For many, the word ‘counterfeit’ implies an unauthorized copy of an authentic product. However, according to research conducted by IHS iSuppli, 57% of the counterfeits reported within the electronics supply chain are obsolete and previously-used components.
Most of the material used to make these counterfeit parts is electronic waste (e-waste) that was shipped from the United States to other countries. The e-waste is then disassembled by hand. Individual components are sanded down to remove marks that identify its age, quality and performance. In many cases, the date code (which tells the consumer the exact day that the part was manufactured) is changed to make the component appear newer than it actually is. Then, in a process known as “black topping,” the tops of individual parts are recoated to hide sanding marks. Advanced printing equipment is then used to put misleading information on the parts. Once the e-waste has gone through this process, it is packaged to look brand new and shipped to places where it can be sold in markets and/or over the internet.
It is impossible to know how well these counterfeit electronic parts will perform and how long they will last once they are procured by legitimate corporations. However, it is clear that defective counterfeit components can cost companies a great deal.
The DOD Supply Chain
These findings follow the recent report to the Senate Armed Services Committee (SASC) announcing the results of an investigation into the prevalence of counterfeit electronic parts in the Department of Defense supply chain. The committee concluded that the problem of counterfeit parts was widespread: by looking at a limited part of the supply chain over just two years, the investigation yielded 1,800 cases of counterfeit parts… The total number of individual parts exceeded one million. The committee also discovered that in more than 90% of the cases, obsolete and previously-used parts were used.
Working to Build Compliance
Where does a MNC begin to address these issues? One way to mitigate the risk of obtaining counterfeit parts from independent distributors is to develop a trusted list of suppliers. At CREATe, we’re developing tools, trainings and resources to help multinationals improve IP protection and reduce corruption among suppliers and business partners. We’re currently working with MNCs across industries and regions to pilot our service offering. If you’re interested in learning more, please contact us by emailing: firstname.lastname@example.org.