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Conference finds fake electronics parts problem growing

Posted: 24 May 2012 ?? ?Print Version ?Bookmark and Share

Keywords:counterfeit chips? electronics industry? chip supply?

IHS iSuppli reports on the highlights of the 2012 ERAI Executive Conference. According to IHS, the speakers at the conference said that companies attempting to manage the growing challenge of counterfeit electronic components face a range of government- and industry-related pitfalls that make it quite impossible to remove all risk associated with the plague of fake parts.

Presenters from information providers, standards organizations, defense contractors and distributors detailed the challenges associated with the rising tide of counterfeit and fraudulent devices. While much of the discussion focused on the impact of fake parts on the military/aerospace sector amid new defense department regulations, the presentations also examined the effect of counterfeits on the broader commercial electronic markets.

The scale of the counterfeit problem has growth dramatically in recent years, with reports of counterfeit parts quadrupling from 2009 to 2011. Supply chain participants in 2011 reported 1,363 separate verified counterfeit-part incidents worldwide, a fourfold increase from 324 in 2009.

Electronic waste as fake parts
Much of the counterfeit-parts problem can be traced back to the enormous amount of electronic waste (e-waste) generated each year, according to Bob Braasch, senior director, supply chain, for IHS.

�People don�t hold onto their old electronic devices,? Braasch told the event attendees. �A three-year-old cellphone is ancient, so people are constantly upgrading to the latest device. As the world economy improves and as technology continues to develop, people increasingly will be looking for the latest technology. All of this electronics consumerism translates into e-waste.?

Braasch noted that 58 percent of e-waste generated by the United States is shipped to developing countries. All too often, electronic components such as semiconductors are culled from this waste and then returned to the U.S. and other developed countries in the form of counterfeit parts.

As the number of counterfeit parts has grown, government regulations covering fake parts have grown more stringent. 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. While this phenomenon is impacting all electronics market, including consumer, communications and computing devices, much of the attention has been focused on defense, due to the NDAA.

Compliance difficulties
One major problem companies face when attempting to comply with the new regulations is the vague language and difficult-to-comply-with requirements contained in the NDAA, noted Kirsten M. Koepsel, director of legal affairs and tax at the Aerospace Industries Association (AIA).

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