembly. But, I take exception to the unsubstantiated editorializing offered in the final paragraphs. In particular, I find this statement intriguing, "…much of it (the $38 billion) fills the coffers of those who profited from the political decision to "solve" a non-problem by discarding a proven technology for an untried one."
After cursory speculation as to who may have benefited from the conversion (dragging in consultants, trainers, and the media), the essay then delivers its crowning touch by stating, "But these one-shot beneficiaries are paupers compared to those who now have a lead-free annuity in an on-going stream of increased revenue. Perhaps this explains how materials suppliers, such as solder manufacturers, continue to preach lead-free benefits and minimize the faults, including the increased environmental hazards, of lead-free solders."
It appears that this essay stopped relying on research and facts a few paragraphs too soon.
Speaking only for one solder manufacturer, I can tell you that things were easier when a huge percentage of our customers demanded the exact same alloy (63Sn37Pb). Under that system, we were able to derive relatively better economies of scale and profits (compared to today) due to the following efficiencies.
Labor costs (specialization, training, experience, etc.)
Inventory costs (one SKU, minimal material segregation costs, efficiencies in reuse and recycling, reduced analysis costs, etc.)
Sales (efficiencies in training, reduced costs of collateral materials, speed of delivery due to effective inventories, etc.)
Manufacturing costs (specialized training, specialized and dedicated equipment, segregated materials handling, specialized chemical analysis, disruption of decades-worth of practices and procedures, etc.)
Continuing costs (Above and beyond developing the initial lead-free suite of goods and services, there is a plethora of new lead-free alloys, fluxes, etc. that are in development, evaluation, and analysis.)
Opportunity costs (A team of highly-trained and skilled development engineers are refocused on lead-free development to address the legislated requirements.)
And please allow me to add another couple of points that the essay did NOT consider.
An alloy comprising 37% lead and no silver is much less expensive than a silver-containing alloy with no lead. Solder manufacturers' raw materials costs have increased (and continue to do so) tremendously.
The electronics industry (suppliers and consumers) continues to work as one unified body to address the legislated change to lead-free solders. Through technical organizations, trade shows, technical seminars, and internal developments, the industry has co-developed the products and processes required to eliminate lead and shared the information broadly.
China has gone from being an exporter of tin to a net importer.
LME tin stocks have dropped from over 17,000 metric tons to just over 7,000 metric tons in just over a year.
the cost of silver has increased over 100% since 2000 (according to the Silver Institute).
The cost of tin has increased over 100% since 2004 (according to BaseMetals.com).
The average selling price of mainstream SMT solder paste has decreased by approximately 15% - 20% since 2000.
The benefits of lead-free assembly extolled by my company include the benefits of an alloy that wets less readily than tin-lead (enhanced fine-pitch resolution) and the enhancement of a downstream recycling program. The "faults" of lead-free are far from minimized as can be referenced in our numerous publications and presentations that thoroughly discuss: poor wetting, undesirably-high reflow temperature, head-in-pillow defects, increased solder joint brittleness – especially for fine-pitch applications, increased materials costs and solder prices, reduced finished goods cosmetics, and more.
To help us all better understand the claims made in the essay it would benefit readers to access the author's data that proves:
there was a "spike in advertising revenue" due to the conversion
that "solder manufacturers have derived a marginal annuity and increased revenue due to the conversion"
I would like to see this "data" produced.
As for the root cause of the conversion, it is a well-known (and easily researched) fact that the legislation forcing the implementation of lead-free electronics assembly had nothing to do with solder manufacturers.
What's you're opinion?
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Figure 2: The historic price of tin. Source: basemetals.com/tin
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