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Global Attention on Counterfeiting Intensifies, Highlighting the Necessity of a Strong Quality Front

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A problem that was once the skeleton in the electronics industry’s closet is front and center nowadays, and has been thrust out into the spotlight even more in recent weeks. Since February 24th, when U.S. President Obama signed off on a new customs law with a provision to combat counterfeit semiconductors, it’s become clearer and clearer that the problem of counterfeiting isn’t going anywhere (quite the opposite) and can’t be swept under the rug anymore.

The law in question, The Trade Facilitation and Trade Enforcement Act of 2015 (Public Law No: 114-125), requires U.S. Customs and Border Protection to open access to information and samples of suspected counterfeit parts in order to more effectively combat counterfeiting efforts.

Specifically, this disclosure allows semiconductor manufacturers, who have resources and expertise Customs groups don’t, to quickly determine if parts are genuine or counterfeit. With counterfeiting costing U.S.-based semiconductor companies an estimated $7.5 billion-plus in yearly costs, these new steps to counter inauthentic components could have real significance for semiconductor manufacturers, and for the global supply chain as a whole.

And the time is right for it, since counterfeiting hasn’t slowed down even as it’s come more intensely under global attention and scrutiny. We saw a prime example of this at the end of 2015, when three Chinese nationals were arrested by the FBI in Connecticut for arranging the trade of nonfunctional, counterfeit Xilinx components for military-grade Xilinx semiconductors that an undercover agent advised could be stolen from a U.S. Navy base. One of their number, Jiang Guanghou Yan, had also previously sold fake Intel microprocessors – bound for use on a U.S. Navy contract – to an undercover agent.

At the same time in December, sentencing was finally handed down for Jeffrey Krantz of distributor Harry Krantz Co. Krantz was charged for his part in supplying remarked microprocessors that ended up in U.S. military and commercial helicopters. With high-profile cases like these and with reports of counterfeit components having quadrupled since 2009, it’s clear that this problem isn’t lessening as time goes on. As the industry’s efforts grow and evolve, so do counterfeiters’ techniques to work around our safeguards.

But there are steps we can take, at all strata of the electronics industry. Any modern player in the industry has to cultivate a secure, trusted supply chain to combat inauthentic components on the front end, and a strong quality front to act as a safety net. Independent distributors like Smith & Associates, that maintain careful sourcing standards, third-party-certified quality programs, and the inspection and testing resources to support those programs, can help manufacturers fill gaps in their sourcing and quality control without worry of inauthentic components infiltrating their supply chains.

Whether you’re a major OEM or a small distributor, we all have a role to play in the global electronics supply chain, and counterfeit components affect us all. More than that – they affect military equipment and operations like in December’s cases, the cars and airplanes that get us from place to place, medical devices and equipment, and the consumer electronics that keep us connected. Electronics affect life.

With due diligence, conscientious QC/QA, and supply chain responsibility, we can all play a part in ensuring that the components that go into devices shaping our daily lives are quality ones.

Keep up with Smith’s Market Blog and our Twitter (@smithweb) for more industry news and analysis.

 


Amanda Pate
Written on Tuesday, 08 March 2016 14:48 by Amanda Pate

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