Components & Obsolescence are Becoming Ubiquitous

Electronic components are already ubiquitous and over time, with continued technology advancement, that will only increase.  It could be said that if a company doesn’t consider itself a technology company, it probably will in the not too distant future. Consider just one example: the automotive industry.  Once a largely mechanical product, cars are increasingly becoming computers on wheels. Demand in that sector alone is shifting what semiconductor and other component suppliers are choosing to make — and in turn it’s shifting how OEMs have to manage procurement and obsolescence.

In 2022, electric vehicle (EV) sales exceeded 10 million units, according to the Global EV Outlook 2023 report from the International Energy Agency. Worldwide, about 14 percent of cars sold were EV, compared with only 9 percent in 2021 and less than 5 percent in 2020.  The report predicts that 2023 will see 14 million EVs sold, a 35 percent year-over-year increase. Not only are EV unit sales ramping but to further detail the impact on global semiconductor demand driven by this vertical market, it is important to note that fully electric vehicles, such as the Ford Mustang Mach-E, use almost 3,000 chips. 

As semiconductor makers scramble to service these new high-demand markets with the newest technologies, other sectors may be searching for the components they need as suppliers shift their product mixes to capture new business. Networking and communications equipment, consumer products and home appliances, for example, are other key sectors for semiconductors—and each has differing needs. Industrial, medical and aerospace/defense vertical markets, meanwhile, demand long-term sourcing of the parts that they use. There is a percentage of products designed into many new products that are at a mature stage of their life cycle or already headed to obsolescence, since engineers are driven to use footprints and products that are proven.

These market realities are making the role of distributors critically important, particularly for customers who need parts that have reached end of life (EOL) and face obsolescence challenges. As this demand for semiconductors increases, we anticipate an acceleration of EOL announcements and obsolescence of specific nodes. The rate of obsolescence on semiconductors in general has increased by 30 percent. In practical terms, that might shorten the life cycle of a particular part from 10 years to seven. As semiconductor makers stop manufacturing older devices to shift to making higher profitability devices, distributors will step into the breach to extend availability and life of mature devices. For OEMs, the right partner will insure continuity of supply in a number of ways:

• By working with suppliers to understand where specific parts are in the lifecycle and proactively get ahead of demand before the end of life.
• By working with customers proactively to understand the future-looking needs for specific products. Typically, OEMs tend to under-forecast future demand.

As we enter this age of every company being a technology company, having a partner with focused expertise in navigating component obsolescence is not just nice to have—it’s critical!

To read the article on EPSNews.com, click here: https://epsnews.com/2023/07/26/why-components-obsolescence-are-becoming-ubiquitous/