Delays have become the norm for the electronics supply chain. Component lead times extend as far as 50 weeks and the wait times for quality control (QC)-related test services span two months or more. Only a small network of test houses serve independent distributors that rely on them to verify the form, fit and function of devices sourced in the open market.
The ongoing component shortage has prompted many electronics manufacturers to source beyond their approved vendor lists. Open-market distributors buy and sell excess, obsolete and hard-to-find parts. This network increases the risk of procuring counterfeit components which can re-marked, faked, or don’t perform to spec.
Top-tier independents differentiate themselves by guaranteeing the quality of the devices they sell and testing verifies their authenticity. Fusion Worldwide in February decided to expedite its QC services and acquired test house Prosemi Pte. Ltd., based in Singapore.
“One of the biggest problems for independents has been the lead time for test houses,” said Paul Romano, chief operating officer for $2.5 billion Fusion Worldwide. “We have a shortage of chips which has impacted a number of market dynamics.”
- Customers that don’t typically use the open market are now sourcing there
- These customers are demanding test services
- Test houses may specialize only in certain types of testing
- Test houses are not set up for the volume of parts now requiring verification
Fusion is familiar with its component sources and the companies that supply them, Romano added. Tracking the provenance of devices is another way to authenticate them but data can be misplaced, or faked, in the open market. Authorized distributors avoid this risk by sourcing directly from component factories.
“If you have good QC, visual inspection will catch 99 percent of the issues, but testing proves beyond a reasonable doubt the part is what it’s supposed to be,” said Romano.
Counterfeiters use a variety of measures to increase the value of products or pass off faulty devices as authentic. Boxes are re-labeled. Parts themselves are re-marked, or blacktopped, with false information such as brand or date code. Parts can be cloned or contain features that compromise security. Many of these components are targeted at the military, defense and aerospace industries that tolerate higher prices for qualified parts.
A large number of independents outsource testing while others have in-house QC labs. Fusion has reduced its turnaround time for testing to 1-6 days. Since the acquisition, Fusion has seen a surge in customers in automotive, aerospace, medical and other industrial segments, where there is a higher cost of failure for end products.
“The demand for testing has increased a lot with so many supply chain disruptions,” said Faiza Khan, executive director for the Independent Distributors of Electronics (IDEA) Association, a trade group for distributors in the open market. “Manufacturers are trying to find components where ever they can. The diligent companies want to make sure they aren’t taking any chances so their attention to testing is heightened — which is good. But test houses are running very late.”
The IDEA has released a set of inspection standards –the IDEA-STD-1010— and currently is working on an update, Kahn said. IDEA was formed to develop quality initiatives for distributors that source through the open market.
Any component buyer can request testing but this incurs additional costs. Test services can run from a couple hundred dollars to several thousand. The average is $1,000 to $2,000, Romano said. Fusion conducts basic testing of components at no charge; additional service costs are bundled into orders. “It’s our job to make sure everything is 100 percent correct,” said Romano.
Tests for authenticity include:
- XRF and x-ray
- Heated chemical testing
- Curve tracing
- Diode voltage testing
- Functional testing
Most of Prosemi’s capabilities are dedicated to Fusion but it can service OEMs and EMS providers. “It’s lead times that drove us toward an acquisition,” said Romano. “Nobody saw the shortage coming. We had hundreds of items waiting to go through testing so acquiring a test house gave us a huge advantage.”
The global semiconductor assembly and test services market is projected to grow from $31.86 billion in 2021 to $46.24 billion by 2028, at a CAGR of 5.5 percent, Fortune Business Insights reported. The testing segment will have the highest CAGR because of increased demand and the need to validate the quality of the product.
There are a variety of standards and guidelines to avoid counterfeits. The SAE and DFARS standards are widely used and supported by the Electronic Components Industry Association (ECIA), a trade association for component makers and their authorized distributors. Authorized distributors are audited by their suppliers, adhere to strict quality controls and provide component traceability, greatly reducing the risk of counterfeits.
“Many mid-sized independents are investing in test equipment for things such as de-cap and x-ray,” Kahn added. “While visual inspection will catch the majority of problems, the next step is testing.”