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Twelve Million Counterfeit Parts Reported Since 2007

There were more than 12 million counterfeit parts reported in the electronics supply chain between 2007 April 2012, according to data from information services group ERAI.

In a speech at the recent ERAI executive conference, Rory King, director, supply chain product marketing at researcher IHS, said in 2011 alone there were 1,363 counterfeit part incidents reported. Citing ERAI data, King noted that each incident involved thousands of counterfeit parts.

“Last year, a record number of counterfeit incidents were reported,” said King. “Altogether, the last five years has seen an all-time high in counterfeit reports.”

China is often blamed for the counterfeit parts problem, but it is difficult to determine the true origin of bogus parts. ERAI data shows that the countries of origin in 64 percent of the counterfeit part incidents were Malaysia, South Korea, Japan, and the Philippines. However, the accuracy of data is limited because counterfeiters often disguise the true origin of where the parts were made, according to King.

Thirty-four percent of the incidents were discovered in the United States, while thirty-three percent of them were detected in China, according to ERAI data.

Often counterfeit parts involve obsolete components. “Slightly more than one out of every two counterfeit parts shipped during the decade from 2001 to 2011 are obsolete,” King noted. This underscores the importance of obsolescence management and lifecycle planning.

King said recent U.S. Department of Defense (DoD) regulations on international suppliers to the U.S. government will impact international suppliers. The U.S. National Defense Authorization Act (NDAA), which was signed into law Dec. 21, 2011, imposes strict regulations and severe criminal penalties on companies that sell counterfeit parts to government military and aerospace programs.

King noted thousands of international companies supply to the DoD. “These companies are receiving inquiries on counterfeit avoidance and need to know how to understand and accommodate the issues related to fake parts and compliance with NDAA,” said King.

The ERAI monitors, investigates, and reports issues that affect the global supply chain of electronics. Its members include OEMs, component manufacturers, distributors and contract manufacturers, and government agencies and associations.