How Component Obsolescence Feeds the Counterfeit Supply Chain

Parts reach end of life (EOL) every day, and the rate keeps climbing. In 2023, roughly 473,000 electronic parts reached end of life, according to Z2Data’s obsolescence tracking. That’s down from 750,000 during the pandemic peak in 2022, but it still means hundreds of thousands of active part numbers drop off the market every year. The 2024 numbers track similarly.

The pace is accelerating. In 1970, a semiconductor was expected to have a market life of about 30 years. By 2014, that figure had dropped to 10 years. Today, advanced semiconductors at sub-28 nm nodes often issue EOL notices within two to five years of release. Every product generation cycles faster than the last, and every BOM inherits the exposure.

Making it worse, 30% of all EOL events in 2023 arrived without a product change notification (PCN). No formal notice, no planning window. The part just stopped being available. A growing share qualifies as instant obsolescence, where parts enter EOL with no last-time-buy (LTB) window at all. Among components that entered obsolescence after the semiconductor shortage, roughly 35% followed this pattern, according to Datalynq. Since 2018, an increasing number of PCNs have listed the LTB date as immediate.

When a redesign triggered by part obsolescence costs between $20,000 and $2 million per event (Z2Data’s range), and hundreds of thousands of parts go EOL every year with no warning, most BOMs are exposed to increasing obsolescence risk. The teams that see it coming are the ones that avoid the scramble entirely. 

Key Takeaways

• More than 473,000 parts reached EOL in 2023, and 30% arrived without any PCN. That’s the baseline trend moving forward.
• Suspect counterfeit reports hit a 9-year high in 2024. Over 25% involved active, readily available parts that were easy to source through authorized channels.
• EOL pressure and grey-market sourcing go hand in hand. When authorized channels run dry, procurement turns to unauthorized ones, and that's exactly where counterfeits concentrate.
• Checking lifecycle status and authorized availability during component selection can head off most of these problems. The earlier that parts data enters the workflow, the fewer emergencies reach procurement.

What Actually Kills Parts

Most of us assume that technological change drives obsolescence, but the data show a different story. Z2Data’s analysis of EOL events in 2023 found that 78% were driven by low market demand. The manufacturer couldn’t justify continuing to produce a part that wasn’t selling enough. Technology changes accounted for 15%. Supply chain disruptions caused 7%.

Yet, when Z2Data surveyed roughly 9,000 professionals, the perception was inverted: respondents ranked technology changes first at 36%, supply chain issues at 26%, and demand-driven obsolescence last at 21%.

If your obsolescence risk model is built around technology turnover, you’re planning around 15% of the problem. The other 78% occurs when demand drops below the manufacturer’s production threshold, and that can hit any part on your BOM, regardless of how current its technology. And when that happens, procurement ends up scrambling for parts, often in all the wrong places.

The Pipeline from Obsolescence to Counterfeits

When a part goes EOL, and no cross-reference or redesign is ready, procurement faces three options:

• Execute a last-time buy if the manufacturer offers one and the window is still open.
• Start a redesign, which is expensive and slow, especially in regulated markets where requalification can take years.
• Find the part somewhere else, which usually means the grey market.

Grey-market parts are genuine components sold through unauthorized channels, without documentation connecting them to the original manufacturer. The parts themselves might be real, but the storage conditions, handling history, and chain of custody are unknown. Batch records may be missing, and the manufacturer won’t honor warranty claims.

Counterfeiters exploit this opening. Grey-market sourcing introduces reliability risk because storage conditions, handling history, screening, and chain of custody are often unclear. Discontinued parts can also be reclaimed from excess inventory, scrap streams, or e-waste, then remarked and reintroduced as new inventory. Without documentation connecting the part to the original manufacturer, buyers have limited ways to distinguish legitimate surplus from a recycled component with a fresh label. 

When a sole-source component enters instant obsolescence, a spot buy is often the only remaining option, and that means sourcing from whoever has stock. During the semiconductor shortage, some companies sourced from platforms like Alibaba, knowing counterfeit parts were a real possibility.

Other factors are at play beyond scarcity. Tariff pressure can push buyers toward unfamiliar suppliers and alternate sourcing routes, adding another layer of risk when supplier vetting, documentation, and traceability are incomplete. Unauthorized suppliers can exploit these shifts by offering discounted inventory diverted from higher-tariff regions. The components might be genuine, diverted, or fake, and the buyer often can’t tell until inspection or testing. 

Counterfeit Reports at a Nine-Year High

ERAI’s 2024 annual report recorded 1,055 suspect counterfeit and nonconforming parts, a 25% increase over 2023 and the highest count since 2015. A single U.S. government batch accounted for 248 counterfeit fan assemblies, which inflated the headline number considerably. But strip out that outlier, and reports still rose 3% year-over-year, continuing a steady climb from 2022. 

Obsolete components accounted for 42.75% of all reports, which is expected. More telling is that active, readily available parts accounted for more than 25% of reports and were flagged more than twice as often as active components with long lead times. Counterfeiting is opportunistic. Scarcity helps, but it isn’t required.

The counterfeiter portfolio is also expanding:

• 21% of flagged brands in 2024 were new to ERAI’s watchlist, indicating broader manufacturer targeting.
• 29.4% of reported parts belonged to manufacturers that had never appeared in ERAI’s database, indicating that the reach of counterfeiters is growing.
• The most-targeted component types have stayed consistent for a decade: analog ICs, microprocessors, memory, and programmable logic.

When a counterfeit part gets used, the costs add up. In a survey conducted between November 2023 and January 2024, 88% of respondents estimated that a counterfeit component in an electronic assembly would cost more than $50,000. In regulated industries, the total burden can rise further through customer notifications, root-cause investigations, agency filings, and corrective action. 

Where the Fix Starts: Component Selection

Engineers often select components without visibility into lifecycle risk. Then, procurement discovers the problem months or years later, when a part goes EOL and the approved channels are empty. By that point, the options have narrowed to LTBs, redesigns, or grey-market spot buys.

Octopart and the BOM Tool show lifecycle status, authorized stock levels, and multi-source options alongside the specifications and pricing data that drive component selection. Engineers get answers to the questions most relevant for sourcing risk:

• Single-source exposure: Is the part available through multiple authorized distributors, or just one?
• Inventory trajectory: Are stock levels thinning across channels, signaling supply risk before a PCN arrives?
• Alternatives on the market: Do better-supported options exist, with stronger availability and longer expected lifecycles?

Sourcing risk becomes visible while there's still time to choose differently, before the BOM is locked and the options narrow. Every at-risk part caught during design is one that never reaches procurement as an emergency and never sends a buyer into the murky grey market looking for stock.

For a step-by-step framework covering PCN monitoring, last-time-buy decisions, sourcing controls, and incoming inspection, read A Practical Playbook for PCNs, Last-Time Buys, and Sourcing Controls.