What Drives Component Obsolescence?

What is component obsolescence?

Component obsolescence refers to the situation where a specific electronic or mechanical part used in a product becomes obsolete or unavailable. When a component becomes obsolete, it can pose significant challenges for product manufacturers and users, particularly if the component is critical to the functionality of the product or system. Component obsolescence can lead to increased costs, production delays, or even the need for redesigning the product to accommodate newer components.

What causes obsolescence?

Component obsolescence is caused by a variety of factors, including:

EOL By Manufacturers

Manufacturers may decide to discontinue parts due to low demand, growing production costs, or because they are no longer profitable to produce. The result is parts (or even families) going obsolete. In 2023 alone, more than 328,000 EOL notices were issued.

Technology Advancements

As technology progresses, newer and more efficient components are developed, rendering older ones obsolete. One might consider Moore’s Law, a 1965 observation that “the number of transistors on integrated circuits doubles every two years.” Although industry opinion is out on its modern-day applicability, it remains a useful reminder that technology is changing at a breakneck pace–and companies who want to stay competitive must keep up. When it comes to semiconductors alone, such progress can easily be seen in the last several years, with advanced process nodes jumping from 7 nm in 2018 to 2 nm in 2024

Nevertheless, technology is rapidly progressing, with advanced process nodes dropping from 7 nm only six years ago to 2 nm in 2024. 

Changes in Regulations

Love ‘em or hate ‘em, regulations in major markets around the world play a critical factor in part obsolescence. From changes to REACH (such as the five new substances to the Substances of Very High Concern List added in January 2024) to the 2023 EU Battery Regulation, regulations are another factor that threaten a component’s market longevity. 

Market Demand

Changes in market demand, consumer preferences, or industry trends can also contribute to part obsolescence. For example, shifts in consumer electronics preferences may lead manufacturers to discontinue older components in favor of newer technologies.

Supply Chain Disruptions

Disruptions in the supply chain, including natural disasters like the 2024 Noto Earthquake in Japan, technology trade restrictions between the US and China, or other economic challenges, can lead to shortages of certain components. In some cases, manufacturers may choose to discontinue parts that are difficult to source or replace due to supply chain constraints.

Trends in Obsolescence

A 2023 analysis by Z2Data of over two million parts found that in the last two decades there were three key trends to part obsolescence:

Other factors include things like factory consolidation, aging facilities, and lack of cost effectiveness. 

Want to learn more about 2024 trends in component obsolescence? Join our free webinar on March 14 to learn what’s changing and how to plan for it: Register Here.

Getting Ahead of Component Obsolescence

Knowing what causes component obsolescence is crucial in today’s rapidly-evolving landscape. The reasons why are multifold: 

Proactively Plan Ahead

By understanding the factors that contribute to component obsolescence, manufacturers can proactively plan for potential disruptions in their supply chain and production processes. This not only helps companies mitigate risk, it also allows them to competitively plan their product designs to meet changing market conditions, including consumer demands. 

Improve Risk Management

Component obsolescence can pose significant risks to manufacturers, including production delays, increased costs, and potential loss of market competitiveness. According to Flip Electronics, redesigns due to cost obsolescence range from $20,000 to $1.8 million depending on the component that’s obsolete. Passives like diodes can be cheaper, but microprocessors and microcontrollers can quickly drive up redesign costs. 

If manufacturers are able to incorporate good lifecycle forecasting strategies into their obsolescence management, they can pinpoint and evaluate the risks linked with individual components in their products. 

Manage Product Lifecycle Management

For all the challenges it presents, component obsolescence is a natural part of the product lifecycle, and understanding its causes help manufacturers manage their products’ lifecycles more effectively. By anticipating and planning for component obsolescence, manufacturers can ensure the continued availability, reliability, and supportability of their products throughout their lifecycle.

Foster Supply Chain Resilience

Knowing component obsolescence trends can help foster supply chain resilience by allowing companies to proactively manage potential risks and disruptions. Understanding which components are at risk of becoming obsolete enables companies to identify potential vulnerabilities in their supply chains. By identifying these risks early, businesses can take proactive measures to mitigate them, such as finding alternative suppliers or redesigning products to use more readily available components.

Achieve Customer Satisfaction

Left unchecked, obsolescence issues trickle down to the customer. Whether it’s not receiving a product, issues with product quality, lack of product support, or something else, obsolescence problems can lead to negative experiences, which can deliver a heavy blow to customer loyalty and brand reputation. By tracking obsolescence and planning for it, manufacturers can prevent problems from trickling down to their consumers and affecting their business in long-term ways. 

Navigating Obsolescence Trends in 2024

Obsolescence may be a given, but the forces that drive it are not. Want to learn what’s pushing obsolescence in 2024? Sign up for our free webinar March 14 to learn what the main obsolescence risks are to engineers, and which parts are most susceptible to risk. 

You’ll learn: 

1. Trends in passive & semiconductor obsolescence
2. The types of components most affected by these trends
3. What teams can do to get ahead of obsolescence risks

Register here to learn more.