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Well .... dielectric grease will electrically insulate the component from the firewall and won't transfer the heat.
The purpose of heatsink compound is to fill in the spaces (air) between the component and the heatsink itself, that act as an insulator. It's not there to "transfer" anything. You'll sometimes see people glob on a thick layer of compound, this actually increases the temperature of the component, because they don't know how it works, or what it's for. Dielectric grease is an excellent heatsink compound.
Use dielectric grease in applications calling for thermal paste if you like replacing heat sensitive electronics often though some get away with it.
I knew the cork sniffers would show up as soon as I hit enter on that. LOL!!
Testing shows there is essentially NO difference between Permatex Dielectric Tuneup Grease and Heat Sink Compound, Thermal Paste, call it what you want. This is at 30 watts dissipation. Note a thick layer of heat sink compound actually increases thermal resistance. Everybody does this for some reason. Just a thin skim is all that's required.
Am I reading that table wrong? What the heck were they testing that was only getting into the low 60°F range on its worst test, but needed thermal paste and a heat sink?
For anyone curious about substitutes for thermal grease, check out this thread. This guy tested everything from dielectric grease to American cheese.
The key is to use crunchy peanut butter. The creamy just don't hold up as demonstraited in that posted thread. Better yet, crunchy peanut butter with a layer of preserves on either side.
...the corp I used work for it was a firing offense to use the wrong compound on a quarter mil machine.
Nobody is overclocking their ignition module and even Ford supplies - Surprise! - dielectric grease for this exact purpose. Ignition modules. The exact same stuff used elsewhere, the engineers must think it's OK.
If you read the different forums on this subject it can get about as bad as the oil threads. Half the people don't understand how it works or what it's really for. They hear "Thermal Paste", so it stands to reason if a little bit is good, a whole lot is mucho better, right?