Tuesday, May 22, 2012

#CHIPS: "Every 15 Seconds Another Counterfeit Threatens"

A counterfeit part threatens the security of our military and civilian electronic systems every 15 seconds, according to IHS iSuppli. When you count obsolete parts rebranded to appear up to date, the the U.S. is number one with China in second place. Counterfeit parts are especially troubling to the defense and aerospace industries where obsolete parts can cause catastrophic failures: R. Colin Johnson

Countries Where Counterfeit Incidents Were Reported in 2011 (Percentage of Worldwide Total) Source: IHS iSuppli

Here is what IHS iSuppli says about counterfeit parts: More than 12 million parts have been involved in counterfeit incidents during the period spanning the start of 2007 through April 2012, according to Rory King, director, supply chain product marketing at IHS, citing data from ERAI. King delivered the news here on Friday to an audience of electronics industry participants attending the ERAI Executive Conference, co-hosted by IHS.

In his presentation, King noted that reported incidents of counterfeited parts amounted to 1,363 in 2011. However, each incident can include thousands of separate parts, adding up to 12 million over the past five-and-one-quarter years. This equates to slightly more than 1 counterfeit part every 15 seconds.

While the rise in semiconductor counterfeiting is often laid at the feet of China, King noted that the country actually is not the location where most counterfeits are reported.

While the U.S. and China dominate in terms of reports at a combined 65 percent, the countries of origin accounting for the counterfeit parts is more disparate, with the four nations of Malaysia, South Korea, Japan and the Philippines collectively accounting for 64 percent of reports, according to ERAI data. However, the accuracy and value of this data is limited, King noted, given that counterfeiters are highly skilled at disguising the true origin of their wares.

For many companies, particularly those in the defense and aerospace industries, much of the counterfeit risk lies in obsolete parts.

King’s presentation also highlighted the international impact of new U.S. Department of Defense (DoD) regulations on foreign suppliers to the U.S. government. The U.S. National Defense Authorization Act (NDAA), which was signed into law on Dec. 31, imposes strict regulations and severe criminal penalties on counterfeits supplied for government military and aerospace programs.
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