Too good to be true - the cost of counterfeit electronics and how to avoid them

Miguel Fernandez
President of Avnet EMEA
Too good to be true - the cost of counterfeit electronics and how to avoid them
The issue of counterfeit electronic components is one that has troubles the electronics industry - using them can have some major issues, everything from being removed from a preferred suppliers list to a reduction in quality.

The scale of and risk posed by counterfeiting in the electronics industry can be well demonstrated with one example from the Senate Armed Services Committee, which a few years ago uncovered over 1 million counterfeit electronic parts in its supply chains. Counterfeit products were found in computers, in special operations helicopters, in surveillance planes, and even in missiles. As Senator, and former presidential candidate, John McCain said at the time this “risk[ed] our security and the lives of the men and women who protect it.”

And it goes beyond anecdotal evidence. While the nature of this being an illegal market means it’s difficult to put an exact figure on the size of the problem, back in 2002 the FBI estimated that the issue lost US companies alone nearly 20 billion a year, and today figures routinely cited for the global cost are in the hundreds of billions of dollars. And the problem of electronic component counterfeiting, like general counterfeiting, is getting worse.

In 2010, a survey showed over half of IC manufacturers had encountered counterfeit versions of their products. A 2015 report by the Defense Systems Information Analysis Center stated that manufacturers supplying the Department of Defense have “encountered a dramatic increase in the numbers of counterfeit components in the supply chain.” On top of this, the analyst Strategyr has put the issue first in its list of four key challenges that will negatively affect future prospects of the market.

Here in Europe, the European anti-fraud office, OLAF, in a multinational partnership with Europol and customs officers from 12 European states have very recently seized over a million counterfeit semiconductor devices - from LEDs and diodes to transistors and ICs. As OLAF stated, had these not been seized they could have “ended up in cars or airplanes ... their use could have endangered human lives. Moreover, the smuggling of counterfeit products causes serious financial damages to the European industry.”

This is a very significant haul - for a comparison, in the three years to May 2010, US customs officers made 1,300 seizures totaling just 5.6 million components, an average of 4,300 per seizure.

Multinational moves, like this, are key in helping the industry fight back. But this latest seize is just the tip of the iceberg, the perceived rewards for the counterfeiters are too great, and the ‘savings’ for buyers are too large, to stop the practice.

Types of counterfeit products

Counterfeit products don’t only lead to lost revenue or other economic factors for the industry, they also hurt the reputation of an industry which strives for global transparency and traceability across the supply chain. They create problems for the OEMs who use them without knowing; both when used in critical applications like medical, automotive, or transportation as well as causing an increase in returns, warranty and maintenance costs, and the need for testing in addition to decreased brand satisfaction.

Some of the key types of counterfeit components are:

Working copies:

  • Copyright infringement - duplicating an existing device to pass off as the original
  • Stolen masks and designs - made elsewhere in non-authorized factories

False markings / documentation

  • Falsely claiming RoHS / REACH compliant
  • Used components that have been desoldered from recycle bins and remarked
  • Wrong date codes
  • False testing certificates
  • False documentation, claiming higher performance

Non-working:

  • Components missing die / wires

Anti-counterfeiting technology

The lawyer and electronic fraud expert Louis Feutchbaum probably put it best: “There's a continual race that there are quality control checks on the genuine products that the counterfeiters can't copy. And those are good, and they work, but usually only for a period of time."

Given the extent to which it has been shown to be affected, it’s not surprising the US Department of Defense has taken a lead in the ensuring a consistent approach is adopted by all manufacturers in its supply chain. However, there are several approaches currently in use or being developed. One such technique looks to biotechnology.

Applied DNA Sciences is working with the US government to place unique sequences of DNA onto batches of electronic components. DNA is fluorescent, meaning the presence can be easily identified under UV light. And the latest sequencing techniques means authenticity can be determined in a matter of hours, and very inexpensively. Doing this not only adds a level of complexity for counterfeiters (they would need access to a genetics lab), sequences would be near impossible to replicate, with even a 20-base sequence having over a trillion possible combinations.

Spotting a fake

Ultimately, if a deal looks too good to be true it probably is. Probably the biggest counterfeiting category is through relabeling old or used parts. Therefore, if you have bought a component you are worried about then some simple tips for visual inspection are:

  1. Is it perfectly smooth? If not, and there are small scratches this would suggest the original label has been sanded off. Similarly, acetone can also be used to check for (now less common practice of) blacktopping - if the markings are in ink.
  2. Is the logo correct versus what’s on the manufacturer’s website / on other parts? Also check the font, and even the epoxy shade.
  3. Check origin of manufacturing - is there a manufacturing plant for that product in that country
  4. Are the part numbers actually used? And is the date correct?
  5. Have they used pre-soldered pins or the wrong package material?
  6. Are there translation errors or typos in the literature and certification?
  7. And does the component perform as specified under testing?

If you’re still not sure

  1. You can decapsulate, cutting / cracking / using acid to open the packaging, in order to check the etchings on the wafer itself?
  2. You can use X-ray inspection to compare the internal structure with a known-legitimate example
  3. You can use X-ray fluorescence to check for the presence of RoHS materials, which are often overlooked by counterfeiters.

However, it should be said that counterfeiters are getting significantly more sophisticated, and several more advanced (and costly) techniques are now being used. Energy Dispersive X-ray can be used to detect elemental differences between the actual part body and blacktopped material. Other techniques include thermal analysis, fourier transform infrared spectroscopy, and scanning acoustic microscopy.

However, going back to electronic fraud expert Louis Feuchtbaum, the bottom line is "if one buys only through an authorized distributor, the chance of getting counterfeits is severely reduced."

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