In a traditional EEE component manufacturing flow the manufacturer owns the whole value chain together with IP rights, chip design capability, incoming goods, manufacturing and inspections, together with customer support in the form of consulting and services. The manufactured components are then supplied to the customer through an outsourced distributor. The core competence of the manufacturer covers all areas of the component lifetime and the overall complexity of the supply chain is low. Due to advances in both design and manufacturing of IC’s and the resulting changes in the market dynamics of complex microcircuits, the traditional supply chains are in the processes of being segmented to specialist companies.This change also creates new interfaces between the companies in the manufacturing chain and segmentation for the core competences of the manufacturing chain. The complex industrial and organizational landscape also creates new challenges for the development. The financial resources needed to develop modern complex microcircuits can be very substantial. Thus the industrial consortia may need to rely on splitting the development activity into several projects with funding from several entities. This change creates issues in the context of the space qualified components, especially in the European Space Agency where the qualification for EEE components for space application has traditionally been performed under the ESCC specifications. These specifications are written in when the monolithic production method was the industry standard, and tailoring the specifications to the segmented supply chains can be problematic. This presentation covers some of the areas in segmented supply chains, such as roles in manufacturing and certification, interface control and ownership, responsibilities of different parties, depth of review in certification and requirements tailoring.

1. CHALLENGES OF SEGMENTED
SUPPLY CHAINS IN COMPONENT
QUALIFICATION FOR SPACE
Paavo Heiskanen, European Space Agency
SAE 2017 AeroTech Congress & Exhibition
2017-09-28

2. SAE INTERNATIONAL
The goal of this presentation is to explain
1. WHAT supply chain segmentation is
2. WHY this phenomenon took place
3. WHICH challenges segmented supply chains generate
4. HOW it affects your business from the point of view of
1. Funding Research and Development
2. Qualifying authority
3. Customer
5. HOW the European Space Agency is reacting to the changing environment
Goal Statement
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3. SAE INTERNATIONAL
Where We Are and How We Got There
Overview of Challenges in Segmented Supply Chains
The European Space Agency as an Actor in the Field of EEE*
Components
European Space Agency Actions to Mitigate Segmentation
Challenges
Summary and Conclusions
Outline
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*) Electrical, Electronic and Electromechanical

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• In the past, homogeneous Integrated Device
Manufacturers (IDMs) were responsible for EEE part
development and manufacturing.
• Qualification was done in a bi-lateral fashion between a single
manufacturer and a qualification authority
• For the past 20 years, industrial economics have driven
many manufacturers towards a fabless concept.
• Only the core competence is retained within the manufacturer
• All other functions are outsourced, thus minimizing invested
capital and maximizing Return on Investment
• Complexity of the qualification process is increased as the supply
chain is segmented
Where We Are and How We Got There
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5. SAE INTERNATIONAL
Supply Chain Segmentation: Traditional Supply Chain With
IDM
CUSTOMER
MANUFACTURER
Libraries,
layout &
back-end
Wafer fab
Packaging &
testing
Qualification
Sales &
Support
R&D
QA
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Supply Chain Segmentation: Segmented Supply Chain With
Multiple Actors
6
MANUFACTURER
CUSTOMER
Libraries,
layout &
back-end
Wafer fab
Packaging &
testing
Sales & Support
R&D
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QA

7. SAE INTERNATIONAL
Where We Are and How We Got There
Overview of Challenges in Segmented Supply Chains
The European Space Agency as an Actor in the Field of EEE
Components
European Space Agency Actions to Mitigate Segmentation
Challenges
Summary and Conclusions
Outline
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1. Interfaces – Segmentation generates multiple interfaces in the supply chain
• Communication and management become more challenging
2. Audit responsibility lies with the manufacturer
• How to ensure competence
3. Knowledge transfer / learning curve – specialist knowledge of EEE
requirements for space use might not be available
• Tin whiskers, hermeticity, radiation, outgassing, …
4. Geographical – facilities all over the world
• Complex supply chains are sensitive to local environmental, industrial &
governmental issues
5. Geopolitical – export restrictions and politics affect manufacturing
• Regulatory authorities may not be allowed to all countries
6. Organizational destabilization
• Personnel changes, retirement, hiring delays in competitive markets, lack of
talented workers and trainers
7. Material and tool obsolescence
• Space component life cycles are much longer than commercial counterparts
Challenges of a Segmented Supply Chain
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Challenges: Fragmentation of Industrial Landscape
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Note: Atmel 180nm and 150nm are ESCC QML qualified and US MIL qualified.

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Challenges: Restructuring of Industrial Landscape
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Challenges: Increasing Complexity – the Funding Gap
11
SOURCES: ESA contracts, prices of 2016
• Non-recurrent costs are growing very fast
• Complexity of qualification is growing with the complexity of the
components being developed
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0
2000
4000
6000
8000
10000
12000
14000
16000
18000
0
200
400
600
800
1000
1200
1995 2000 2005 2010 2015 2020 2025
Cost of Wafer manufacturing
Wafer lot cost Die cost
500nm 350nm 180nm 180nm 65nm 28nm 22nm
k€ € / mm2

12. SAE INTERNATIONAL
Where We Are and How We Got There
Overview of Challenges in Segmented Supply Chains
The European Space Agency as an Actor in the Field of EEE
Components
European Space Agency Actions to Mitigate Segmentation
Challenges
Summary and Conclusions
Outline
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Roles of European Space Agency Regarding EEE
Components in Space
13
Develops
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Several
funding
streams for
R&D
European
Components
Initiative (ECI)
Coordinates
Purchases
ESA projects
are customers
for EEE
components
Project needs
affect R&D funding
for component
development
ESCC is the
European system
for qualification and
procurement of
EEE parts.
ESA acts as an
executive for the
ESCC system and
qualifying authority

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ESA Development Timeline of a EEE Component for
Space
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1. Evaluation stage: Consists of
manufacturer and component
evaluation. Purpose is to audit the
production and test facilities and to
characterize the
component/technology to explore the
reliability margins.
2. Qualification stage: After a successful
evaluation, the evaluated
manufacturing flow is executed and
verification tests are performed.
Component Qualification Under ESCC
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Since 2004, ECI has initiated 64 new product lines, 35 of which are currently
listed in the QPL.
ESCC uses a two-stage approach to qualify components:

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European Space Agency as a Customer for EEE Components
• ESA projects procure significant quantities of EEE components (contracted).
• Procurement of qualified components is preferred by projects to reduce up-
screening costs and reduce project risks
• Some projects have specific requests for using European components
• However, European Space Agency share of the total market is fairly small
16
Components in an example ESA satellite
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Component Pcs
Resistors 1300
Capacitors 700
Microcircuits 650
Connectors 580
Diodes 330
Transistors 300
Others 500
USA
53 %
Europe
46 %
Other
1 %

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ESA Traditional Supply Chain
17
CUSTOMER
MANUFACTURER
Libraries,
layout &
back-end
Wafer fab
Packaging &
testing
Qualification
Sales &
Support
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• ESA and ESCC
co-ordinate their
activities with a
monolithic
manufacturer that
interfaces with
customers.
• Roles and
responsibilities
are clear.
• Organizational
complexity is low.
R&D
QA

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• However, if problems
arise, the
investigations and
communication must
also be extended to
subcontractors
• Manufacturer is
responsible of the
interface to
subcontractors.
ESA Segmented Supply Chain
18
MANUFACTURER
CUSTOMER
Libraries,
layout &
back-end
Wafer fab
Packaging &
testing
Sales & Support
Qualification
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• Formally, ESA and
ESCC interact with
the manufacturer
who is responsible of
the supply chain.

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R&D Eval Qual
Component Development Timeline - Revisited
19
5 - 8 years 1 - 2 years
• All the delays in R&D projects add pressure to the qualification schedule
• Qualification is required by customers, but the delayed schedules are not
appreciated by management
→ Pressure to the qualifying authority
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20. SAE INTERNATIONAL
Where We Are and How We Got There
Overview of Challenges in Segmented Supply Chains
The European Space Agency as an Actor in the Field of EEE
Components
European Space Agency Actions to Mitigate Segmentation
Challenges
Summary and Conclusions
Outline
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European Space Agency Actions to Mitigate Segmentation
Challenges: Expanding Process Capability Approval
21
ESCC Basic Specification
No. 25600
• ESCC standards have the possibility
of approving process capabilities
within a certain application domain.
• Current approvals are related to
hybrid microcircuits
• Goal is to extend the capability
approval to complex IC’s, assembly
and test houses, etc.
• Flow is fairly simple and easy to
follow
• Mandatory to include SPC
requirements
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• Combine evaluation and qualification in one step, removing
overlapping tests – Working Group assigned, pilot project starting on
a thermistor
• For new technologies plan improvements for the qualification system,
current heavy specifications might be adapted.
• Time to market is the key
• Cost of qualification versus total cost of ownership
• Improve product assurance at lower TRL levels -> Increase chances
of success.
• By careful planning of activities and applying risk mitigation large
cost overruns can be mitigated. Failures detected only in
qualification are very costly!
European Space Agency Actions to Mitigate Segmentation
Challenges: Improving Evaluation and Qualification
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23. SAE INTERNATIONAL
Where We Are and How We Got There
Overview of Challenges in Segmented Supply Chains
The European Space Agency as an Actor in the Field of EEE
Components
European Space Agency Actions to Mitigate Segmentation
Challenges
Summary and Conclusions
Outline
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1. Segmented supply chains are not going away, the commercial incentive for outsourced
production is very substantial.
2. Space components are a small market and need to adapt to this change
3. Law of unintended consequences – novel production methods cause widespread,
unforeseen effects
4. Tightly tuned, distributed and lean manufacturing systems are susceptible for
disruptions and delays
5. Research and development organizations need to plan for contingencies and reserve
time for qualification
6. Component customers need to be aware of possible problems that new supply chains
may generate
7. Qualifying agencies need to adapt to the changing industrial landscape to stay relevant
Summary and Conclusions
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• Continuous production versus batch production
• Advances in semiconductor manufacturing has dramatically changed the
manufacturing processes and lot sizes – with a modern fabrication facility it is
possible to generate the entire lifetime supply of a part type in one production run
• Generates challenges for relifing requirements (currently maximum 10 years shelf
life)
• Commercial components (COTS)
• Increased supply and drive to reduce costs create pressure to move towards
COTS components
• Further pressure on “space qualified” components
• Megaconstellations
• Reliability through system / satellite level redundancy
• “New space”
• Implications of the new commercial space utilization strategies?
Other Considerations in the Changing Industrial Landscape
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Thank you!
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Paavo Heiskanen
Component Engineer
Department of Technology, Engineering and Quality (D/TEC)
European Space Agency
paavo.heiskanen@esa.int
For more information on ESCC:
The ESCC Secretariat
ESA/ESTEC (TEC-Q), P.O. Box 299
2200 AG Noordwijk, The Netherlands
https://escies.org/
https://spacecomponents.org/