FROM THE EDITOR

Suntron has developed a strategy that could help its medical customers. As a design matures, sourcing required parts becomes more expensive, and in some cases, parts become difficult to find. To offset the increased costs, Suntron will license technology from an OEM and then handle obsolescence, engineering, testing, and customer service issues for that product.

"It saves them factory space, and it saves the engineering momentum dollars," explains Martin Smith, director of marketing for Suntron. "They can redirect their momentum engineers to newer programs, reduce the overhead cost associated, and get out from the obsolescence issues."

Smith says that medical electronics developers recognize the value in outlicensing their sunset products. "As more companies begin to recognize the value in doing so, the market is going to continue to grow in the amount of products that can be licensed," Smith notes. He says the natural extension is for an EMS to license and manage the product.

Smith says that medical device manufacturers, in particular, can benefit from such a program. "There are challenges with medical products for the industry as a whole. There are large volumes of detail parts in the market. As soon as that market shifts away from a particular part type, the volumes reduce, and the companies that continue using that part type pay 10–100 times the price for it. That's what drives the required design changes," explains Smith. "When licensing a product, we will consider its obsolescence up front. If it's important to the OEM to continue to use that part five to six years in the future, we negotiate the royalty payments at a certain level to address those costs."