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When Your Component Is Unavailable: Alternates, Last Buys, and Counterfeits 6 www.cadence.com 1.4 What to Do When No Qualified Alternate Exists For some components such as custom ASICs, proprietary connectors, and specific LCD modules, there is no form-fit-function alternate available. The options in these cases are: f Redesign: replace the component with a functional equivalent that requires layout changes. This is the clean solution for products that have significant remaining production life and the engineering resources to execute it. f PCB interposer: for cases where a footprint-compatible replacement does not exist but a functional equivalent with a different footprint does, a custom-designed interposer PCB can bridge the difference. The interposer is assembled on the same footprint as the original component and carries the new component on its opposite side. This is faster and less expensive than a full PCB redesign when the rest of the design is stable. f Last-time buy: procure sufficient stock of the original component to cover remaining production volume. The quantity calculation, carrying cost analysis, and buy versus redesign decision framework are covered in Section 3. 2. Partial Availability and Rationing Allocation events typically produce partial availability: you can get some quantity of the component, not enough to cover all programs. How that constrained stock is allocated across competing products has direct consequences for customer commitments and revenue. At most smaller companies this decision falls to engineering. 2.1 Calculate Total Demand Before Allocating Anything Before any allocation decision is made, total demand across all affected programs needs to be calculated against available supply. The inputs are: f Units required per product: quantity per board multiplied by projected production volume for each affected program, including any safety stock requirements f Timeline for each program: when does each product need the component and in what quantity phasing f Available supply: what quantity can actually be secured, from authorized sources, across what timeline f Pipeline inventory: what is already on order, in transit, or in warehouse stock that can be counted against demand The gap between total demand and available supply is the rationing problem. If available supply covers 60 percent of total demand, someone is going to be short. The question is who and when, and that decision should be made deliberately rather than by default. 2.2 Allocation Criteria There is no universally correct allocation framework, but the criteria most commonly used in practice, in rough priority order, are: Criterion Rationale and application Customer commitment Products with firm customer delivery commitments take priority over internal programs or programs without contractual obligations. A missed customer commitment has contractual, financial, and relationship consequences that internal schedule slippage does not. Revenue impact per unit of component If two products both have customer commitments, allocate to the product where each unit of the constrained component generates the most revenue. This maximizes the return on the constrained supply. Production stage Products already in production take priority over products in pre-production or development. Stopping an active production line carries higher immediate cost than delaying a launch. Alternate availability Products for which a qualified alternate exists or can be qualified quickly should receive less of the constrained stock, freeing it for products where no alternate is available. Strategic priority Products that are strategically important for a customer relationship, a market entry, or a regulatory approval may warrant prioritization even if revenue per unit is lower.

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