Flip Electronics’ VP of quality and warehouse operations, Gary Beckstedt, explores counterfeiting data, trends and best- practice prevention strategies
Wherever necessity and scarcity collide, there is money to be made. Wherever there is money to be made, counterfeiters and other opportunists can be found circling the waters. The electronic component industry is no stranger to this phenomenon. Counterfeit electronic components have been the bane of technology manufacturers’ existence for decades, but when supply is threatened, production deadlines loom and customer deliveries are at stake, it can be tempting to risk an unsanctioned vendor. It is a risk— unauthorized parts are rarely, if ever, in step with original manufacturers’ quality standards.
More than one trillion semiconductors—$574 billion worth—are sold worldwide each year, led by logic, memory and analog ICs. Policing can be a daunting task, especially on a global scale. Though the numbers aren’t definitive—not all counterfeits are found, nor are they reported when they are—the ERAI noted a 35 per cent increase in reported counterfeit and nonconforming parts from 2021 to 2022, despite global semiconductor sales remaining essentially flat. Its buyer beware when purchasing components in the grey market.
Even for the most diligent, counterfeits can sneak into the supply chain. The only way to be assured of the highest quality components is to deal directly with original manufacturers or their authorized and franchised distributors. A rigorous approach to sourcing and due diligence once parts arrive can help keep sham components out of finished goods. So can staying abreast of counterfeiters’ latest tools of the trade. The following are some of the prevalent trends.
Increased counterfeiting sophistication alongside the rise of authentication technologies. Counterfeiting isn’t a mom-and-pop game anymore, nor is it simply stripping old parts from e-waste for resale. Counterfeiters’ latest techniques are more nuanced and sophisticated. They may use processes closely mimicking genuine components, from flawless finishes to unimpeachable paper trails. In turn, this is accelerating demand for authentication and anti- counterfeiting technologies such as blockchain, RFID and unique serialization to track and verify components throughout the supply chain. However, counterfeiters can be quite skilled, so anytime a new detection or prevention methodology is introduced, it’s a fair bet they’re working on ways to offset it. Component buyers must remain hypervigilant and component manufacturers’ R&D investment should go beyond the parts themselves to protecting the parts.
Business as usual despite the re-homing of semiconductor manufacturing. It’s long been a trend to offshore various aspects of production to lower-cost labor markets. However, the effort to build or maintain dominance in the semiconductor field among ever-present geopolitical tensions
and materials scarcity is prompting a rethink. The Covid-19 supply chain debacle provided a stark reminder of the dangers of manufacturing in outlying locales. While efforts to shore up supply chains and rehome manufacturing are accelerating, they won’t happen overnight. Neither those making or consuming components can let future promises blind them to present realities. Millions more counterfeit parts have entered the market since the CHIPS and Science
Act was signed into law in August 2022. Onshoring manufacturing will provide greater quality control,
for now it’s business as usual for counterfeiters. Bobbing and weaving through advanced testing, screening and tracking efforts. The savvier the counterfeiter, the more aware they are of companies’ countermeasures. It’s easy for counterfeiters to forge traceability documents/certificates.
If a counterfeiter is good, x-ray inspection and basic functional testing will only get buyers so far regarding recovered and reused parts. The fact many chips are designed for long life and multiple use cases can keep them recirculating through illicit channels for years. AI-powered track- and-trace is becoming an anti-counterfeit weapon of choice to help maintain a transparent supply chain and verify components’ authenticity. Full-functional testing—100 per cent fault test coverage to the manufacturer’s specs per AS6171 standards—is the best way to ensure performance, especially when provenance is questioned. However, counterfeiters understand the cost of implementing such measures—and many companies don’t unless it’s legislated. It’s like playing the odds at the casino: never bet against the house.
No one is safe from counterfeiting, not those on technology’s cutting edge nor those trying to find a reliable source for end-of-life or obsolete components. ERAI found 62 per cent of parts reported as counterfeit in 2022 were classified as ‘active’ while just 33 per cent were classified as ‘obsolete’ or ‘not for new design’. No matter how meticulous a counterfeiter is, re-marking and recovery processes, along with poor handling and storage, can damage components.
Collaboration between organizations, industry associations and government agencies has been increasing to share information about counterfeit threats and prevention strategies. Governments are getting on board with stricter regulations requiring companies to act. Organizations have focused on training employees to identify and report counterfeit components: crucial in preventing counterfeits entering the production process. Buying electronic components from authorized sources is the surest way to reduce risks of obtaining counterfeit parts. When fighting counterfeiting, vigilance never goes out of style.