The best route to avoiding counterfeit electronics

It’s been discussed and analysed for years, yet there does not seem to be an end in sight for the trade in counterfeit electronics.

Of course, we shouldn’t overstate the case. The vast majority of electronics supplied to companies throughout the world are perfectly above board. Nonetheless the numbers are significant. The UK electronics association estimates that counterfeit goods could cost the UK economy £30billion annually. And according to suppliers, distributors and buyers the problem is getting worse.

The dangers of electronic counterfeiting were highlighted once again by the US’ recent request to visit notorious counterfeiting sites in Shenzhen. As US senator Carl Levin stated, “Counterfeit microprocessors were purchased by the Air Force for use on the F-15 operational flight control computers,” representing a serious security and safety risk.

The worry of the US officials aligns with the British Electrotechnical and Allied Manufacturers’ Association (BEAMA) stating that ‘China remains a problem area as 95% of counterfeit products that potentially could kill are made there.’

Regardless of where counterfeit goods are actually being produced, reduced availability and discontinued components continue to fuel the market for counterfeit semiconductors, which is currently experiencing a mini ‘boom’.

If there is one cardinal rule that electronics buyers should follow to reduce the risk of buying counterfeit or substandard parts it is obviously to know the source of the parts.

However, the growing pressure to buy components at the right price has let the online trade of electronic components flourish, with attendant risks. Better to make sure, first and foremost you have a relationship with your supplier.

The approach to counterfeit avoidance should, in a sense, be the same at every level of the supply chain: the company passing on the goods should seek to protect its own reputation as well as avoiding any expensive, long term comeback caused by failing parts.

Buying components online has made it increasingly difficult to track the source of the parts and to guarantee their authenticity. A lot of products are shipped directly from the manufacturer to the OEM.

While many manufacturers actually have quite decent test procedures in place, many others do not have rigorous enough testing to guarantee authenticity. And there are inherent risks in only testing components at the beginning of a potentially long supply chain.

And while the vast majority of component manufacturers are thoroughly honest, unfortunately from time to time unscrupulous goings on happen. Thinking about counterfeiting inevitably leads customers to think about the ‘human factors’ that might introduce counterfeits to the supply chain in the first place, or lead people to attempt to cover them up in order to maintain the bottom line.

Manufacturers have big resource/overhead heavy businesses to take care of, and, to them, genuine goods replaced with counterfeit goods represent stolen business. Companies would look to recover these costs somehow. Some buyers would see this as a reason to be nervous about leaving authenticity testing entirely in the hands of manufacturers. It’s not necessarily a big risk, but it’s perceived to be *a* risk.

With this in mind, many distributors own significant test facilities and test in house. However, it is by no means guaranteed that even distribution house test results meet industry standards, as there is often no external control approving the testing process and outcomes. Instead, the inspections are generally measured by the distributors’ own standards. Standards and checklists to determine component authenticity and confirm functionality defined by the electronics industry defined are not binding.

And again, while the majority of distributors are totally above board, buyers return to the question, ‘who could potentially have a vested interest in ensuring the parts I buy get through the process and who will be relatively neutral?’

There’s always the option of having parts tested exclusively at the buyer end. However, whether this takes the form of in house testing facilities or third party testing houses off site, this is likely to be expensive. Buyers will simply not have the economies of scale enjoyed by component manufacturers and distributors.

Clearly the best way to ensure vigorous, unbiased, assured testing for counterfeits is to employ the services of a dedicated third party test company, but have them located on site.

This provides a best of all worlds. Essentially, distributors can guarantee quality to their clients and pass on economies of scale, while at the same time assuring buyers of their limited influence over the testing process. Buyers also get commercially tried test expertise.

But inspections alone are not the only means of guaranteeing the authenticity of products. That’s why more and more independent distributors are encouraging total process transparency, inviting buyers and quality engineers to visit their third party testing facilities. Independent distributors know of the buyer’s scepticism, wanting to make sure that their sourcing and testing processes are as transparent and accessible for inspections for every customer as possible. Look for a company that will willingly divorce itself from total, oblique control of the testing process and is prepared to offer cast iron guarantees to back up the quality of the components it sells.

Counterfeiting is not something that is ever likely to go away forever, but an intelligent electronics company can mitigate against it by understanding something of the processes involved and the relative advantages of each approach.