ACF Blog- April 2023
The reporting of suspected counterfeits – is there evidence to show we are winning or losing the battle?
The supply chain crises of recent years led by the covid pandemic, the trade wars between the US and China and the military conflict in Ukraine have created great opportunities for counterfeiters in the world of electronic components, but can we say how big the problem has gotten?
Most supply chain executives feel it is much worse, but it’s hard to conclude, via evidence from reporting channels (such as the ERAI) what exactly the quantitative state is.
Do not misinterpret this lack of evidence that the war is over and that counterfeiting as a major business risk is over as that is not the case!
Please remain vigilant!
Let us take a look at the main reasons behind the lack of reporting figures, for what is an integral issue in today’s supply chain:
Fear of reporting
Whilst identifying the threat of a suspected counterfeit should be a proud boast of a contractor there is the fear that the transaction was even considered and that this might damage the commercial integrity the company and opportunities for future contracts. This is most disappointing as the whole industry loses knowledge because of this. Perhaps industries that are experiencing this problem for the first time are not aware of the reporting channels. Examples of this may be the automotive, industrial and medical sectors.
A lower volume of product being manufactured owing to the pandemic
Could the much reduced volume have led to reduced instance of reporting? Less product in the market place being shipped and being assessed on receipt?
Improvement in component assessment processes
SAE & IPC standards have helped system integrators and end users to put in place the right tools and resources to manage the purchase of parts through non-approved suppliers and to assess them before shipment or at the point of receipt. The successful prosecution and imprisonment of a few traders may also have encouraged counterfeiters into markets where legal action has not been so strong. Additionally, the US DOD have rightfully been very strong in being vocal about the need to improve defence supply chains.
Relevant Standards Do not have High Enough Sampling Rates
The above standards/practices might be adhered to, yet this is still balanced with strong demand; this means sampling only 3 components per batch where counterfeiters only infiltrate 15% of counterfeit into a good batch and might not routinely be caught.
Semiconductor companies’ efforts in technology and in legal efforts
Many of the larger most used semiconductor companies have joined in pursuing legal action alongside trade and policing bodies in Europe and the USA. More importantly they have also embodied serial numbering and anticounterfeiting technology within the parts or the paperwork to make counterfeiter harder to undertake successfully. For the more complex parts this adds little to the price of complex sub-system parts such as memory, processors, programmable logic or high-end A/D and D/A convertors.
An excellent example of this is Xilinx (who for many years have been among the most counterfeited) but have seen a rapid decline in reported counterfeits and those being reported seem to be older generation parts shipped before the new technology was implemented.
The integration of electronics into fewer bill of material parts
For me this is the least understood and the factor with the most influence!
Modern designs use very few parts now and each part may replace tens or hundreds of simple parts in similar older designs. There are therefore fewer individual parts being designed, used, and needing to be purchased. So, less part numbers but more impact as these parts play a bigger part in the functional performance of a given system. The good news with this case is that identification and test costs should fall as less parts need to be assessed.