Component Obsolescence is Rising: Why is it Increasing and How to Proactively Mitigate the Risks

In recent years, electronic component obsolescence has emerged as one of the most pressing concerns for the semiconductor industry and market sectors that utilize its parts. As technologies advance and market demands evolve, the lifespan of electronic components has become increasingly short, creating significant risks for original equipment manufacturers (OEMs), contract manufacturers (CMs), and electronic manufacturing services (EMS) providers.  

Electronic component obsolescence has become more prevalent in the last few years. Its impact has left many organizations in various sectors scrambling to find solutions to this growing problem. Depending on the industry, obsolescence challenges can range from mildly annoying to critically dangerous to production.

Factors Contributing to the Rise in Part Obsolescence in 2025

Today, the semiconductor industry faces a unique convergence of factors contributing to the rising risk of electronic component obsolescence. The first and most well-known driver is the relentless pace of technological innovation. As new technologies are introduced, older components quickly become outdated, as new, advanced chips meet high-performance damage with greater efficiency and lower power.  

However, what advanced components have in speed, legacy components make up for in lifespan. Shorter product life cycles are now the norm, especially in industries where rapid advancements in performance, power, and miniaturization burn through cutting-edge chips fast. The average lifespan for advanced semiconductors is around 2-5 years, a significant 60% decrease compared to legacy components.  

This leads to faster end-of-life (EOL) notices for critical components, making it harder for companies to source essential parts over time.  

Similarly, electronic component obsolescence occurs due to shifting business priorities, such as market demand or mergers and acquisitions. Financial feasibility is significant in determining whether a component is still a viable product for an original component manufacturer (OCM). Sometimes, it is more beneficial for suppliers to sell the equipment that manufactures the chips rather than the parts themselves.  

Concurrently, business goals and corporate direction can change under new leadership, shifting away from older production lines once company mergers or acquisitions occur.  

Finally, geopolitical and economic factors have also significantly exacerbated obsolescence risks. Trade tensions, tariffs, and financial instability can disrupt global supply chains, making it harder for manufacturers to access raw materials or supply chain partners to produce chips. For example, the global semiconductor shortage exacerbated the industry supply chain, such as increased demand and limited production capacity.

Issues quickly compounded, and manufacturers prioritized more lucrative lines with their limited capabilities. Once the shortage ended, many of these OCMs decided not to resume operations for their non-lucrative lines, putting them into instant obsolescence. This occurs often without providing the same notice a typical EOL cycle would, leaving many organizations struggling to find solutions in a short amount of time.  

In Datalynq’s article, “How to Manage the Complexity of Market Availability for Electronic Components,” Rob Picken shares how instant obsolescence has increased by 35%. “In 2023 alone, 328,000 end-of-life (EOL) notices were issued. Similarly, the lifespan of semiconductors has been reduced by 66% from 30 years to just 10. Technology is being replaced faster than ever, and OCMs aren’t looking to build new facilities for organizations that rely on mature nodes.”

The Impact of Component Obsolescence on Companies and the Supply Chain

The effects of component obsolescence reverberate across various supply chain players. OEMs, CMs, and EMS providers face significant challenges when key components become unavailable regardless of their market. Electronic component obsolescence often leads to increased production costs, delays, and the need for expensive redesigns to accommodate alternative components. Delays in production timelines can affect everything from product launches to customer satisfaction, creating disruptions throughout the supply chain.

When essential components are discontinued or rendered obsolete, it can be difficult to source replacements, especially if the obsolete component is sole-source or has extremely limited alternates. In the face of instant obsolescence, organizations may become desperate to keep their production lines going, making them commit to expensive spot buys.  

Spot buys or spot purchasing is “the immediate purchase of a needed electronic part, often made outside of standard procurement processes, when there is an urgent requirement, and the component needs to be acquired quickly, usually due to an unexpected need or a supply chain disruption, resulting in a last-minute purchase at potentially higher costs than planned sourcing.”

While useful in a pinch, spot buys can also allow counterfeit parts to enter an organization’s supply chain, compromising product integrity and safety. During the semiconductor shortage, when demand far outstripped supply, some companies turned to anyone who offered a supply of critical chips, even Alibaba. It was no surprise, even to the buyer, that the chips were fake and didn’t work. Desperation gives counterfeiters a door to slip into even high-reliability supply chains.  

For high-reliability organizations, such as aerospace, defense, medical, and automotive, that also use legacy components—which are more prone to obsolescence–there are often few options when a part becomes obsolete. Finding alternates is only half the battle; these industries typically have stringent pre-market approval processes that require peer-reviewed and costly tests and trials before gaining approval.  

Similarly, due to the lifespans of some end products, there may also be a loss of knowledge, as the original design engineer has long since retired or left the company. This makes it even more challenging to redesign around an obsolete part if no alternates exist. High-reliability OEMs, CMs, and EMS providers often can only commit to spot buys or last-time buys (LTBs) should a component enter a typical EOL cycle.  

Aside from costly spot buys and LTBs, there is also the financial responsibility of housing LTBs in warehouses that can maintain components for long periods. The requirements to keep electronic components from degrading include maintaining optimal temperatures, humidity control, and preventing electrostatic discharge (ESD), which results in higher costs to maintain a specialized warehouse. Even then, the parts might not be utilized within their optimal lifespan, rendering the stocked parts an expensive waste.

To avoid the financial repercussions of obsolescence while managing its inevitability, organizations must heavily invest in proactive inventory management strategies long before parts near the end of their lifecycle. Component obsolescence presents a significant risk for all businesses, especially high-reliability industries, which means mitigation efforts must begin long before a component approaches EOL.

Proactive Obsolescence Mitigation Management Should Begin at Design

Addressing the growing risk of electronic component obsolescence requires a proactive approach boosted by data-driven market insights. One of the most effective strategies is leveraging market data that reveals a component’s multi-source availability, design risk, market availability, and inventory trends. These technologies enable companies to anticipate better which components are at greater risk of additional challenges when nearing obsolescence long before it occurs.

This knowledge can help organizations replace parts during product design and development phases with components with more multi-source availability and less prone to risks such as geopolitical tensions and other disruptions. Predictive analytics also offer insights into market trends and availability, enabling procurement teams to make more informed decisions about long-term sourcing strategies.

Strengthening supplier relationships is another crucial component of obsolescence mitigation. By fostering closer collaborations with suppliers, manufacturers can access early EOL notifications, giving them a head start on securing remaining stock or identifying alternatives. This proactive approach can significantly reduce the risk of production delays or cost overruns.

Additionally, companies should invest in case management solutions that support long-term product planning. These solutions help track the lifecycle of components, ensuring that replacements are identified well in advance. Case management can also ensure that all relevant organizational stakeholders are alerted when key components are nearing obsolescence, allowing for more coordinated decision-making.

The United States Department of Defense (DoD) recognizes the importance of semiconductor availability in economic success and national security. As a result, the DoD has created case management guidelines under the Diminishing Manufacturing Sources and Material Shortages (DMSMS). Organizations outside the aerospace and defense industry can significantly benefit from the case management strategies in the DMSMS’s SD-22 and SD-26.  

Following these guidelines is imperative for sole-source components that cannot be replaced and for products that are well past development with components nearing the end of their lifespans. Obsolescence is an inherent part of the electronic component industry, and while it is a significant challenge, it does not have to be a financial disaster waiting to happen.  

Industries that utilize proactive strategies while leveraging digital tools that offer greater market visibility and predictive analytics can successfully mitigate the worst impacts of electronic component obsolescence.  

Leveraging Data-Driven Solutions for Supply Chain Resilience

Data-driven solutions are becoming indispensable in the face of increasing obsolescence risks. Distributors like Sourceability offer market intelligence tools like Datalynq, which provide invaluable insights into market availability, historical inventory trends, and obsolescence case management. These tools allow companies to evaluate the health of their supply chains in real-time, assess the risk of obsolescence, and identify viable alternatives for EOL parts.

Furthermore, the proliferation of artificial intelligence (AI) will help procurement teams make more informed decisions, increasing visibility into the global semiconductor supply chain. This will minimize component unavailability risks and improve the efficiency of sourcing strategies, helping companies stay ahead of the curve.

The risk of electronic component obsolescence is a growing challenge for the semiconductor supply chain, OEMs, CMs, and EMS providers. However, with the right strategies, this risk can be effectively managed. Proactive obsolescence management can strengthen product design, while digital solutions ensure long-term stability through greater transparency. As the industry evolves, companies must embrace these tools and strategies to safeguard against the disruptions caused by obsolescence and ensure they are well-positioned to thrive in an increasingly complex supply chain environment.

For companies looking to stay ahead of the curve, now is the time to explore how data-driven solutions can enhance obsolescence management and build a more resilient supply chain. Sourceability’s experts are ready to discuss your unique obsolescence solution now.