Organizations live and die by brand reputation. A single counterfeit or low-quality part can erode the quality of the whole end product. Criminals follow the cash. This handful of truths sums up the state of the electronics industry and counterfeiting.
Counting the cost
Although firm figures are hard to come by, it is generally agreed that counterfeiting in the electronics industry is a growing problem. Based on estimates culled from ERAI Inc., between January 2007 and April 2012, more than 12 million parts were involved in 1,363 incidents of counterfeiting reported to ERAI, which monitors, investigates, and reports issues affecting the global semiconductor supply chain, said Rory King, director, supply chain product marketing at IHS Inc., in a written statement.
"Most people would agree that in the '90s we saw counterfeiting, but it was less sophisticated and of poorer quality," said Tom Grace, brand protection manager for the Americas Electrical Sector at power management vendor Eaton Corp. "Now, better manufacturing techniques by counterfeiters and better efforts in creating those parts [have] made it more difficult to identify counterfeit products in the market and supply and distribution chains. I like to think that most counterfeits are traded unknowingly."
Today, understandably, aerospace and defense organizations have the highest level of awareness of the problem of counterfeiting. "Companies in aerospace and defense have stepped up to the plate and put processes in place. As a whole, they are much more aware than in the past and are doing a far better job of catching counterfeits," said Mark Snider, founder and president of ERAI. "We are finding fewer and fewer components making it into the defense contractor's supply chain."
Increasingly, though, commercial and consumer electronics OEMs are also looking at ways to identify counterfeit parts and keep them out of the electronics supply chain. "The medical and nuclear sectors are late adopters of anticounterfeiting processes," said Snider. "The commercial side is a different animal because the life cycle of products is so short and so much of it is so inexpensive. Their level of concern isn't as great as some where there is life-critical equipment."
Depending on trust
OEMs need to partner with trusted organizations when buying products. "Our first and foremost statement to the market is that you need to buy all products from the authorized channel of the component manufacturer," said David Moore, sales manager, Defense/Aerospace, for Avnet Electronics Marketing. "We have a trail of authenticity from the shelf and we provide that to the customer."
Further, authorized distributors create and maintain a clear process for handling and verifying returned products, Moore said. At Avnet, for example, low-cost and defective product returns are scrapped. Higher-cost product returns are inspected to ensure that the same product that was sent out was returned. "The final thread is that we systematically sequester those products in a way that ensures that we never pull or ship it to a defense, aerospace, or aviation customer."
Distributors can also help organizations build anticounterfeiting technologies into the devices that they buy and use. "We suggest devices and device families that we believe can help them with counterfeiting and reverse engineering to protect their product," said Doug Adams, senior vice president, Global Programming Operations, at Avnet Electronics Marketing.
For example, Avnet offers Renesas Electronics' smart card IC technology. Renesas' Board ID solution authenticates Board ID devices in machine-to-machine applications. The anticloning capabilities of Board ID ensure that only genuine or certified components can be used in the system, while IP protection safeguards the IP on the circuit board. Avnet's programming center has been certified to meet the stringent programming and security requirements for Board ID.
Since counterfeit components are a persistent and unavoidable reality in the supply chain, organizations in every sector need to consider a multipronged strategy that works toward mitigating the risk, rather than seeking to completely eradicate the problem. Throughout the supply chain, those making, handling, or purchasing electronic components are leveraging an array of methods to foil counterfeiting efforts.
"I've seen uses for virtually all of the anticounterfeiting methods, and certainly it's common to use a layered approach," said Eaton's Grace. "By layering a combination of methods, you can look at the product, the packaging, and other labeling and come up with a more robust solution."
The list of solutions that are often used is extensive and includes supply risk solutions and X-ray and tracer equipment to perform input and output testing, said Debra Eggeman, executive director of the Independent Distributors of Electronics Association (IDEA).
Choosing the right solutions to help mitigate the risk of counterfeiting can be a complex proposition. Dr. Diganta Das, a researcher at the Center for Advanced Life Cycle Engineering (CALCE), offered a list of must-have attributes of such a solution, culled from conversations with prime contractors. For wide adoption, Das said, anticounterfeiting technology must:
- Be secure and covert
- Be easily and quickly verifiable by the end user and in the field (if possible)
- Be low cost (less than 5% of product cost)
- Be compatible with manufacturing process (for example, cleaning, SMT reflow, etc.)
- Survive for life of the product, and possibly longer
- Be able to survive end item and product qualification testing
- Be secure from reverse engineering or cloning
- Not compromise end item reliability
- Include antitampering features for the higher assembly (if possible)
Further, the breadth of the supply chain, from component to end consumer, provides many entry points for counterfeiters. OEMs, then, need to safeguard both purchased components and manufactured products.
Read the rest of this article in the Avnet Velocity e-magazine, "Building a Defense to Confound Counterfeiters."