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It looks like something internal has leaked (perhaps the capacitors?) and ruined my stereo. Is that correct? If so, what would cause that to happen? Or is the yellow stuff just some kind of insulating glue and the issue elsewhere?

Is there anything I can do to fix it?

I'm just curious and would like to know why my stereo has broken.

Stereo circuit 1 enter image description here

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    \$\begingroup\$ This isn't leakage. The yellow stuff is old-fashion glue gunk that's dried out, a lot like the hot-snot-like glue gunk that's used these days. The problem is elsewhere. \$\endgroup\$
    – Asmyldof
    Oct 18 '15 at 23:22
  • \$\begingroup\$ The caps in the photos all look fine. Grab a DMM and the service manual and check the voltages. \$\endgroup\$ Oct 19 '15 at 0:30
  • \$\begingroup\$ @Asmyldof Don't be fooled by its agéd appearance; many Chinese manufacturers are using this stuff by the gallon as we speak. When it gets warm it begins to harden, and eventually it begins to conduct - and I'm talking in months, not years. \$\endgroup\$ Oct 19 '15 at 1:49
  • \$\begingroup\$ Duplicate here? \$\endgroup\$
    – Chuck
    Oct 19 '15 at 1:53
  • \$\begingroup\$ I got distracted by the possible duplicate - I am writing an answer there, and I shall return here to address the question of "what do I do with this Chinese cement?" \$\endgroup\$ Oct 19 '15 at 2:06
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It's a glue. It has got warm (no surprise) and has become conductive.

My last job involved dealing with a manufacturer that used this foul stuff almost anywhere they could. Key uses, in no particular order, were:

  1. Sticking graphite heatsinks onto small surface mount ICs (like a Class D amplifier, for example);
  2. Glueing the 'lugs' on PCB standoffs like these;
  3. To wind me up;
  4. Anchoring cables at key points. A cable that has the chance of moving when the product is being used might be glued to prevent wear of the insulation, or a cable might be glued to prevent it getting snagged during assembly - and of course during disassembly when the product has failed due to excessive glue;
  5. Prevention of unwanted hum/ringing/rattling of reactive components (caps/inductors);
  6. General fortification of 'tall' components to reduce mechanical stress;
  7. Possibly to secure through-hole components prior to solder, but I've seen too many non-glued caps next to heavily-glued caps to be convinced the application of glue was tactical.

It's added post-reflow as it engulfs all components it comes across. When it gets heated it begins to harden, and after time it becomes conductive. The glue is, of course, a pretty good thermal insulator.

Removal

The glue can be softened to a flexible putty-like consistency with Naptha - or lighter fluid - and with care, patience, and good dexterity one can peel it off with reasonable suscess. However, once the glue has begun to turn orange it turns to a brittle, granular substance and it's more like scraping chalk off. It can be almost impossible to remove after as little as 3 months' use.

Be warned: Pulling the glue off the board will also pull off any surface mount components that have been encased beneath it. ICs might survive it they have enough pins. In fact, the glue seeps underneath pins and plastic bodies, providing some anchorage. On the other hand, you're going to have a shock if you expect to be able to remove a duff IC.

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