New Approaches to Address Counterfeit Electronic Components
During the COVID-19 pandemic, prolonged lead times with tier 1 component suppliers left many OEMs unable to ship vehicles and high-value electronic systems worth $100,000. This was due to a shortage of necessary components, particularly integrated circuit (IC) components, under $10. This led OEMs and Contract Manufacturers to rely on component resellers (brokers) to get the parts they need. Resellers, often with insider information on demand forecasts, manufacturing lead times, and component prices, capitalized on the situation, holding, and selling components at significantly higher prices to desperate OEMs.
As scarcity and prices increased, OEMs started designing certain components out of their products. Many resellers stuck with unsalable inventory adapted by repackaging and remarking inventory to look like component that have demand. This introduced further counterfeit components into the supply chain. Component resellers have millions of parts of unsalable inventory still sitting on the side lines waiting for buyers that may or may not come along. With China heading into difficult economic times in 2024 with reduced foreign investment and microchip manufacturing, it may result in formerly employed workers with component manufacturing or Supply Chain experience to apply those skills towards counterfeiting components.
Over the next five years, the global electronics manufacturing services industry is expected to grow to $856 billion, driven by increased demand for self-driving cars, medical devices, space exploration, and defense spending. This growth will lead to more demand for integrated circuit chips in critical electronics. Startups have been addressing the problem of counterfeit components, with novel approaches highlighted by two leading innovative startups in the industry.
A recent survey of industry experts says, 9 of 10 view IC counterfeits as either Major or Significant Issue. And 9 of 10say a counterfeit component in their electronic assembly would cost more than US$50,000 in damages
Numerous standards and governing bodies have created standards test methods to determine authenticity, for example SAE AS5553. The existing standards are specifically for aerospace and defense sector so other industries don’t have similar oversight. This is especially concerning for the medical device industry because they use commercial off-the-shelf components which are at risk of being counterfeited.
The OEMs in non-aerospace and defense industry push the requirement to their contract manufacturers. But these OEMs also participate in competitive bidding with their contract manufacturers. These incentivizes perfunctory effort to manage counterfeit components to keep costs low and check the box.
It is important that Engineers outside of Aerospace and Defense familiarize themselves with current techniques for component authentication. This helps reduce time and financial investments in needless tests and empowers those Engineers to communicate to external auditors the effectiveness of procedure.
Read how new solutions for component authentication compare to existing methods and gain insight into the risk of counterfeit electronic components by reading the newly published IEEE paper written by Adam Hook, Senior Principal Component Quality Engineer with Harvard Bioscience. Adam will also present this information in person at the Upper Midwest SMTA Tech Forum in St Paul Minnesota on June 4th.
IEEE link: https://ieeexplore.ieee.org/document/10436515
Event link: https://smta.org/page/uppermidwest-schedule
