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Counterfeit Electronic Component Risk Mitigation
Wednesday, April 04, 2012 | John M. Radman, Renee J. Michalkiewicz and Daniel D. Phillips, Trace Laboratories Inc.

A worldwide epidemic of counterfeit electronic components is flooding the market and affects the supply chains of all industries. It is estimated that the financial loss due to counterfeit components is well over $10 billion per year.

According to Thomas Hallin, an intellectual property attorney at Greensfelder, Hemker & Gale, P.C., in Chicago and former chief litigation counsel in the IP Practice Group at Ford Motor Company, “The multi-billion-dollar counterfeit industry, particularly in China, is costing the U.S. auto industry billions of dollars in annual sales and precluding the employment of hundreds of thousands of workers because of lost business.”

Hallin added that the counterfeit parts problem also raises important safety issues.1 With regard to high-end electronics specifically, “the Alliance for Gray Market and Counterfeit Abatement (AGMA) estimates one out of every 10 IT (information technology) products are counterfeit or contain partial counterfeit parts.”2 Counterfeiting itself becomes profitable when scrapped components, components from recycled products, or inexpensive components can be “remarked” and sold as a new, more expensive, higher reliability version. Much of the effort today has not been placed on preventing counterfeiting but rather screening components to identify and remove counterfeits before they are used in a finished product.

Figure 1: Double marking evident on part on left.

As with any counterfeiting, be it money, designer clothing, or electronic components, there is a battle between the counterfeiter and the industry affected. Each tries to better its ability to either fool or recognize the other. Counterfeit components entered the marketplace and the electronics industry countered by adapting a variety of existing test methods to help screen components for authenticity.

These methods have proven effective in detecting fakes before they enter the product stream and have become the conventional techniques used in the war on counterfeiting. They are becoming more and more familiar to engineers and purchasing agents and are often added to purchasing documents to ensure the authenticity of incoming supplies. Unfortunately, these techniques and their limitations are also becoming more familiar to the counterfeiters themselves. With this knowledge, counterfeiters are able to improve their craft and utilize materials and processes that can allow a fake component to evade detection.

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