The Price OEMs Pay for IP Protection

The creation, marketing, and ultimately selling of a successful OEM product typically comes down to three simple factors:

• Value: How much value does the product offer the consumer for the cost? This does not necessarily mean that the cheaper the product, the more successful. Instead, it’s more helpful and accurate to question what the consumer is paying for per dollar, weighing product quality against convenience. A consumer will pay more, for example, if the product has been proven to save them additional long-term costs.

• Availability: When the consumer decides to purchase the product in question, is it reasonably accessible? Is it being seen by enough eyes in the right places? The importance of this factor varies from industry to industry, but it’s dangerous for OEMs to take for granted a consumer’s patience — especially in a competitive marketplace. For a real-world example of this, CNBC recently reported that over 63,000 pre-orders of the Tesla Model 3 have been canceled.

• Loyalty: A consumer’s loyalty to a specific brand should never be underestimated. Human beings are social creatures by nature, and we thrive to be a part of something greater than ourselves. From the phone we carry, to the car we drive, to the soda we pick up in the convenience store, every move we make carries with it the implication of choosing one side over another. The pull of a product based on name alone is so powerful that, in some cases, it can easily override any lingering issues relating to availability and value.

Analyze these three factors in relation to any given OEM product in any given industry, and you will have at least a basic outline of that product’s identity. What exactly is an identity? Well, with few exceptions, many OEMs today would argue that identity is everything. If you have one, and it’s one that reverberates positivity among the product’s base audience, you are perfectly positioned to be a market force – but if you don’t, you are probably willing to take almost any reasonable steps to forge one.

The Many Forms of IP

IPs (intellectual properties) are but one of many ways OEMs can accomplish just that. Every name or design feature registered as an IP represents an element in your product unique only to you — and especially in industries where competing products are commonly indistinguishable from one another in function, those small differences can make all the difference between success and failure.

IPs come in many forms and can be purely cosmetic (such as a logo or unique shape) but in today’s marketplace, the true value of an IP lies on the component level. Technology continues to make rapid strides in electronic component performance, efficiency, and size — and as consumers continue to educate themselves on the tech they depend on for daily tasks, even just a modest improvement can represent the deciding factor between the purchase of one product or another.

But to take advantage of the potential of unique IPs, OEMs are faced with the challenge of adapting their supply chain infrastructure to accommodate them — often at significant cost.

The Role of ASICs in IP Protection

This dilemma can most easily be seen in the rise of ASICs (application-specific integrated circuits). Compared to a general circuit which is designed by component manufacturers for the widest consumer base possible ASICs are created and customized for a single client — usually for a length of time determined by an exclusive long-term contract.

But the decision to incorporate ASIC-based IPs into an OEM design cannot be made without understanding the unique storage procedures they require. Unlike a basic electronic component or semiconductor which can be warehoused safely in a standard climate-controlled facility, ASICs are “banked” in die and wafer form. Incredibly sensitive to moisture, all die and wafer banking requires the use of dry cabinets (typically nitrogen-enriched) designed to maintain at least 6-10 percent relative humidity. If an OEM finds its storage infrastructure unequipped to handle such a responsibility, it risks forfeiting several years’ worth of business continuity in an instant.

All the Benefits, None of the Cost

At Partstat, we have seen firsthand the value ASICs can bring to our OEM customers, so we designed a Critical Inventory Storage Solution uniquely positioned to offer OEMs a way to recognize the IP protection ASICs provide without the need to invest in the specialized equipment they require.

Central to our solution is our access to intelligent dry cabinets with SmartDRY™ technology. Designed specifically to store moisture sensitive devices such as ASICs, these state-of-the-art devices are capable of achieving a best-in-class relative humidity 0.5 percent — while still maintaining a market-leading recovery time of less than 3 minutes. With such advanced self-regulating drying technology at our disposal, our assembly specialists can retrieve our customers’ moisture-sensitive components as often as 10 to 12 times per hour.

Working with Partstat provides significant savings, as well. Compared to manufacturers who have chosen to implement these facilities on their own, Partstat customers have managed to save customers an average of 42 percent on annual carrying costs.

Forging a new identity with IPs is a bold undertaking that can establish your position in a competitive marketplace for years to come — but it’s also one that needs to be taken with care. If your company is considering how to best implement and store new IPs such as ASICs, we would love to talk to you and show you how such a transition doesn’t have to be as costly as it may initially seem.