If you’ve been in the electronics industry for any length of time, you’ve heard about counterfeit components. In a recent government study, 39% of OEMs (Original Equipment Manufacturers) say they have been directly impacted by counterfeits. Learning to identify red flags is critical to avoid becoming a victim of this potentially brand-damaging problem. Whether you build your own products or use a Contract Manufacturer (CM), safeguards should be in place to protect your build quality and reputation.
What Are Counterfeit Parts?
A simple definition would be “an electronic component that is misrepresented by any source in the supply chain process.” This can include misrepresentation by the manufacturer, supplier, distributor, contract manufacturer, or any other supply source.
"The DOD supply chain is vulnerable to the risk of counterfeit parts, which have the potential to delay missions and ultimately endanger service members," the Government Accountability Office (GAO) reported when congressional attention to counterfeit parts in 2011 and 2012 led to increased reporting. Sadly, most of the counterfeit parts came directly from contractors who, in most cases, had unknowingly purchased these counterfeit components.
Where Do Counterfeit Parts Come From?
In most scenarios, unauthorized or counterfeit parts come from reclaimed or scrapped parts that are refinished in some way and represented as new. Unfortunately, there are many ways in which a dishonest company can create counterfeit components: the simplest way is to relabel, refurbish, or repack a component that has gone End-of-Life (EOL), obsolete, did not pass Quality Control (QC) inspections, or was faulty to begin with, and sell that component as though it were brand new from the manufacturer.
Who Is Most Susceptible?
Anyone who purchases parts from a selling source is capable of falling prey to the practice of counterfeiting. Whether you are a buyer for a CM or an OEM, you can be misled into purchasing a counterfeit component if you’re not careful. The level of sophistication in counterfeiting continues to improve and is therefore getting more difficult to identify. In 2011 alone, the Government Accountability Office (GAO) reported that 40% of the supply chain is suffering an adverse impact from fake or defective parts.
Some factors that may make a manufacturer more susceptible to purchasing counterfeit components are those who:
How To Avoid Counterfeit Parts
The two easiest, and perhaps most obvious, ways to avoid purchasing counterfeit parts are to purchase parts directly from the source or from a distributor franchised with that source. Sometimes you may need to work with new suppliers when sourcing materials due to availability or timelines. When this happens, be on the lookout for counterfeit parts.
The first step in identifying a counterfeit part is through traceability. Recent changes in regulations require most parts to be traced back to their origin, so your supplier should be able to provide the proper tracking documentation. Be sure to review the documents and look for any strange occurrences. Things like random font changes and layout changes can be red flags that the documents have been forged or altered.
Visual inspection is commonly used to identify suspect parts. The downside to this is the sheer amount of knowledge needed to do this properly. At first glance, almost all counterfeit components will deceive someone who is not trained to look for specific issues.
Examples of what to look for:
Internal inspection, known as decapsulation, is an excellent way to verify a component. Unfortunately, most end users lack the proper equipment to inspect the internal elements – X-ray technology is the best way to inspect the component effectively and identify the dies, workmanship, and proper internal structure. Compare a suspect counterfeit to legitimate components and the differences should be noticeable.
Choose The Right Supply Partners
Counterfeit parts are a pervasive issue in the manufacturing industry and diligence is required to avoid placing counterfeit components on a build. Over 39% of manufacturers were affected by counterfeit parts between 2006 and 2010, and that number has since grown. With proper awareness, oversight, and the right supply and manufacturing partners, you can minimize your risk.