Outsmarting obsolescence with the grey market

Liam Kilmister, Senior Marketing Strategist, Component Sense

Component Sense’s Liam Kilmister and Grant Rutherford walk readers through the process of sourcing obsolete and hard-to-find components via the grey market.

Given its sudden and disruptive nature, it is clear why many electronic manufacturers see component obsolescence as a major production line risk. When a component’s end-of- life (EoL) is announced and no longer available directly, it can force manufacturers into costly redesigns and new product lifecycles. Research conducted by Z2Data on their customers found that roughly 30 per cent of EoL notices issued in 2023 were without a prior product change notification (PCN).

Whilst there is no silver bullet for preventing obsolescence, the grey market—a secondary market for electronic components—enables manufacturers to stay agile and overcome production challenges. The secondary market can provide companies with significant cost savings and reduce electronic waste.


Grant Rutherford, Chief Technical Officer, Component Sense

A common challenge for procurement experts is securing rare and obsolete parts. When these hard-to-come-by components are unavailable directly, your next port of call should be a trusted grey market supplier. Leveraging a broad global supplier network, companies like Component Sense provide procurement experts with access to hard-to-find parts. The key to safely sourcing obsolete components on the grey market is vetting suppliers. The grey market sometimes has a negative reputation due to fly-by-night sellers and counterfeits. However, it certainly is not black and white.

When searching the secondary market for components that are unavailable directly, demand the following of potential suppliers:

• Ensure components are fully traceable back to original manufacturer

• Check they conduct rigorous quality assurance inspection processes

• Insist on a 100 per cent anti-counterfeit guarantee

• Check they only source components directly from top- tier OEM (original electronics manufacturers) and EMS (electronics manufacturing services) companies

Component Sense’s CTO, Grant Rutherford, said “Rather than buying directly from a franchise, electronic manufacturers can often find genuine, fully traceable stock with new date codes from the grey market, all while saving money.”

The grey market is not just beneficial for sourcing hard-to- find components. Procurers of legacy components may also find what they seek in the secondary market. At times, the availability of a single, decade-old microchip can maintain crucial industrial machinery, saving replacement costs and reducing waste.

Navigating the grey market productively is made simple with a BOM (bill of materials). Supply vs demand often dictates the asking price for hard-to-come-by and obsolete components on the secondary market. However, if approached correctly, the pitfalls of price gouging, as seen during the chip shortages of the COVID-19 pandemic, can besidestepped. By providing clarity on your BOM to Component Sense, the process of sourcing exactly what you need is simple and cost-effective. Over twenty two years’ experience managing excess stock for the world’s largest OEMs and EMSs has given the company unmatched insight into price variations, allowing it to extend economy- of-scale discounts to buyers.

Obsolescence is expected to continue being a significant challenge for electronic manufacturers. While the grey market is not the only solution to the broader issue, it can help companies mitigate its impact. If procurement professionals cannot find the obsolete components they require in Component Sense’s inventory of over 150,000 fully traceable parts, the company will direct them to available, trusted sources.