September 19,
2006
Counterfeiting
Moves Up the Technology Ladder
Counterfeit
components have long been a problem in the electronics industry, but lately,
parts counterfeiters are becoming more technically savvy. In the past, most
counterfeit parts have been passives. These days, you’ll also find counterfeit
semiconductor components. The counterfeiters are also shifting geographically.
In past years, China was the source of most counterfeit parts. Now
counterfeiters are just as likely to be in Eastern Europe.
While
counterfeiting hasn’t necessarily picked up recently, it remains a big concern
in the components industry. “It’s an ongoing steady problem,” says Jeff Ittel,
SVP of the Semiconductor Business Group at the distributor, Avnet Inc. in
Phoenix. “Things are not picking up or getting eliminated.” Ittel notes that
companies that see their products counterfeited tend to keep it quiet, which
give the impression the counterfeit problem is smaller than it really is.
“Suppliers don’t advertise it,” says Ittel. He notes that most of those talking
about counterfeit parts are the victims themselves. “Sometimes an OEM will go
out and talk about it.”
Ittel
agrees that the counterfeiters are becoming more technologically advanced.
“Counterfeiting has picked up a bit in the semiconductor market,” says Ittel.
“It’s moving up the technology chain. So now semiconductor manufacturers have
some IP (intellectual property) issues.”
There
has been a recent surge in counterfeiting lead-free parts. As companies switch
to environmentally compliant parts they increase their risk of running into
fake components. Companies become more vulnerable to counterfeiting when they
spec new parts into their products. As companies switch to RoHS-compliant
lead-free parts, the chances of running into counterfeit parts increases. “With
people changing their BOMs (bill of materials) there are a lot of components
being swapped out, which increases the chance of running into counterfeit
parts,” says Ittel.
Most
counterfeit parts never get caught, since customers don’t know they have fake
parts unless the part fails or the company tries to return it to the
manufacturer. “Most of the counterfeit parts are good or at least at acceptable
quality,” says Tom Valliere, SVP at Design Chain Associates, a consulting
company in San Francisco. “The counterfeit parts you catch are the ones where a
battery explodes or capacitors are leading – you catch those by accident.”
Valliere
notes that he has seen a geographic shift in counterfeit parts. “Most
counterfeit parts are coming from Asia, but it’s unfair to label China,” says
Valliere. “We have found counterfeit parts in the supply chain in Eastern
Europe. This is a global problem, even though Chain is the lightning rod.”
There
are a slew of new laws in China that are designed to curb counterfeiting. But
those new laws are not necessarily slowing counterfeit components, since the
anti-counterfeit laws in China tend to focus on consumer goods. “China now has
very good laws against counterfeiting, but enforcement is spotty,” says Valliere.
“Plus, most of the legal cases are with finished goods such as designer
purses.”
China
has developed two tracks of legal recourse for victims of counterfeiting, one
civil and one criminal. There are also law firms that specialize in bringing
counterfeit claims to court. “China has a legal remedy and a civil remedy, so
you can sue people if you are victimized,” says Valliere. “There are several
U.S. attorneys who practice in this area. They have offices in both China and
the United States.”
Valliere
has also seen the recent shift from low-tech counterfeit parts to counterfeits
of higher tech components. “Most of the counterfeiting used to be with
low-cost, low-technology products,” says Valliere. “But now we’re seeing more
counterfeiting with semiconductor products. That’s increasing. Before, it was
limited to cheap transistors.”
As
for avoiding counterfeit parts, Valliere says it’s a matter of choosing the
right place to buy your parts. “The rule is to know your supplier and deal
directly with the supplier when you can,” says Valliere. He recognizes that not
all manufacturers are large enough to buy directly from suppliers. In these
cases, Valliere recommends buying from a reputable distributor. “If you use a
middle man, use a franchised distributor,” says Valliere. “I would not be
afraid to buy from a distributor such as Arrow Electronics or Avnet.”
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