Sometimes buyers head to the open market in search of hard-to-find parts before they have considered all authorized sources.
It is often said that the best way to avoid buying counterfeit parts is to purchase directly from component manufacturers or from manufacturers’ authorized distributors.
In fact, most purchasers buy the bulk of the components their companies need for production from component manufacturers or from authorized sources. However, when a component manufacturer discontinues a part, often there is still demand for the component by companies in such industries as defense and aerospace, medical, communications, networking equipment, which tend to have long product lifecycles.
Buyers in those industries often head to the open market for discontinued parts and buy them from independent distributors and brokers. In most cases, buyers can purchase genuine components from independent distributors and brokers, but sometimes the parts they purchase turn out to be counterfeit and fail when the electronics system that they are used in fails during test or later in the field.
Obsolete or discontinued parts are often the target of counterfeiters, according to IHS Technology. The researcher says 67 per cent of counterfeit parts sold are for discontinued components.
Many purchasers say they look for discontinued parts on the open market only when they can’t find them from authorized sources. However, component manufacturers, trade associations and authorized distributors say buyers in many instances don’t search for authorized distributors as thoroughly as they could. In other cases, buyers may not be as concerned about purchasing from an authorized source as they are in finding the lowest price for the obsolete component, which sometimes can be found in the open market.
Many buyers purchase parts from a select number of preferred distributors and when those sources don’t have the parts, buyers may mistakenly think the parts are not available from other authorized distributors.
In fact many times there are other sources and there are a number of search sites and tools buyers can use to find them. For instance, the Semiconductor Industry Association (SIA) sponsors the Electronics Authorized Directory www.authorizeddirectory.com. Buyers can find authorized distributors for dozens of semiconductor manufacturers at the site.
Another site, www.ECIAuthorized.com, allows buyers to search the inventories of 61 authorized distributors for older parts as well as parts still in production. The site is run by the Electronics Components Industry Association (ECIA) and the distributors on the site have parts listed from about 2,800 component manufacturers, said Robin Gray, chief operating officer for ECIA.
Buyers can search for components at Verical, a division of Arrow Electronics. Using Verical’s Our DemandMatch quoting engine, a buyer can upload a list of parts that are in short supply and receive email responses back with a match list of available inventory, which is ready to ship factory stock from Arrow’s franchise distributor divisions around the world. Arrow has about $10 billion of inventory.
The match lists contain price, delivery and manufacturer part numbers and warranty information. About 700 manufacturers published inventory at the Verical site.
Arrow says all the inventory published to Verical.com is traceable and warrantied. Verical.com does not publish excess inventory from OEMs, EMS service providers, brokers or non-franchised distributors.
While buyers search for obsolete and discontinued components from their preferred distributors, they may overlook aftermarket distributors and manufacturers that are authorized sources for billions of discontinued parts.
Such sources as Rochester Electronics, Lansdale, Micross and EV2 among others specialize in end-of-life and discontinued parts. Aftermarket distributors have large inventories of discontinued products in stock. Many also have wafers and die in stock and chips can be packaged based on the customer’s needs either internally at the distributor or through a third-party. Such parts are marked with the original component manufacturer’s logo and have full warranty coverage and post sales support, the SIA said.
Most authorized aftermarket distributors are also authorized to manufacture discontinued products. Some use the same fabrication processes, tools and packages that were used when the original products were fabricated, according to the SIA.
The aftermarket products have similar and sometimes better performance, quality, and reliability as the original products and they also carry full warranties from the authorized aftermarket distributors/manufacturers, SIA said.
Not a problem
While there may be authorized sources available for discontinued components, some buyers prefer to buy from independent distributors because prices can be less than parts sold by authorized sources. Some buyers have developed relationships with a small number of reliable independent distributors over the years.
Many buyers say they have never had a problem with counterfeit parts buying from the open market and all the parts they purchase turned out to be genuine components from the original manufacturer.
Most independent distributors don’t knowingly sell counterfeit parts. Most acknowledge that counterfeit parts are an issue and have installed rigorous inspection and screening programs involving state of the art X-Ray equipment. In many cases they can trace parts back to the original component manufacturers.
They also point out there have been instances when authorized distributors have unwittingly sold counterfeit components. This has happened when an authorized distributor sold parts that previously had been returned by a customer and those returned parts were not the same ones that the distributor had originally sold.
Independent distributors buy parts from multiple sources. They will buy excess inventories of OEMs and EMS providers as well as from other distributors including independent and authorized, and resell the parts.
In some cases, independent distributors buy components directly from component manufacturers. This can happen when a component manufacturer has built too many components and needs to get them off the books by the end of the month.
However, while most of the parts independent distributors sell may be genuine, there may be other problems with the components. Semiconductors sold on the open market often are resold several times and if the parts were not handled or stored correctly, they may not perform up to the original specification of the part, according to the SIA.
For instance, many parts are prone to electrostatic discharge (ESD) damage if they are not handled properly. Careless handling can result in bent leads, or deformed solder balls. Chips stored in excessive heat or moist conditions can experience solderability problems. Missing or incorrect dry packaging can result in “popcorning” in the packaging of the semiconductor, the SIA said.
Reliable and reputable independent distributors may handle and store components properly, but they may have received the parts from other open market sources that weren’t as conscientious about how the components were stored and handled.
Trade associations such as SIA and ECIA say buying from independent distributors and brokers is a risky business and parts should only be purchased from authorized sources. Buyers who purchase components from authorized sources eliminate the need for their companies to conduct costly, time-consuming authenticity testing, the SIA says.
Scrutinizing parts and suppliers
Some buyers who purchase parts from independent distributors are members of ERAI, an association that collects data about counterfeit parts in the supply chain.
ERAI offers its members access to a counterfeit parts database and e-mails members when there is a new report of the counterfeit component. The association has about 9,100 members who work at aerospace, defense, medical, nuclear and commercial OEMs as well as EMS providers, distributors, government agencies and industry associations.
Richard Smith, vice of business development for ERAI, said the association has been collecting information on bogus components since 2000. “Since then we have put together the largest single database of suspect counterfeits and non-conforming components in the world,” he said.
“We have a search screen that allows buyers to look up parts one at a time” to see if there’ve been any reports of counterfeit parts for that part number, said Smith. “You punch in the number and you can see if we have anything on that particular part,” he said.
Buyers also get an e-mail alert every time a part number is added to the ERAI counterfeit parts database.
ERAI also offers a BOM scrubbing tool. A buyer can load a bill of materials and have it “scrubbed against our database,” said Smith. A report is generated which will say if any parts on the BOM have been reported to be counterfeit or nonconforming, he said.
If there are part numbers that are listed as counterfeit, an OEM or EMS provider knows it needs to scrutinize the sources of the parts so it can take appropriate action.
Purchasers can also check to see if there’ve been reports of counterfeit parts of certain suppliers. “If you type in Intel we would see 17 pages of Intel devices that have been reported to us as being counterfeit or nonconforming,” said Smith. The parts, of course, were not fabricated by Intel but by counterfeiters.
Buyers can also look up a distributor or broker or other company to see if there have been reports that the company had sold counterfeit components.
While counterfeit parts is not a new issue for the electronics industry, it is a continuing one that electronics purchasers have to deal with. They need to do their due diligence and make sure they only buy from reliable sources, preferably authorized ones.