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2011 sets new record for counterfeit electronics

IHS iSuppli says most counterfeits come from Asia, at a rate of one every 15 seconds

Internet Security Threat Report 2014

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The analyst also warned that the biggest risk is obsolete parts, especially in the defence and aerospace industries, with more than one in every two counterfeit parts shipped during 2001-2011 obsolete.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. ®

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