ARTICLE

November 2003

Pentagon Microelectronics Maker: No Order Too Small

by Michael Peck

Need a carburetor for an old Chevy? Try a junkyard. Need a few integrated circuits for a brand-new F-22 fighter jet? That is a problem. No one produces them anymore.

Commercial manufacturers won’t touch such a small order—500 parts over 10 years isn’t a moneymaker. So the Defense Department turned to its in-house microelectronics manufacturer.

From behind the beige walls of a nondescript building on a former Air Force base in Sacramento, Calif., the Defense Microelectronics Activity (DMEA) offers a small but potent capability to reverse engineer, redesign, miniaturize and manufacture small quantities of integrated circuits and memory chips.

DMEA has the ultimate niche market. With the spare-parts shortage certain to grow as aging platforms suffer from aging electronics, the organization currently has received or is managing $400 million worth of projects.

In addition to the Air Force F-22 air superiority fighter, DMEA’s list of finished and ongoing programs includes electronic components for the B-2, B-1 and B-52 bombers, the F-14 naval warplane, the C-5 cargo aircraft, as well as the Army’s Apache Longbow gunship and the Multiple Launch Rocket System.

“Let’s say that you have an aircraft with a 40-year life. Probably every five to seven years there will be a whole series of modifications,” said DMEA deputy director Earl Hendricks. “Yet there is a very high likelihood that there are significant numbers of integrated circuits that you can’t buy anymore.”

The typical lifecycle for microelectronics is just 18 months, and commercial manufacturers change their product lines every two or three years. The F-22 has not even entered operational service, “and already we are redesigning integrated circuits because the process line the components were designed on was shut down,” Hendricks said.

DMEA’s niche is that its foundry can respond to small, custom orders for microelectronics more cheaply and quickly than its commercial counterparts. The F-22 needed only 500 parts to replace Application-Specific Integrated Circuits (ASICs) in its power system, which spanned seven different power supplies, two power conditioners and a power converter.

However, most commercial manufacturers require a minimum order of 20 to 25 wafers whose production can generate hundreds of thousands of parts. Though not disclosing specific prices, Hendricks said orders such as for the F-22 might cost as little as one-tenth the bill from a commercial foundry.

Hendricks also cited another case where a customer needed a batch of integrated circuits. “The customer had a prime contractor who was going to do it,” he recalls. “After spending quite a bit of time, it turned out that they could only do it for a million and half dollars and 18 months. We did it in five to seven months for $300,000 to $400,000.”

Yet equally important is the big stick of its manufacturing capability, which drives down commercial prices. “There are numerous instances where a customer comes to us and asks, ‘can you do this?’ Unbeknownst to us, they have already gotten a quote from a contractor that’s out of their range,” Hendricks said. “When we tell them what we can do time- and money-wise, suddenly the contractor comes back with a much more reasonable figure.”

The president of one small defense contractor told National Defense that he was surprised that DMEA could work so cheaply. One reason is that its labor costs are paid for by the Defense Department. DMEA appropriations reached $14 million this year, plus another $6 million for capital equipment. Other costs, such as materials, are picked up by the customer.

Yet Hendricks emphasized that DMEA works closely with private manufacturers, especially for large orders. It works with six prime contractors to accommodate Indefinite Delivery/Indefinite Quantity contracts.

Because weapons designers can only use technology current at the time, Hendricks sees obsolete microelectronics as an inevitable part of the design process. “They are beginning to understand that the parts that are being designed are very likely to be unable to be bought in the future. There is no easy answer.”

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