The good news may finally be overtaking the bad news
If you’re “in the industry,” you’ve seen a flurry of articles recently about the Senate Armed Services Committee Hearing on Counterfeit Electronic Parts in the Department of Defense (DOD) supply chain. The hearing addressed the March 2011 investigation into counterfeit electronic parts in the DOD supply chain. The hearing revealed bad news and good news, but for once, it seems that the good news may be winning.
There are cost-effective strategies to avoid counterfeits – strategies that are supported and promoted by the Anti-Counterfeiting Task Force (ACTF) of the Semiconductor Industry association (SIA), which was formed in 2006 as a result of an anti-counterfeiting symposium held by Rochester Electronics. Rochester, Texas Instruments, and other industry leaders, were instrumental in the formation of ACTF.
In summary, the hearing addressed the following points:
- The committee defined counterfeits as, “both fakes and previously used parts that are made to look new, and are sold as new.”
- Counterfeit electronic components have a high failure rate and pose a serious threat to life and to national security.
- The majority of counterfeit parts originate from China.
- Most of the Chinese parts are salvaged from electronic waste, tidied up, remarked, and sold, mostly over the Internet. Age and appallingly bad handling make them practically useless.
- The DoD is vulnerable to receiving counterfeits because the parts they need are manufactured for only a short time, while the defense systems they need the parts for typically have long life cycles. The DoD often turns to independent distributors or brokers and receives counterfeit parts.
- Most counterfeit “incidents” go unreported to either government agencies or industry organizations.
The bad news
Witnesses from government agencies, the Semiconductor Industry Association (SIA), and various companies affiliated with the industry provided testimony that brought some of the bad news to light:
- The Chinese government appears to be turning a blind eye to the entrepreneurial endeavors of thriving counterfeiters.
- The Internet quickly and cheaply connects counterfeiters to a worldwide marketplace. Some counterfeiters run multiple virtual “companies.” When one gets into a little trouble, it just disappears, to be replaced by a “new” one days later.
- Testing is not a viable way to verify the quality of a semiconductor because accurate testing requires intellectual property from the original maufacturer. In addition, counterfeiters often sprinkle some good in with the bad, or ship a “sample” of good parts before shipping the bulk of the order, which are counterfeit.
- Counterfeiters keep one step ahead of the industry. As technology in the industry advances, so do the production and marketing strategies of the counterfeiters.
- Current Homeland Security regulations prevent officials from sending information to original manufacturers that could help identify counterfeits.
The good news
Lt. Gen. Patrick O’Reilly is director of the Missile Defense Agency (MDA). He testified at the hearing and outlined the serious and successful steps taken to eliminate counterfeit electronics in missile defense systems.His agency found that 61 percent of independent distributors couldn’t produce documentation that proved the origin of their product. MDA has subsequently banned all contractors from buying from independent distributors without permission from MDA.
Because of the success of the MDA plan, Senate Armed Services Committee Sen. Carl Levin and Sen. John McCain, the panel’s ranking member, will take MDA’s procedures into consideration when they draft new legislation that will be included in the 2012 defense authorization act.
The really good news – what you can do now
Testimony at the hearing by industry experts, including Brian Toohey, president of the SIA, reaffirmed the semiconductor industry’s best practice: buy only from the original manufacturer or their authorized distributors. In an ongoing campaign to promote this practice, Rochester Electronics has partnered with the SIA to create the Electronics Authorized Directory (http://www.authorizeddirectory.com), a comprehensive and searchable resource where buyers can find authorized distributors.
And even more good news? Most manufacturers believe that, when they install that last authorized part, their only alternative is to risk using unauthorized parts or spend huge amounts of resources on system redesign. But there are other, safer and more cost-effective solutions. Rochester Electronics, for example, provides never-ending supplies of “mature” and end-of-life semiconductors through continuing manufacture, replication, and special product agreements.