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The 5 Most Counterfeited Electronic Parts

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.

16 comments on “The 5 Most Counterfeited Electronic Parts

  1. Barbara Jorgensen
    April 5, 2012

    I am fascinated by this list and its implications. I'd love to know–and it might be impossible to do so–how much of this stuff is discarded goods and how much is being processed from scratch. Analog parts are really complex and must be difficult to duplicate. Yet, we know counterfeiters are getting better. This is a real eye openiner.

  2. LAK
    April 5, 2012

    For a real eye opener, see this link:

    http://www.landandmaritime.dla.mil/downloads/psmc/Apr10/Loenstein100420PSMCCounterfeitBrief.ppt

    Also you might want to consider attending the 2012 DMSMS Convention where Suspect Counterfeits are addressed from a DOD/DLA standpoint:

    http://www.dmsms2012.com/

    As a side comment to the article, I suspect that the top five reported IHS categories are the easiest to find counterfeits, not to mention the highest margin parts.  When you look at the pictures in the Power Point presentation above, passive devices are also being counterfeited and there is a lot of them.

    While the high-reliability industry is in the limelight because of the recent Levin-McCain senate meetings showcasing the problem, a vast majority of the part numbers in the ERAI database are commercial part numbers.  COTS parts are an obvious opportunity to get counterfeits into a military hardware supply chain, the commercial market is a far easier target to hit.

    After the intrusion of counterfeits seen going into the market that I have seen by watching daily ERAI reports, I have taken to buying service contracts on all my high end electronics purchases at home.

    It used to be purses that were counterfeited, but now it is anything that can turn a profit – pharmaceuticals, assembly equipment, even packaging materials.  It's downright scary.

  3. vimalkumarp
    April 6, 2012

    This is really an eye opening article. There was a repsort in Electronic design news last year depicting the increase failure rates and also the impact of counterfeited electronic part on the reliability aspects. It was a shocking report.

  4. vimalkumarp
    April 6, 2012

    Another menace is the usage of salvaged components. Components which are removed from old or scrapped instruments are given a facelift and are sold as new components. These are alarming facts when you think of the possibility of those components beign used in medical and other mission critical/ life critical applications.

  5. bolaji ojo
    April 6, 2012

    IHS didn't provide information on the estimated value of the fake parts market. I assume even a fractional percentage of a $169 billion market must be worth a lot to the counterfeiters.

  6. _hm
    April 7, 2012

    @Bolaji: I have also seen many passive electroincs parts with counterfiet. This is very complex problem and it create many quality and reliability problems. Is there easy way to get rid of this?

     

  7. syedzunair
    April 8, 2012

    Is there easy way to get rid of this?

    @_hm:

    There are many ways of identifying counterfeit products. For example, X-Ray inspection, bar codes, RFID tags, electrical inspection etc. However, unfortunately there is no easy way of getting rid of this. 

    Counterfeiters are becoming more and more efficient with time. They are devising new startegies to infiltrate these detection mechanisms. Firms, on the other hand are trying their best to identify such products in their supply chain. 

  8. Eldredge
    April 8, 2012

    These 5 parts may also be the easiest/highest volume salvage parts that the couterfeiters can access, as well as high volume on the demand side.

  9. Barbara Jorgensen
    April 9, 2012

    IHS primarily tracks the semicondcutor industry–semis being the largest most lucrative components market. But with 80 percent of a PCB being IP&E, counterfeiting is just as big an issue. In particular, when tantalum is scarce, counterfeit capacitors begin to crop up. Even a shortage of certain packaging can prompt an outbreak. There are so many stops along the manufacturing and packaging process that a fool-proof system seems impossible.

  10. prabhakar_deosthali
    April 10, 2012

    For a counterfeit part to get into a product, it must pass through the inward inspection and has to show same functionality of the original part.

    I am interested to know at what point in time/life cycle of a product does one detect that a part is counterfeit?

    In my life time as an engineer we used to get counterfeit parts but in most cases they used to get filtered out in the inward inspection process itself and most of the time such parts had been hastily bought by our purchase people from unauthorised sources.

  11. bolaji ojo
    April 10, 2012

    The danger counterfeits pose is that they may not be detected until they fail in actual use. When millions of parts are being used, it's next to impossible for a company to test each item before they are incorporated into a finished device.

  12. Anne
    April 19, 2012

    Counterfeit electronics and the semiconductors they are built on, are a growing threat to the health and safety of people.  As microelectronics are found in an increasing number of mission critical applications like life saving medical devices, automotive safety systems, airplanes, and communications equipment.

  13. Adeniji Kayode
    April 19, 2012

    I agree with you Bolaji, Companies should order for these components from a certified manufacturers.

  14. Adeniji Kayode
    April 19, 2012

    well counterfeit electronics might be hard to eradicate completely due to lots of reasons, the losses are great and multidirectional in the sense consumers suffer from the consequesces and the manufacturers of such devices suffer it too but who is to be held responsible?

  15. syedzunair
    April 19, 2012

    @Adeniji: 

    I think manufacturers are trying their best to combat counterfeit products from entering the legit supply chain. While the consumers are also opting for legit distributors to get their products. Overall, progress is being made to detect these products when they enter the supply chain. 

    I think firms are playing their role to counter this but still we need better technology to identify exactly when these products enter the supply chain. So that they may be removed from the legit products. 

     

  16. JADEN
    April 20, 2012

    These counterfeit chips are created from salvage waste materials.  If the electronics manufacturers can have in place a good Quality Control service, the products fallout can be reduced if not totally removed.

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