Both players have struggled this season and were in the team dumped out of the FA Cup by Southampton on Saturday.
“I'm not so sure," Smith said when asked if he believes Pepe can still prove his worth to the side.
“He's in his second season now so it's not as if he's still adapting to a new country and league.
“He's one of those players who can produce a bit of magic, cut inside and find the top corner. But on other occasions his football intelligence looks short.
“It's not as if he had been tearing up trees for a long period in France. You can throw the transfer fee at him but that's not his fault.
“The fact remains he's a big signing and they spent a lot of money on him. If they were to sell him now they would make a huge loss, so that's another problem
“They've got rid of the Ozil problem but they are still saddled with the Pepe and Willian problems."