Traditionally, most original equipment manufacturers (OEMs) and contract electronic manufacturers (CEMs) bought electronic components on the open market only during times of extreme shortage. That’s because counterfeit parts have long tainted the landscape, making the open market a perceived “unsafe” or “last resort” place to conduct business.
However, independent electronic component distributors occupy a necessary spot in the electronics supply chain, not only providing parts in times of shortage, but also cost savings opportunities in times of excess. Further, in today’s current environment OEMs and CEMs have little choice as to whether or not they’ll use independent distribution.
With economic, staffing, availability, and forecasting issues continuing to impact inventories and the supply chain, OEMs and CEMs are left without a choice. To stay competitive, they must be able to get components when and where they need them and turn excess into cash when they can’t do anything else with it.
This dynamic has placed even greater pressure on distributors, including open market independents, to build trust. The price for occupying that ‘spot’ in the supply chain is the ability to prevent counterfeits from getting into their customer’s hands. And, some distributors are taking a hard line to beat the counterfeiters at their game.
This is no easy task, though. As technological strides benefit the power of the parts themselves, they also support sinister efforts. Thanks to technology, counterfeiters are getting increasingly sophisticated and intensifying the difficulty in detecting their bogus products.
Counterfeiters are now employing ultraviolet ovens to harden codings, passing black topping and marking permanency tests, and giving the product a finish equal to the original component manufacturer. Further, they’re using the same laser equipment the manufacturers are using to alter, rather than produce, original parts.
What’s far more concerning than the blatant fakes are the components that have only slight remarkings. In international markets, it’s not unusual to find 2004 chips remarked with a newer date code. Unfortunately, the scruples of some brokers also are deteriorating. So if a broker buys remarked parts knowingly, but with little concern, parts easily enter the supply chain.
While some of these parts may work, like any component, they’re susceptible to corrosion as well as electrostatic discharge (ESD) damage from handling. Also, they likely won’t solder as they should. At the very least, they will create reliability problems in the field. Still, while there are buyers who won’t purchase chips more than a year old, the market for forgeries will continue to grow with the demand for new material.
A GROWING PROBLEM
It’s impossible to define how widespread the problem is, partly because parts that do not meet manufacturer’s specifications and fail in systems often go unreported because they are treated as “faulty.” Some estimates put the proliferation of counterfeits at 5% to 20% of components on the open market, and claims abound that counterfeits could cost the industry up to $1 billion per year. A study by the U.S. Department of Commerce Bureau of Industry & Security states the number of counterfeit incidents reported by 387 participants climbed from 3868 in 2005 to 9356 in 2008, an increase of more than 140%.
Counterfeit parts have an indelible impact on the industry. They sully the reputation of manufacturers, compromise consumer confidence, and can cost corporations, at best, time and money, and customers, at worst, safety.
The first line of defense against counterfeit parts is tapping a trusted supplier. Of the thousands of independent distributors, slightly more than 30 are members of IDEA, the Independent Distributors of Electronics Association, a highly regarded non-profit trade association representing quality and ethically oriented independent distributors of electronic components. But even within the industry association, independent distributors are not all equal. Experience is the game’s goalie. Many brokers simply don’t have the inspection know-how, processes, or technology to consistently spot and prevent fakes.
For example, one quality manager might find a different die on a part than what’s generally used by a manufacturer and immediately assume the part counterfeit. However, another seasoned manager might recognize that the manufacturer subcontracted the die manufacture and set of chips and deem the parts authentic. A more experienced quality manager also may spot minor inconsistencies in labeling and packaging, leading to rejection and a determination that the parts may not be what they are purported to be.
Relying on a distributor that knows the manufacturer and its products and processes is key. Vendor verification processes are also essential to ensure the highest sourcing standards. And, distributors must leverage database comparisons and manufacturer specifications to guarantee traceability.
Junk parts can also be vetted by more invasive methods through inspection. Customary, rigorous inspection processes should leverage advanced technologies. Real-time x-ray imaging systems, decapsulation machines, and high-powered optical microscopes enable distributors to conduct both destructive and non-destructive screening and analysis. These techniques offer a more in-depth, meticulous analysis, reducing the risk significantly further.
Even when the market turns, the problem isn’t likely to go away. OEMs and contract electronics manufacturers (CEMs) will then sell their excess inventories to independent distributors, and the distributors will source lower-price parts in an oversupply to other buyers. While we can keep counting on counterfeiters, we can also count on a counter-attack. Independent distributors are ready, willing, and technologically poised to fight back.