As technology continues to advance, there are an ever-increasing number of semiconductors that are declared EOL (End Of Life) by the original manufacturers. For industries that require extended product support, there is a never-ending need for obsolete or discontinued semiconductors, which has led some customers toward the use of gray market practices. Because an original semiconductor’s EOL schedule does not typically support the continuing needs of all customers, especially those serving applications with long system lifecycles, OEMs may be left in a difficult position for fulfilling their long term supply requirements for vital semiconductor devices. If an OEM does not plan appropriately for an EOL announcement, they may be tempted to turn to the gray market for availability.

The Gray Market

There are many risks in buying components on the gray market; that is, through brokers or independent distributors. Since these sources are not authorized by the original manufacturer, there is no factory traceability, no approved quality control and no manufacturer’s guarantee. Pricing through brokers on the gray market is greatly influenced by supply and demand, and as the supply of obsolete semiconductors inevitably decreases, the price increases, sometimes exponentially. Counterfeiting continues to be a growing problem throughout the electronics industry. The fraudulent manufacturing, distributing and selling of fake semiconductor devices has a negative effect on reputable component manufacturers and distributors. Counterfeiting also causes purchasing dilemmas for component buyers, reliability concerns for equipment manufacturers and field failures for equipment operators. In a worst-case scenario, counterfeit components can cause legitimate manufacturers to be driven out of business or experience catastrophic disasters through equipment failure. For mission-critical applications such as military and aerospace, there can be even more serious consequences where faulty equipment can result in loss of life.