2011 sets new record for counterfeit electronics
IHS iSuppli says most counterfeits come from Asia, at a rate of one every 15 seconds
Asian countries led by China are responsible for the vast majority of reports of counterfeit electronics parts, which have reached 12 million over the past five years in a potentially lethal development for the global supply chain, according to analyst IHS iSuppli.
Citing data from supply chain monitoring organisation, ERAI, the market watcher claimed that 2011 was a record year with 1,363 counterfeit incidents reported.
However, with each incident potentially involving thousands of individual parts, IHS calculated that over the past five years there have actually been reported 12 million, or one counterfeit part every 15 seconds.
Although the US led the way in 2011, as the country where most reports were logged (33 per cent), China was just behind with 32.3 per cent and when combined with other Asian countries such as Japan (1.7 per cent), South Korea (4.3 per cent) and Singapore (7.6 per cent) the total reaches close to 50 per cent – the largest for any global region.
Furthermore, the countries where the counterfeit parts originated are overwhelmingly Asian, with Malaysia, South Korea, Japan and the Philippines accounting for 64 per cent, IHS said, with the caveat that counterfeiters are adept at hiding the true origin of their products.
When contacted for further comment, IHS referred The Reg to some previous statements by the firm’s director of supply chain product marketing Rory King, who has said that in some cases these rip-off parts could endanger lives.
“Counterfeit parts often are often cheap substitutes or salvaged waste components that fail to meet strict military and aerospace specifications, leading to potential failures. Even more concerning, these failures put lives at stake,” he said.
“A faulty counterfeit analogue IC can cause problems ranging from a mundane dropped phone call to a serious tragedy in the aviation, medical, military, nuclear or automotive areas.”
The analyst also warned that the biggest risk is obsolete parts, especially in the defence and aerospace industries, with more than one in every two counterfeit parts shipped during 2001-2011 obsolete.
Obsolescence management, lifecycle planning and vigilance in managing the supply chain are crucial to reducing the number of counterfeit goods, it added.
One law which could help tighten things up, at least in the military sphere, is the new National Defense Authorization Act (NDAA) which imposes strict penalties on any company supplying rip-offs to US government military and aerospace programs, said iSuppli.
The report comes just a month after IHS highlighted the challenge facing the semiconductor market after revealing that the five most common types of counterfeit parts there represent $169 billion (£107bn) in potential annual risk for the global electronics supply chain. ®
Don't forget the absolutely horrible epidemic of "capacitor plague" that struck the computer and electronics industry about a decade a go due to many Taiwan-produced electrolytic capacitors that had a botched formula for their electrolyte. I mention this as a massive example of "counterfeit" parts causing problems instead of just "defective" parts causing problems because the electrolyte formula was originally proprietary to a Japanese company, but then was stolen and delivered to the Taiwanese manufacturers in question through industrial espionage. Unfortunately, the worker that stole the electrolyte formula copied it down incorrectly, so the millions of knock-off capacitors that the Taiwanese manufacturers produced weren't stable and leaked or exploded after a relatively short amount of time. Dell alone lost around $300-million identifying, repairing, and replacing computer components that contained these bad capacitors. In fact, I personally still have a pile of early 2000's-era computer equipment ranging from computer motherboards to terminal servers with blown or leaking electrolytic capacitors in them that I still need to re-cap and repair if I ever want to get some of them to work again.
I also have heard first-hand tales told to me about the plague of counterfeit steel bolts being produced by places like China. They are labeled as being made of a particular strength and quality of steel when in reality they are made from much poorer and weaker steels. It has gotten so bad that now many organizations are having to take the time (and money) to test all of the bolts that they buy to make sure that they actually meet the specifications that they are labeled for to keep these potentially dangerous counterfeit bolts from being accidentally used in their products.
This counterfeit part problem can be potentially very serious depending on what kind of system the part is installed into and how off-spec the part is. There are real reasons for organizations such as the military, the aerospace industry, and even consumer electronics manufacturers to be extremely concerned-- should the device that fails due to counterfeit parts be particularly important, it could mean the loss of a large amount of time and money, or in some cases possibly even lives.
Re: I should have liked more details in the article
I second that comment. You could be ISO-9000 certified to build cement life preservers as long as you have a documented process and follow that process.
As to counterfeit parts, despite my company's diligence in parts control and only buying pedigree'd parts from certified supply chain vendors, we still have problems with some counterfeit parts getting through. Its a big problem which takes more and more time and resources to address.
Re: I should have liked more details in the article
ISO 9000 certification is a joke. All you have to prove is that all your documentation is correct.
Also, for your final point, I cant speak for the US military, however, the US Military's suppliers have been duped repeatedly. Just do a google search for "counterfeit military parts"