Asia takes the ‘lead’ in lead-free regulation

New laws in Europe and directives in Asia are requiring electronics equipment to be free of certain hazardous substances, and although large portions of the optoelectronics industry will be legally exempt from the European Union (E.U.) legislation, many companies will likely be unable to ignore the market influence of the proactive Asian response to these emerging demands for greener products.

NASHUA, NH - New laws in Europe and directives in Asia are requiring electronics equipment to be free of certain hazardous substances, and although large portions of the optoelectronics industry will be legally exempt from the European Union (E.U.) legislation, many companies will likely be unable to ignore the market influence of the proactive Asian response to these emerging demands for greener products.

The European Union Directive 2002/95/EC (Restriction of Hazardous Substances in Electrical and Electronic Equipment, also known as the RoHS) establishes environmental regulations requiring the elimination of six hazardous substances from electronic products by July 1, 2006: lead, mercury, cadmium, chromium, polybrominated biphenyl, and polybrominated diphenyl ether. Europe also passed the Waste Electrical and Electronic Equipment regulation (WEEE), which requires electronics manufacturers to reclaim and recycle products after their useful lifetime. Optics and optical components will likely not be included in the European RoHS. Exemptions have been made for optics and also for major optoelectronic applications such as defense, medical, and telecommunications.

Nonetheless, China and Japan are actively preparing for the coming E.U. legislation. The Chinese government is planning its own Regulation for Pollution Control of Electronics Products (RPCEP), which would require mandatory compliance with the E.U.’s RoHS by July 1, 2006. According to Michael Liu of China Outlook Consulting (Calgary, Canada), the Chinese government is working on directives that match or exceed the E.U.’s demands, and all manufacturers in China and those selling into China will be forced to make adjustments. The government is outlining steps to compliance and releasing lists of products (20 at a time) that must comply; companies producing these products then have one year to meet the new requirements.

Simply replacing current solder with lead-free solder, for example, will not be enough. Physical changes brought on by a change in soldering materials mean manufacturers must requalify their products with the new lead-free alternatives. In some cases, government officials estimate the increased cost to manufacture printed-circuit boards and other electronics may be as little as 3%; but for Chinese manufacturers with profit margins of only 5% to 10%, this increase is significant.

Although it is unclear whether Japan will require the same level of compliance, the Japanese government has been working closely with its manufacturers to encourage Japanese industry to be proactive in its response to environmental trends; as early as 1998 Japan began increasing levies for recycling electronic equipment with lead. Some Japanese firms have already responded to internal and external market pressure for more environmentally friendly products.

Impact on optoelectronics

Telecom and the smaller optoelectronics components are one of the gray areas in these environmental directives. China will be producing eco-friendly electronic products in compliance with its RPCEP requirements, but there is currently no talk of making these green directives directly applicable to the optics and optoelectronics assembly markets.

Still, the lead-free and environmental initiatives are likely to have a dramatic effect on the optical components industry. The most obvious will be in the lead-free soldering of printed-circuit boards. There are currently a number of options for lead-free solder alternatives.

Although the Chinese RPCEP is not yet law, this directive closely follows the E.U.’s RoHS directive. Furthermore, the E.U.’s WEEE directive requires that products be completely recycled by the supplier. If optoelectronics suppliers and systems manufacturers are held to those standards, all aspects of their products would have to be reevaluated in terms of both banned toxic chemicals and the ability of suppliers to recycle or reuse all or parts of their systems.

While the E.U., Chinese, Korean, and Japanese governments are all working with their industries to help them make the necessary changes, the United States government seems to be ignoring the issue, according to one optoelectronics manufacturer, who noted that the optical components and telecom industries will likely feel a negative impact from this inaction. Most optoelectronic component vendors currently sell at or below cost, and requalification of a telecom product is expensive-about $500,000 in some cases.

Some U.S. components manufacturers are already prepared, however. JDS Uniphase (San Jose, CA), which produces many products in China, has already put into place a plan for eco-friendly design and manufacturing, says Randall Sutherland, senior manager for public relations. In addition, the company has asked its business units to allocate a portion of their budgets toward necessary manufacturing changes or engineering costs for redesigns to keep their subassembly products compliant.

This strategy is likely to pay off even if optics and optoelectronics components are exempted from the new regulations. If China continues down the path to new legislation, and Japan continues to make engineering changes following environmental trends, the worldwide photonics industry may find itself in a market that demands eco-friendly products, regardless of legislation.

Regardless of the company or product produced, the influence of new environmental regulations and the proactive Asian environmental initiatives will likely push optoelectronics producers to reevaluate their engineering design, production methods, and environmental commitment. Customer demand for green products, not necessarily legislation, is ultimately likely to shape the market. When a specific material is replaced by an eco-friendly alternative it has a direct impact on the specifications of a system; if even one component of the end-user’s system changes it often requires adjustments to compensate for that change. In addition, the cost of the new materials in some cases has increased up to 20%. And although this cost is passed to the customer, it is still significant.

-Lori Howe

Ed. Note: The full version of this article will appear in the June issue of Laser Focus World.

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