New Solutions to Combat Counterfeits

By Adam Hook, Sr Principal Component Quality Engineer – Harvard Bioscience; President – Upper Midwest Chapter SMTA

During the COVID-19 pandemic, prolonged lead times with tier 1 component suppliers left many OEMs unable to ship vehicles and high-value electronic systems worth hundreds of thousands of dollars. This was due to a shortage of necessary components, particularly integrated circuit (IC) components under $10. This led OEMs and Contract Manufacturers to rely on component resellers (brokers) to get the parts they needed. Resellers, often with insider information on demand forecasts, manufacturing lead times, and component prices, capitalized on the situation, holding and selling components at significantly higher prices to desperate OEMs.

Adam Hook

As scarcity and prices increased, OEMs started to design out certain components from their products. Many resellers, stuck with unsellable inventory, adapted by repackaging and remarking inventory to look like components that have demand. This introduced further counterfeit components into the supply chain. Component resellers have millions of parts of unsellable inventory which still sits on the sidelines waiting for buyers that may or may not come along. With China heading into difficult economic times in 2024 and with reduced microchip manufacturing, it may be very temping for formerly employed workers with component manufacturing or selling experience to apply those skills towards counterfeiting components.

Over the next five years, the global electronics manufacturing services industry is expected to grow to $856 billion, driven by increased demand for self-driving cars, medical devices, space exploration, and defense spending. This growth will lead to more demand for integrated circuit chips in critical electronics. Startups have been addressing the problem of counterfeit components, with novel approaches highlighted by two leading innovative startups in the industry.

This concern is echoed by a recent survey of industry experts that took place from November 2nd 2023 to January 1st of 2024. Of the 93 responses, 86.87% said the IC counterfeits were either Major or Significant Issue. And 87.78% of the 93 responses said a counterfeit component in their electronic assembly would cost in excess of US$50,000.

Numerous standards and governing bodies have come come up with methods to test for authenticity. It is worth noting that these standards for checking authenticity are specifically for aerospace and military sector.

Individuals within the Life Sciences and Medical Device sector have the flexibility to pick and choose which standards apply to their business. Most OEMs in the medical industry push the requirement to their contract manufacturers.

Quality and Reliability Engineers in the Life Sciences and Medical Device field should familiarize themselves with current techniques for component authentication. This will allow them to reduce expenses and time investments for unnecessary tests and also empowers them to articulate their risk management choices to auditors.

A recently published IEEE report titled, “New Solutions in Combating Counterfeits” introduces driving factors for counterfeits in the electronic component market, compares existing methods for authentication based on effectivity, and presents a case study. The case study was an effectivity challenge for new methods that utilize visual authentication. A total of three obsolete components were procured by four Chinese component resellers. A fifth component reseller had two of the three obsolete components in the study.

Read how new solutions for component authentication compare to existing methods and gain insight into the risk of counterfeit electronic components by reading the IEEE paper.

Link:https://ieeexplore.ieee.org/document/10436515