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The Shocking Truth about Electronic Component Counterfeiting
How big is the problem?
Counterfeit electronic component growth rateThe U.S. Government Patent & Trademark Office estimates the economic damage due to counterfeiting is in excess of $250 Billion.  The Alliance for Trademark and Counterfeit Abatement (AGMA), an industry group of top-tier electronic OEM companies, estimates the loss to electronic manufacturers alone to be over $100 Billion.

These numbers are so large it's hard to grasp how pervasive the problem really is.  Virtually every aerospace and military manufacturer had been victimized, and the problem is escalating at an alarming rate.  As just one measure, the Government and Industry Data Exchange Program (GIDEP) has seen a six-fold increase in reported electronic component counterfeiting, just since 2006.

Where do counterfeit components come from?
The single largest source?  You guessed it - China.  Business Week published an investigative report October 2, 2008, tracing counterfeits found at a major U.S. military manufacturer back to their source.  Watch the video here.  It will change the way you think about buying components.

Read the full article, Dangerous Fakes, for an in-depth view of the counterfeiting business in China.

How do they get into the U.S. supply chain?
Counterfeiters are getting increasingly sophisticated in the ways they get their goods into the U.S. supply chain.  It's a common mis-conception that risks are minimal so long as components are purchased through authorized distributors.  Even franchised distributors are at risk when surplus stock is returned for resale, potentially with counterfeit parts co-mingled.

When faced with the need to source through the independent market, your risks can be substantially reduced by working only with quality certified companies, and especially those with an aerospace AS9120 certification that requires them to flow down your inventory control practices for inspection, vendor control and lot traceability. See our page on Distributor Qualifications for more on how you can mitigate your risks.

The tricks they play

ESCS counterfeit component gallery Some counterfeit electronic components are manufactured to look like an authentic part. Many are pulled from old circuit cards and then simply cleaned up and re-marked.  Often commercial parts are made to look like higher reliability military grade components that will sell at a much higher price.

Fortunately, sound inspection practices can catch the majority of these fakes.  Competent, experienced inspectors should be used, trained to catch the often subtle clues of counterfeiting.  When in doubt, proper functionality testing should be mandatory, in accordance with the manufacturers specifications or the mil-spec requirements.

ESCS has collected a wide range of example photographs, detailing what to look for and the most common clues to conterfeits.  Please carefully review these in our Counterfeit Gallery.

60 Minutes Report: Toxic E-Waste
View this incredible video exposing the business of e-waste "recyling".  This is a major source of counterfeit components.