October 9, 2013
Article highlights the scale of counterfeit electronics and the problems they bring.
The article on IEEE Spectrum discusses the risks faced when using counterfeit electronics, either with or without prior knowledge, noting that with the global trade in recycled electronic parts “growing rapidly”, there are recyclers who do not act “ethically” and some old components are “misused”, with relabelled or altered parts “masquerading as new” often failing prematurely “in critical systems”, including for example cars and airplanes.
Noting that “with proper screening, electronics components could be safely reused in some low-cost applications”, the article goes on to say that unlike non-electronic counterfeit products, products using counterfeit electronics are harder for consumers to identify due to parts “hiding deep within products and systems”. It explained: “Very few of us open up gadgets to inspect the components inside, and even if we did, almost none of us would know how to distinguish good components from bad. Unethical recyclers of electronics parts don’t need to fool everyone in a supply chain; often they just need to fool a single company among the many that sit upstream from an end product”.
In terms of the supply chains, which the article states are “built largely on trust”, recycled parts may pass through a number of different “intermediaries” before being included in a final product and to remain undetected “need only function well enough to pass a few tests” conducted along the way. These tests rarely aim to identify counterfeit parts, instead focusing on accidental defects and design flaws, making it fairly simple for counterfeit parts to pass by unnoticed.
While a US law was put in place in 2011 obliging government contractors to be “more diligent” in screening parts for military systems in order to identify counterfeits, there’s much less screening present in the commercial community, and so “consumers and businesses that purchase electronics devices and systems are often unaware of the potential risks posed by the parts they contain”.
The process of counterfeiting is described as beginning “at the foot of a mountain of discarded electronics that grows by some tens of millions of tons annually”, with unethical recyclers adopting a number of methods to pass off old and often faulty parts as new and relabeling parts by sanding off the original markings and applying a black coating “almost indistinguishable from the original topcoat” and then printing new text onto the coating.
These parts can cause risks such as having lower quality and a shorter lifetime that consumers would expect. The recycling process itself can damage the part due to the high heat, water, chemicals and physical impacts they undergo; and unsuspecting buyers could use them in “environments where excessive temperature, humidity, or vibrations could lead to premature failure”.
The article states that according to 2011 findings of the Semiconductor Industry Association, the cost of electronics counterfeiting is at $7.5 billion (€5.51 billion) per year in lost revenue, resulting in the loss of approximately 11,000 US jobs; with the issue also affecting economies on a global scale.
While recycling reportedly accounts for between 80 and 90 percent of counterfeit parts in circulation, the article notes that counterfeit products also include “parts that are made in an authorised production run but fail testing and are sold anyway, […] excess inventory intended for the scrap heap that isn’t disposed of properly, and some parts that are simply phony from the beginning”.
The problem of counterfeiting has grown in recent years, with further statistics from a 2010 US Department of Commerce report in the Department of Defence supply chain finding that between 2005 and 2008 the number of companies reporting counterfeit chips “more than doubled”; while market intelligence firm HIS iSuppli stated in February that “reports of counterfeit parts have soared dramatically in the last two years”.
In terms of rectifying the issue of counterfeiting, the article states that certain technologies can be used, such as companies scrutinising packages for any signs of damage and performing detailed analyses such as X-Ray, scanning electron, or acoustic imaging to look within a package for any potential signs of counterfeiting.
DNA sciences are also beginning to be used through “mixing DNA synthesised from gene sequences found in plants into the ink used to stamp chip packages”, with companies keeping the gene sequences a secret so that no one else can make or verify the marks.
However, the article points out that “detection technologies can identify problematic components only after they have entered the supply chain” and so making sure that “far fewer” counterfeit parts enter the supply chain to begin with by making it more difficult for counterfeiters to operate would be a more effective way of solving the problem. This could be done by tracking parts as they move through the supply chain and using the information to “call out unethical suppliers”, with “more effective systems to log, reports and share information” about such suppliers potentially impacting on their business. The article adds that while such systems are in place on a small scale in some governments, “we need more companies […] to be aware of the problem and to improve their efforts at detecting, tracking and reporting counterfeit parts” on an international level.
Furthermore, governments can help by “closing regulatory loopholes” allowing counterfeiters to operate and by “increasing whistle-blower protections to encourage reporting”.
Categories : Around the Industry