In semiconductor procurement, one bad batch can cost weeks of production downtime — not to mention the reputational damage of shipping defective products. Here's the pre-PO verification checklist we recommend every buyer run through before placing a first order with a new supplier.
Step 1: Verify Legal Entity & Registration
Before discussing pricing or availability, confirm who you're actually dealing with.
What to check:
- Request the supplier's business registration certificate and verify it's active
- Confirm whether they're an authorized distributor or an independent broker — both are legitimate, but you should know which one you're working with
- Check their registration jurisdiction and how long they've been in business
Red flags: Reluctance to share registration documents, recently registered entities without track record, registration in jurisdictions known for shell companies.
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Step 2: Demand Full Part Traceability
Traceability documentation is your primary defense against counterfeit components. The industry rule of thumb: 80% of counterfeit issues stem from missing or inconsistent traceability documentation.
Required documentation for every order:
- Lot/Date Code — confirms when and where the component was manufactured
- Certificate of Conformance (COC) — from the original manufacturer
- Full chain of custody — documentation showing every intermediary between the manufacturer and you
This is non-negotiable. Any supplier who can't provide this documentation should be treated with extreme caution — regardless of their pricing.
Step 3: Clarify Warranty & Return Policy (DOA)
Dead-on-Arrival (DOA) policies protect you when components arrive defective or non-functional.
Industry standards to expect:
- 30-day return window for manufacturing defects is the minimum industry standard
- 90-day warranty is common among quality-focused distributors
- Anything less than 30 days — or vague warranty language — should raise immediate concerns
Also clarify: who covers return shipping? What's the RMA process? How quickly are replacements shipped?
Step 4: Establish Clear Payment Terms
For first-time transactions, payment terms are a critical risk management tool.
Recommended approach:
- Start with T/T (Telegraphic Transfer) or L/C (Letter of Credit) for initial orders
- Never pay 100% upfront to an unverified supplier — standard practice is 30% deposit, 70% against shipping documents or upon inspection
- As trust builds over multiple transactions, terms can evolve toward net-30 or net-60
A supplier demanding 100% upfront payment without any track record is a significant red flag — regardless of how competitive their pricing appears.
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Step 5: Verify Logistics & Insurance Coverage
A great component deal means nothing if the parts never arrive — or arrive damaged.
Questions to resolve before ordering:
- Who covers transit insurance? (Should be clearly stated on the proforma invoice)
- What Incoterms apply? (FOB, CIF, DDP — each shifts risk at different points)
- For high-value orders: independent pre-shipment inspection (through agencies like SGS, CCIC, or Bureau Veritas) is worth every cent
Pro tip: For first orders, request photos of the actual components and packaging before shipment. Quality suppliers do this as standard practice.
One More Piece of Advice: Start Small
Your first order with a new supplier isn't about saving money — it's about testing the process.
Place a small test order and evaluate:
- How do they communicate? (Response time, clarity, professionalism)
- How fast do they ship? (Do they meet their stated timelines?)
- Do they provide real tracking information? (Not just "shipped" — actual carrier tracking)
- Is the documentation package complete? (COC, packing list, commercial invoice)
A supplier who handles a $500 test order professionally will likely handle a $50,000 order the same way. The reverse is rarely true.
Building Reliable Supply Chains Takes Time
There's no shortcut to supply chain reliability. But methodical verification — using this checklist as your framework — will protect you from the most common and costly mistakes in semiconductor sourcing.
At Future-IC, we provide full traceability documentation, 90-day warranty coverage, and transparent logistics for every order across our ST, ADI, and TI product lines.
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This guide reflects industry best practices as of May 2026. Always adapt verification procedures to your specific industry requirements and risk tolerance.
