The Facts About Counterfeiting Can't Be Ignored

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Mr. Roques
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Re: The cost of it all
Mr. Roques   9/21/2012 5:26:55 PM
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When we talk about counterfeits in brokers... are they buying those parts at very discounted prices? The buyer must know that there's something weird going on when a part costs 50% less than the original.

Shouldn't buyers be trained as well?

Barbara Jorgensen
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The cost of it all
Barbara Jorgensen   9/11/2012 9:10:55 AM
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It does seem silly when put that way. Not having to track stuff seems to be the better option. But I don't think OEMs, EMS companies are anyone, for that matter, won't mix products. Moto tried that when it founds its chips were being sold in the gray market for 2x their price: it declared anyone selling to the gray market will be 'cut off.' It never happened. So, given the reality of the market, what are the options? I know some of that will be covered tomorrow on the Webinar.

Bolaji Ojo
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Re: The cost of it all
Bolaji Ojo   9/10/2012 8:55:54 PM
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I agree. I can't think of anyone in this industry whose entire passion is tracking counterfeits and making money from doing this. Tracking fake parts cannot be a part of a company's business at least not until this problem because so gargantuan someone sees an opportunity to make money from it.

owen
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Re: The cost of it all
owen   9/10/2012 5:40:55 PM
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Dan: I think we may be beating a dead horse here, however, with regard to the esteemed Dr. Das of CALCE, as I've pointed out before, he has in the past supported marking of parts and material at its manufacturing point as a means of authentication. No doubt the Doctor has said many things which can't be ignored. For me, I'm a firm supporter of DNA verification, I believe it is a disruptive technology that will have a profound impact, not only in electronics, but throughout the counterfeit world we live in. In the meantime, I look forward to your Webinar. Best of luck. 

http://www.calce.umd.edu/seminars/cws20120124.htm

 




ddeisz
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Re: The cost of it all
ddeisz   9/10/2012 3:08:36 PM
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Barbara,

If an authorized source doesn't go out and mix customer excess purchased product with original product, authorized sources will have original and authorized product ONLY. When you buy from these types of authorized sources, you never get counterfeit.....no DNA marking necessary. The value of the component matters when the 1% market (DLA and DoD) tries to increase the price to the other 99% market.

Dr. Das at CALCE has brought up the fact that original product has a built-in signature just by how it has been constructed. Each and every single part has a unique signature consisting of die attach material, package material, die size, die material, etc.... This is but one example where industry could be involved to come up with a solution instead of a mandate. There are other ways too.

You bring up an interesting point about tracking and it relates to my logistics argument. Who is really doing the tracking here? What I see is somebody selling DNA and nobody tracking. Applied DNA is selling to anyone, not just authorized sources (SMT for example). ANYONE can put DNA on a product and Applied DNA gets to decide who that is. DNA marking says nothing about product authenticity or long-term reliability (handling), just who marked the product.

Dan

 

Barbara Jorgensen
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The cost of it all
Barbara Jorgensen   9/10/2012 1:04:13 PM
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Dan: I think that is the same argument that applies to RFID tags. It is one thing to put tags on a lot or a pallet; quite another to ID each and every component. Yet, if you can't track each component, how can you prove it is authentic, particularly if lots are broken up or kitted? In terms of the value of the component, a failure in a .05-cent part or a $100 part is still a failure, especially if the failure is in the end-product.

ddeisz
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Re: The Facts About Counterfeiting Can't Be Ignored
ddeisz   9/10/2012 9:29:45 AM
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The primary issues with DNA authentication are logistics and financial issues, but there are many more. The SIA has thoroughly documented all concerns directly back to DLA.

From a financial perspective, any cost added must be justified and fully understood. To date, the financial costs are neither justified nor fully understood. Adding $.01 to a part that costs less than $.05 or less makes no financial sense....so now what do you do? Exceptions for low-cost parts? Who makes this call? From a market perspective, long-term system markets contribute less than 1% of the total semiconductor revenue in the world. Long-term markets (DLA purchased parts and all of DoD) do not significantly influence the semiconductor OCM's. There's no way 1% of the market should be increasing the price for the other 99% of the market - it just makes no financial sense.

From a logistics perspective, this is where it gets really interesting. The 1% market is relegated to buy almost exclusively through distribution channels and not on a direct basis. Their revenue is simply not high enough to warrant direct sales most of the time. This means that the DLA mandate is mostly a logistics burden place on distribution and not the semiconductor OCM's. To add to the logistics issue, take into account most of the components that DLA will buy for the next 10 years have already been manufactured and are sitting in authorized (or non-authorized) storage. We have over 5 billion finished devices from over 50 different manufacturers.....the source for many DLA purchases......sitting at Rochester Electronics. Which DNA marker is used? Should the parts go through testing again once they are handled for marking? What does that DNA marker really do to combat counterfeit when we already know the parts at Rochester are FULLY AUTHORIZED to begin with?

In essence, the DLA mandate turns into a penalty (both financially and logistically) for a fully authorized source like Rochester Electronics. We know our inventory is fully authorized and direct from the manufacturer. We go to great lengths to ensure this and it is fundamental to our business model. The SIA and Rochester Electronics remain committed to anti-counterfeit, but this mandate is not the way to go.

 



owen
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Re: The Facts About Counterfeiting Can't Be Ignored
owen   9/10/2012 12:34:39 AM
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Bolaji, The cost of DNA Authentication, from what I have gathered from Douglas Alexander in his June EBN article titled: "Calm Down, Counterfeiters can be stopped", appears to me to make financial sense, here's an excerpt:



Bolaji Ojo
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Re: The Facts About Counterfeiting Can't Be Ignored
Bolaji Ojo   9/9/2012 5:32:33 PM
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Owen, I'd like to add to your message by asking if anyone has done any studies on the financial case for DNA authentication. This industry is happy to consider anything that would further its cause as long as it makes financial sense. Is the case strong enough financially for DNA authentification and if it is not, what would make it more compelling?

owen
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The Facts About Counterfeiting Can't Be Ignored
owen   9/8/2012 8:44:35 AM
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Dan, Exhaustive testing by LMI, Idaho National Labs, the Department of Defense, Altera, SMT, Micron, Raytheon and a host of other world class players support the Defense Logistic Agency recent mandate to use DNA Authentication solutions for counterfeit protection. I do not understand your objection, as expressed in another recent blog, to this technology and would appreciate further explaination. Thank you


 

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