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Article Highlights:
The acronym DMSMS stands for diminishing manufacturing sources and materials shortages. According to the Defense Department, DMSMS covers the “loss, or impending loss, of manufacturers or suppliers of items or, raw materials.”
Replacing obsolete, not-recommended-for-new-design (NRND), or otherwise high-risk parts is an arduous process for A&D companies—especially when compared with, say, a consumer electronics manufacturer that releases new models of its flagship products every two or three years.
Aerospace and defense companies rely on a large quantity of legacy and mature-node chips, which are in many cases being deprioritized by chipmakers focused on the high margins offered by products used by artificial intelligence companies. As a result, these older commodities are more likely to go into allocation or face lengthy lead times, because manufacturers have made a conscious financial decision to produce less of them.
A never-ending challenge for engineers and procurement professionals, electronic component obsolescence has only come to loom larger in the 2020s. During the pandemic, obsolescence events skyrocketed to historic highs, with well over 700,000 components reaching end-of-life (EOL) in 2022. And while those trends eased somewhat in the years immediately after COVID-19, 2025 saw component obsolescence surge again, with over 620,000 parts discontinued by their manufacturers. This was the second-highest annual figure on record, behind only the aforementioned 2022.
This rise in obsolescence events—and the compressed component lifecycles behind them—is a major challenge for aerospace and defense manufacturers. These businesses make expensive, technologically sophisticated products that are expected to last for decades. So when a supplier sends an EOL notification for a semiconductor used in a $100 million fighter jet, that jet’s manufacturer suddenly finds itself in a difficult position, forced to scour for a viable alternative that doesn’t compromise form, fit, or function. Multiply that challenge dozens and dozens of times, and you’re approaching a sense of the scale of the problem faced by aerospace and defense companies. For them, DMSMS is becoming a constant threat—and the tumultuous chip landscape is only adding to that persistent volatility.
What Is DMSMS?
The acronym DMSMS stands for diminishing manufacturing sources and materials shortages. According to the Department of Defense, DMSMS covers the “loss, or impending loss, of manufacturers or suppliers of items or, raw materials.” The Naval Sea Systems Command provides more detail and nuance in their definition, explaining that the phenomenon occurs “when manufacturers of items or raw material suppliers discontinue production due to reasons such as rapid change in item or material technology, uneconomical production requirements, foreign source competition, Federal environmental or safety requirements, or limited availability of items and raw materials used in the manufacturing process.”
The second definition is important, because it speaks to just how many causes of DMSMS the U.S. government, defense contractors, and manufacturers operating in the aerospace and defense industry now face. While DMSMS has traditionally been seen as the loss of all suppliers capable of providing specific parts or large-scale raw material shortages, sourcing challenges can now impact manufacturers on smaller scales, too. As the Naval Sea Systems Command suggests, DMSMS can now be triggered by business decisions made by individual suppliers, including those who deem specific parts to be “uneconomical.”
These strategic manufacturing decisions are playing an increasingly large role in the global manufacturing landscape aerospace and defense firms rely on to source parts for their jetliners, military aircraft, missile defense systems, and radar infrastructure.
Why Semiconductors Are Going Obsolete Faster
The global semiconductor manufacturing ecosystem has experienced some major changes in the past few years. The emergence of an entirely new industry, artificial intelligence, and its voracious appetite for advanced chips has had a profound impact on chipmakers. AI companies require large quantities of specific semiconductors like graphics processing units (GPUs), central processing units (CPUs), and memory, and they’re predominantly focused on acquiring the most advanced technology and processing nodes available in these chip commodity categories, including high-bandwidth memory (HBM) and DDR5.
This extraordinary demand for cutting-edge semiconductors and powerful memory is reverberating across chipmakers, influencing their own internal production decisions. Because foundries have limited manufacturing capacity, when they face a level of demand that exceeds their total production capabilities, they need to make difficult decisions about what to continue producing and what to manufacture at lower quantities or discontinue entirely. This is likely triggering higher levels of component obsolescence, as demonstrated by the historically high rates of EOL seen in 2025 (and the high likelihood that those numbers will be matched or surpassed in 2026).
Taiwanese foundry TSMC provides an ideal example of this conundrum. Earlier this year, TSMC said that it would be “streamlining” its mature-node production—including 6-inch and 8-inch wafers—in order to allocate manufacturing capacity and other related resources to more profitable AI products. The downstream effect of that manufacturing decision is fewer legacy semiconductors, and thus a tighter supply pool for the many industries and businesses that rely on everything from discretes to power management ICs to microcontrollers.
As if that wasn’t enough, plenty of AI companies building data centers and the infrastructure that powers them are also sourcing legacy chips. The result is a limited, strained supply stemming from economic decisions by manufacturers—exactly the set of circumstances covered in the Navy’s definition of DMSMS.
How the Current Landscape Is Squeezing the Aerospace and Defense Industry
It’s this unstable, high-demand electronic component marketplace that aerospace and defense companies must now operate in. And while plenty of manufacturers in a myriad of industries rely on the legacy semiconductors whose supply is now squeezed, A&D firms are uniquely attached to these parts.
There are two primary reasons that these manufacturers are unusually vulnerable to the current electronic market dynamics. Aerospace and defense companies make products that are expected to last for decades. Lockheed Martin’s F-35 Lighting, for example, is rated for at least 8,000 flight hours. Depending on how often the jet is flown, that typically amounts to a lifespan between 20 and 40 years. Radar and missile defense systems are similarly expected to last for multiple decades.
So when specific manufacturing part numbers (MPNs) go into a shortage, are put in allocation, or are sent into EOL by their manufacturer, these businesses don’t have the same ability to pivot as manufacturers producing more ephemeral products. They have to find viable replacement parts so that these large, expensive aircraft and systems can be serviced and repaired, and manufacturers can keep producing them.
But finding those cross-references is also harder for companies in aerospace and defense. These manufacturers have a long and rigorous qualification process, and all their components must be rated for a wide range of extreme environments and stressors. Because of this, obsolescence and all the other variables creating more volatility in the electronic component market right now are harder for them to adapt to. Replacing obsolete, not-recommended-for-new-design (NRND), or otherwise high-risk parts is an arduous process for A&D companies—especially when compared with, say, a consumer electronics manufacturer that releases new models of its flagship products every two or three years.
Obsolescence Is Only Part of the Problem
While obsolescence has historically been the primary risk for aerospace and defense firms sourcing electronic components, the past year or two has expanded that into a larger constellation of hazards.
In the current high-demand supply chain environment, plenty of chipmakers are being forced to put parts into allocation. As a result, some original equipment manufacturers (OEMs) are only getting partial fulfillments of their orders or are facing unusually long lead times. Here, again, aerospace and defense companies are uniquely vulnerable. They rely on a large quantity of legacy and mature-node chips, which are in many cases being deprioritized by chipmakers focused on the high margins offered by products used by artificial intelligence companies. As a result, these older commodities are more likely to go into allocation or face lengthy lead times, because manufacturers have made a conscious financial decision to produce less of them.
As with obsolescence, the long lifespans and rigorous qualification processes A&D businesses must adhere to give them less flexibility to respond to these supply constraints and the various consequences stemming from them. They can’t simply move on to a new product or bill of materials (BOMs) because it’s more convenient or financially advantageous.
Finally, it’s worth noting that the defense industry does not have the industry leverage that one might think, either. According to the National Academy of Engineering, defense accounts for less than two percent of the total semiconductor market in the U.S. This means that these customers don’t have all that much influence on the manufacturing decisions of chipmakers, who are serving a large customer base that now includes powerful and well-heeled artificial intelligence firms.
How Aerospace and Defense Can Prepare for a Precarious Future
These problems aren’t going anywhere in 2027. Aerospace and defense manufacturers will need to devise ways to source parts and maintain BOMs in spite of this onslaught of obsolescence, allocation, and chronic instability now endemic to the electronic supply chain.
Many of these manufacturers have traditionally been somewhat rigid. Given the rigor of their qualification process and their commitment to a relatively small portfolio of complex, expensive products, A&D firms have historically relied on small supplier bases consisting of longtime vendors. But if these OEMs want to deftly navigate a landscape strewn with obsolescence risks and other sourcing hazards, they’ll need to adopt a more open, flexible procurement approach.
This means maintaining as much optionality as possible in an electronic supply chain market where supply can get thin fast and demand is relentless. That optionality can be achieved through alternatives to traditional suppliers, including independent distributors, brokers, and other sources from secondary markets, as well as strategic inventory buffers that can sustain businesses if specific chips go into allocation or are pushed toward obsolescence before anticipated.
But for aerospace and defense manufacturers, embracing optionality comes with some serious strings attached. Because of the stakes and liabilities attached to so many of their products, these companies need to utilize all the risk mitigation strategies at their disposal to guarantee that new or alternative sources are above-board. These due diligence measures include:
Traceability
Chain of custody
Inspection
Qualification
Compliance verification
Manufacturers that want to strengthen their optionality and resilience in the face of a more precarious electronic component landscape can benefit from the capabilities of Z2. The supply chain risk management (SCRM) tool offers an industry-leading database of over one billion components and 1,000+ commodity types, which can all be filtered based on technical attributes and other critical sourcing criteria. Z2’s parts database also shows comprehensive, up-to-date pricing and availability information, allowing users to make data-informed sourcing decisions that keep their costs low and their procurement versatility high.
To learn how Z2 can help businesses navigate DMSMS and access maximum visibility into the entire global electronics marketplace, schedule a free trial with one of our product experts.
