Friday, April 28, 2006

"IC" Might Mean: It's Counterfeit

A recent
article from the IEEE throws wide open the scale of the problem of counterfeit electronic components. The AGMA has estimated that an astonishing 10% of the global technology products are counterfeit. The article rightly points out that the cost is not just lost profit, but also the warranty cost of replacing faulty equipment that may have been compromised by a single bogus component.
Some examples:
  • $1.2 million of fake Compaq computer parts - including warranty cards
  • Fake GFI outlets - with fake UL logos on them, and without the GFI circuitry
  • Fake Philips IC's that Philips thought had been scrapped, that showed up at a military contractor
There are a couple of sites dedicated to tracking counterfeit electronics, including the ERAI as well as GIDEP (look under Failure Experience). What's astonishing is the quantity - and these are those products that have been volunteered. Manufacturers are still reluctant to go public with evidence of fakes - for fear of driving away customers. There are a lot more articles on the subject here. A worrisome lesson is the drive for more regulation in the industry (such as EU lead free legislation) creates new opportunities for counterfeiters to enter and profit.

The IEEE article discusses potential remedies to the problem. RFID is too expensive and lacks standard schemes for anti-counterfeiting, holograms are too easy to fake, taggants can work for some applications but not all. As UID gains ground in certain markets (e.g. DoD and aerospace), we think that unique part marking and scanning is a cheap and viable method. However, the UID must be secure (no serial numbers), and standardized so that anyone can easily validate it.