Investors love winners, and so do counterfeiters. That's why they've been targeting a pool of semiconductor products that together make up more than half of the total chip market, according to data from the research firm IHS Corp.
The electronic parts most targeted by counterfeiters account for about $169 billion of the slightly more than $300 billion semiconductor industry, IHS said in a report. The top five part types are analog ICs, microprocessors, memory ICs, programmable logic, and transistors. “Together, these five component commodity groups accounted for slightly more than two-thirds of all counterfeit incidents reported in 2011.”
The components are attractive for counterfeiting because they ship in huge volumes. Their commodity nature also plays a role — the components are widely available and are used across many of the major electronic markets, including personal computers, industrial and automotive equipment, and wired and wireless communications.
The good news for the industry is that manufacturers are reporting counterfeiting more frequently these days. Previously, companies didn't want to disclose these incidents because they worried the mere whiff of illegality would taint their reputation and hurt sales. However, with increasing publicity and global government actions identifying the impact on military and communication systems, more companies have introduced steps to notify authorities immediately about fake parts in the supply chain.
IHS said in a press release on its report:
For many organizations, addressing the costs and risks associated with counterfeits is not just important, it’s also regulated. On December 31, 2011, President Barrack Obama signed the H.R.1540: National Defense Authorization Act for Fiscal Year 2012. The act mandates that participants at all tiers of its global defense supply chain implement processes and systems to analyze, assess and act on counterfeit and suspect counterfeit electronic parts.
While the top five most counterfeit or fraudulent parts represent a major portion of the counterfeit problem, multiple other types of devices also are vulnerable to counterfeiting and fraud. In all, IHS has data for more than 100 types of integrated circuits, passive components, electro-mechanical devices, and other parts with counterfeit incidents reported against them.