Counterfeiting: The Battle Is On

A few months ago, I was watching a CBS 60 Minutes feature called “Wasteland.” The investigative team was tracking electronic waste (e-waste) from a recycler here in the United States. After the owner of the recycling business had sworn that he was not exporting goods out of the US, 60 Minutes caught him doing exactly that.

CBS set up a sting operation where they offered to buy 1,500 CRTs (cathode ray tubes) and some 500 computers and have them recycled overseas. The owner took the bait like a widemouth bass, and, as 60 Minutes followed the e-waste from Hong Kong to China, they discovered that the CRTs had made their way into a small, poverty-stricken province and into homes of the neediest people in China.

Entire families were engaged in desoldering components over open coal fires. They would separate these components by packaging similar items into small paper cups. They had no masks, gloves, or any other equipment that would protect them from the lead or other hazardous chemical fumes. 60 Minutes said it was like 21st century electronics being disassembled with 16th century tools. The commentator noted that there is about two to three pounds of lead in every CRT. One interview with a home worker showed burns on the worker's hands and arms.

“Why do you do this?” the reporter asked. The worker responded for all his fellow workers: “Because the pay is good.” The gangs that were running the loosely confederated workers were paying $8 per day. Compare that with the legitimate {complink 2125|Foxconn Electronics Inc.} pay of $1.78 per hour, and you have the reason we have a very complicated counterfeiting problem. While this is a technical, safety, and legal problem, it is, at its very root, a human problem.

I had a very wise person tell me that if I wanted to get closer to the root of any problem, I should ask “Why?” no less than five times. Here is the idea: Consider a problem where a particular electronic circuit failed. Why? 1) The regulator burned out. Why? 2) It received too much current. Why? 3) One of the series input resistors shorted. Why? 4) The power supply crowbar circuit diode was the wrong value and the over current protection failed. Why? 5) The wrong part was mixed into the stock bin with the right part. Voila! It is at its core an inventory management problem and not a circuit design failure.

Now ask the five Whys of the aforementioned Chinese worker: Why are you doing this miserable job? 1) My family has to eat or we will die.

Hmm, one Why was sufficient for an adequate explanation. At this level of crime, the “criminals” have very little choice. Remember, our crime started in the US and it involved lying, deception, and smuggling, but most of all, a love for money that far exceeded the sense of harm the business was initiating. It resulted in burned hands and lead poisoning, along with the absolute fact that those same parts being salvaged would find their way back into both the illicit and licit supply chains, potentially causing additional harm if used in critical applications.

At present, the industry spends millions of dollars testing products for authentication. One of the newest technologies being explored is Radio Frequency Identification. RFID and track-and-trace based anti-counterfeiting approaches enable automatic mass authentication. With these approaches, tagged products can be authenticated throughout the entire supply chain, helping to pinpoint counterfeiters' injection points, thus making it possible to detect counterfeits early in legitimate supply chains and deterring further propagation.

RFID technology is being investigated as a near-foolproof means of following inventory from source to customer, as described in a 69-page report funded by the European Commission and titled “BRIDGE” for Building Radio frequency IDentification for the Global Environment. Here is a direct quote from the report: “…serialized Tag ID (TID) numbers currently provide a practical hurdle against cloning, but this is no real protection and can be overcome with a 10 EUR impersonation device.”

If a cloned tag enters the supply chain before the corresponding genuine tag is read, the cloned tag will go unnoticed, and an alarm will only be triggered when the genuine tag is read. As a result, the counterfeit product can already be consumed before the alarm is triggered. In short, build a better lock and someone will devise a new tool for picking it. This one-upmanship may be regarded as a “war of escalation”; brand name companies have to keep escalating their anti-counterfeiting technologies to protect their supply chains.

The RFID technology can also be defeated if the counterfeiter can remove genuine tags and reapply them to counterfeit product packaging. Then the real deal is sold outside the licit supply chain while the fakes are making their way to a reputable wholesaler or distributor. This tag swap is called a one-to-one exchange. The counterfeiter could also actually replace the contents of a shipping container with the bogus products, leaving the tags untouched, while making off with the genuine product. This also is a one-to-one exchange.

Obviously, it is the very nature of the one-to-one exchanges that make them so hard to detect. Interviews with experts from customs organizations and affected companies reveal that the knowledge about particular counterfeiting strategies, routes, and entry points into the supply chain is extremely limited due to the clandestine, illegal nature of this business. This fact alone, combined with the various methods for defeating the latest anti-counterfeiting technologies, makes it fairly obvious that the escalating counterfeiting of electronic components will not be subsiding anytime soon.

Several of the papers I have read indicated that the best way to avoid receiving products traveling through the illicit supply chain is to not buy from independent distributors. Ask your distributor to describe for you its anti-counterfeiting practices before purchasing any products from it. For ICs, black-topping — the practice of removing original markings and remarking parts — is fairly easy to detect with an acetone application that removes the top-layer marking, thus revealing any anomalies in the package surface itself.

But here is the shocker: I am a component engineer with a significant materials background, and, from time-to-time, I purchase large quantities of components at the behest of a consulting client. Sometimes the first few 100 parts and last 100 on a reel are the genuine, un-doctored parts, while the bulk of the reel contains the counterfeits. The reel itself and all the labeling are counterfeit as well.

The level of sophistication of a highly organized and operated counterfeit operation is daunting. Think about the fact that {complink 379|Apple Inc.} is closing entire cloned Apple stores in China where even some of the employees being let go thought they had been hired by Apple. That has got to be the knock-off coup of the century.

In subsequent articles, I will keep you posted on the latest anti-counterfeiting technologies. There are technologists working around the clock addressing this issue. New laboratories are being created with materials scientists exploring methods for detection and authentication processes that, if scalable to rapid, mass identification techniques, will at lease help prevent the counterfeit parts from being used on any new products.

That is to say, the counterfeit business, like the drug war, is not going to stop entirely, but the war is definitely on. I will try to get you, the reader, as close to the technology front as possible.

19 comments on “Counterfeiting: The Battle Is On

  1. DataCrunch
    March 13, 2012

    Counterfeit parts continue to plague industries with no end in sight. RFID, along with other technologies like machine-to-machine (M2M) applications, in which covert and overt tracking devices communicate on cellular and in some instances satellite networks can complement RFID and other passive and active tagging technologies.

    Counterfeit parts, which are effectively inferior parts or even worse totally useless parts, are a major concern across many industries, not only the electronics industry. The pharmaceutical, chemical and medical industries continue to struggle with counterfeiting issues, which can be life threatening. Retailers are also plagued with counterfeiting within their supply chains. As supply chains become more global in nature with increased touch points, counterfeiting will continue to increase exponentially. Unfortunately counterfeiters are becoming smarter as well in their counterfeiting methods.

    To help tackle these problems, companies, manufacturers and suppliers must implement effective asset tracking, track and trace, and in some instances advanced serialization systems. Implementing M2M technologies to assist in tracking and global positioning can enhance the level of security and visibility. These types of solutions will increase visibility within the supply chain and identify weak links that can be addressed and corrected. Companies at a minimum should be starting to investigate strategies and intelligent approaches in tackling counterfeiting.



  2. opeters
    March 13, 2012

    Applied DNA Sciences (APDN) is currently working with the US Department of Defense on what might be the “cutting edge” in Anti-counterfeiting technology. Their initial trials, using botanical DNA, have proved very encouraging, and they have since entered into expanded studies with SMT and Altera. Please check them out and let me know what you think.

  3. dalexander
    March 13, 2012

    Openers, I will be writing about biotech for DNA applications. The tallest hurdle we will have to jump is mass authentication. The DNA ID is at the chip level and we have to be able to have low cost equipment and means for the small to mid-size companies as well. This field of research is too underfunded now and it will be up to private enterprise to crack this nut. There are some really great ceramic (MaterialsScience) technologies coming soon. Feel free to add your knowledge to this topic. The more we know, the better prepared we will all be to fight our personal anti-counterfeit battles.

  4. dalexander
    March 13, 2012

    Dave, No doubt you are correct. We may all end up with many parallel resources for counterfeit detection. There is a methodologies coupled with RFID, called rules based tracking that every company will be pressed into thoroughly verifying their supply chain partner's invulnerability to counterfeiting. Rules based tracks time and sequence as a product moves through the company's known supply lines. Still, that one-to-one exchange issue could be the biggest fly in the ointment. If some employee in the supply chain is compromised, then RFID tags could be switched at birth. Whose baby is it? The wrist band says it is mine, but it doesn't have my DNA.

  5. Barbara Jorgensen
    March 13, 2012

    Douglas: Your anecdote about the RFID tags made me LOL, although I know that wasn't the intention. Here's why it struck me as ridiculous: we continue to develop technology that is supposed to help us protect our technology but we are being outdone by technology at every turn. After 20 years of watching this unfold, I am beginning to believe that there is a low-tech way to deal with this: make sure boards and chips are destroyed when they are supposed to be destroyed. Instead of a 60 minutes crew, install security cameras at disposal sites. Do unannounced spot visits and audits. Inspect the vehicles that are entering and leaving these sites. Increase the penalties for noncompliance. Sure, this will cost money, but not as much as equipping the entire electronics industry with RFID tags and scanning equipment. I am beginning to wonder whether the industry really wants to eliminate counterfeiting at all. After all, anti-counterfeiting technology seems to be a booming market.

    And yes, counterfeiters may still build chips from scratch. But that has to be a drop in the bucket compared to the volume of recycled/refurbished chips that are available from scrap.

  6. dalexander
    March 13, 2012


    I bought a blender after watching a YouTube series “Will it blend?” I mean this blender took an iphone and ground it to black powder. It did occur to me that we should have giant crusher centers where all our E-Waste gets ground to powder and then the recyclable materials are reclaimed. However intriguing the idea of an e-Waste smoothie might be, I'm sure it is not practical. Maybe some other version, but I think a low tech solution that is universally accessible is the best solution of all. Now, what that is, well that is the $64,000 dollar question. I think I just dated myself.

  7. rohscompliant
    March 13, 2012

    Great Article! As an independent supplier of components here is what we face everyday….. we use test houses for authenticity testing of board level components. It is getting to the point where our highly reputable, “customer directed” test houses will not stand behind their own authenticity tests of a component. All after they have decapped, consulted w/ the mfg of the component and have done full functionality tests. This is not the case on every component that requires this testing but the incident rate is becoming more and more prevelant……..and we are using test houses sanctioned and approved by milspec/aero OEMs which build for gvt contracts…………… do we combat this when the pro's won't guarantee authenticity??? Very frustrating …..yet challenging!

  8. bolaji ojo
    March 13, 2012

    Douglas, You didn't address how pervasive counterfeiting is in the electronics industry. Could this be one reason why not too much attention is being paid to this problem? Or is it possible nobody wants to be known as the company whose products are targeted by counterfeiters?

  9. dalexander
    March 13, 2012


    There may be some sensitivity as to who wants to admit in particular that they have a counterfeiting problem with their supplier, but it is not just limited to electronics as I am sure you are aware. I just had a short talk with a company that provides water distillation systems and they said they had a recurring problem with a pump source. At design Con I met a major connector company that said when his customers started complaining about poor product, it turned out that the connectors were bootlegged and the plating was radically different. The part marking was forged. I will be interviewing this vivtimized company's officer soon. I know that drugs, cosmetics, white goods, clothing, jewelery, watches, etc have been “knocked off” for years. How else could I explain owning two genuine Rolex watches that I purchased in Taiwan for $20 each back in the early 80's? When I took them to a watch maker here in the uS, he got out his loop and hemmed and grunted for awhile and then asked me if they were real. I could have purchased genuine Guchi leather goods for about the same price….from the next outdoor stall to the right. The problem is very significant in the Electronics industry because the techniques for counterfeiting run the gammet from factories running two legitimate shifts, with a third shift using less qualified workers and no QC, to empty IC packages…no die whatsoever. In the latter case, the counterfeiter has access to some pretty significant equipment. That means we're up against some big money and organized criminals with well established transport mechanisms.  

  10. dalexander
    March 13, 2012


    Boy! That is ugly! In the coming weeks, I will look at who shoulders the liability for counterfeit parts as it relates to the Supply Chain.. If there is no real accountability, then that implies the motivation level to resolve the problem may be lower than needed. Definitely worth exploring that issue. Thanks for bringing it to our attention.

  11. Barbara Jorgensen
    March 13, 2012

    Douglas–you and me both! I'll counter your $64,000 question with a Bass-O-Matic and raise you an 8-track

  12. dalexander
    March 13, 2012


    Throw is a Willie Mays Card and a pack of Black Jack gum, and you got yourself a deal.

  13. bolaji ojo
    March 13, 2012

    Do you actually foresee a time when the war is reduced to a few skirmishes rather than a full blown assault and efforts to defend the supply chain?

  14. garyk
    March 13, 2012

    Like I said before 95% of the countfiet product comes from CHINA.

    I love counterfiet product Rolex Watches, Purses, Jewlery, I just want to know when I'm buy couterfiet product. I don't want a counterfiet Sony TV, Golf Clubs, Chey Volt made in CHINA, Etc. I really don't want counterfiet units in the Electronics of Military product, Boeing Aircraft, Military weapons, etc.

    Bust some contract manufactors that are buying counterfiet units, take them to trial, put it in the new paper, internet, then lets see what happens.

  15. Brian775137
    March 13, 2012

    I have no experience with non-electronic parts which are being counterfeited, however, it seems to me that we are all missing the point of how to eliminate the counterfeiting which is going on in the electronics industry's supply chains.

    If the counterfeiters did not have any of the scrap material to use for counterfeiting, ( i.e. if you dried up their supply) then their ability to remove parts, remark them and sell them as new parts would be gone.  I believe, as do others, that we would be served best if we did all the scrapping of used, old, unwanted electronic items here in the United States, where the reclamation of the desired materials could be done correctly and under our supervision.  We need to stop shipping this unwanted material offshore, and, instead, do the reclamation here.

    In order to do this, we would have to set up special centers where the scrap is processed.  We could use currently unemployed workers to perform this work, and pay them out of the vast amount of money which is currently being spent on the effort to defeat the present counterfeit problem. We should keep the government out of the process, since we do not need an additional bureaucratic cost, and, instead, use one of the existing professional entities such as UL, or IEEE, or even NASA Goddard instead. 

    Those Component Engineers who have written specifications for parts for years would have the necessary knowledge on how to write the necessary specifications on how to reclaim and separate the desired materials obtainable from the scrap, such as gold, silver, lead and silicon.  Perhaps you might have to throw a few metallurgists into the mix, along with people who know how to get rid of the excess ceramic which would result in order to get an efficient method defined, but there are plenty of unemployed people out there who could do this, and we should tap into this vast resource. 

    Passive parts such as resistors, capacitors, inductors, etcetera, would also be included into the reclamation mix, and anything else which might be of value, such as the metal from old washing machines & dryers, and other things – the list goes on and on.  Let's keep our resources here and make appropriate use  of them, instead of shipping them elsewhere (costly), and paying shipping cost (costly) for the resultant materials to return here as raw product.  The cost of doing this could be shared by a variety of means (TBD), but a majority could come from the cost savings achieved by not having to test everything before using it.

    If this was done here, in the US, it would provide jobs for the unemployed, but, most importantly, it would dry up the material used by the counterfeiters to make their spurious parts.  If it were found that scrap electronic items were still being shipped offshore, the fines imposed on these offenders would also add to the amount of money available to perform the reclamation here in the US.

    Yes, it would require oversight to impose and maintain, but the cost savings would be enormous.  Imagine what it'd be like, if you didn't have to worry about counterfeiting and could only do the testing which is performed routinely.  Do you believe that this would improve your bottom line?  I do.

    Now to address some of the comments in this thread:

    @Dave :  I fully agree with you that the pharmaceutical, chemical and medical industries also have a major problem with counterfeiting, but addressing items outside the electronic industry is not within my purview.  Thus, since this is so far outside my solutions experience, I feel that it is prudent to leave to others better qualified than I am, to solve the non-electronics counterfeiting which is occurring.  My best solution for the electronics industry (how to do it, I don't know for these industries) is to find a means of drying up their supply, but as I see it, this may not a perfect   solution either, since the counterfeiting processes elsewhere are different.

    @opeters & Douglas :  I believe that we are trying to use very technical means to solve the problem, and that maybe we need to step back and look at how we can solve it using the “why” procedure to which Douglas referred above.  In my opinion, if we “why” enough, we'll ultimately come to a simple solution (The easiest things are the hardest to find).

    @Barbara :  Why are we trying to “technology” the problem?  Why not simplify and “cut them off at the pass” – eliminate their source of product to use for counterfeiting.  Put the unemployed here to work solving the problem, don't give any raw material to the counterfeiters in China by not sending it there , make the visits and audits here in the US (much less costly than overseas) and shorten the length of time it takes to obtain the desired raw materials from the waste.  The anti-counterfeiting industry is becoming like the border patrol along our southern border – too much effort expended and not enough results.  Let's use the “KISS” principle.  I won't go into how we could slam the southern border shut – it'd be “politically incorrect”.

    @Douglas :  You're correct – let's go low tech, keep the waste product in the US & use presently unemployed workers to recycle the product here & keep the shipping costs down.  Use unemployed CE's to write the recycling specs, etc., as discussed above and solve your $64,000 question.

    @RoHScompliant:  If I had a testing facility tell me that they would not guarantee the authenticity of a product which they were testing for me, I would cancel the testing contract and look elsewhere for someone who would stand behind their product & services.  There's no excuse for that kind of attitude.   It also implies that they're not doing a good job for you since they don't want to guarantee their work.

    @Bolagi : Product contaminated by counterfeit parts is a well-known problem within the manufacturing industries discussed above (& probably others too).  I believe that we need to cut them off at the foot   by denying them raw material, rather than trying to find out if they've raped us after the fact. Let's be proactive rather than reactive.  Also, let's get the emotions out of it – let's get the problem solved as fast and effectively as possible and work together for the common good (Impossible ?)

    @Barbara:   I wonder what Douglas did with his black powder after he “blended” his i-phone, and in what condition was the blender when he was through.  I thought that I had a twisted sense of humor, but that is a weird thing to do. 

    @ Barbara & Douglas : I'll bump you both up with a recording of “Yes we have no bananas” just to make the game interesting.

    @Bolaji : They couldn't fight a war if there was no material with which to fight.

    @all:  Yes I'm a radical thinker, but I believe that simpler is better.

  16. dalexander
    March 14, 2012


    I think we will see an increase before we see a drop in counterfeit parts. I believe it takes time to educate and focus. Just as companies have documented expectations and agreements with their regular suppliers, I think, in the not too distant future, we will see proactive statements from distributors and wholesalers announcing anti-counterfeiting measures with correlating metrics in order to gain new customers' confidences. It will become a selling and marketing point as they will substantiate their claims with reports declaring so many parts sold with no returns for counterfeit etc. Likewise, customers will require that the suppliers have effective anti-counterfeiting measures in place before commencement of business. In a soon-to-be posted article titled “The Supplier Quality Audit”, I have included both REACH and RoHS Compliance and anti-counterfeiting measures on the survey criteria. If that happens universally, then most companies will move towards an organized and sytematic approach towards thwarting the counterfeiters now working through the various licit supply chains. Maybe then we will see a reduction, but as the saying almost goes, build a better mousetrap and from the ones that got away, you'll create a race of super intelligent, highly evolved, criminally inclined, master race of malevolent rats.

  17. BDownes
    March 14, 2012

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