Preventing counterfeit electronics can positively impact sustainability

Yes, you heard that right! Preventing counterfeit electronics can positively impact sustainability.

Anthony J. Bryant, Electronics Component Engineer, Aerospace and Defence, and SAE G19A Subcommittee Counterfeit Electronics expert, recently discussed the Supply chain integrity: Protecting your business from counterfeit electronics, on behalf of the Global Electronics Association, USA.

Counterfeit impact by industry is massive. We have the annual financial impact of counterfeit parts across major industries. Electronics exceeds $100 billion, automotive clocks $40 billion, defense / DoD has $32 billion, and healthcare has $25 billion.

Let us look at the top counterfeit components reported in 2024. Analog ICs made up 32%%, memory IC 14%, programmable logic IC 12%, passive components 8%, power management 6%, and others 10%, respectively.

The most affected industries from counterfeit electronics are: automotive, with increasing electronics content, consumer electronics and industrial equipment, aerospace and defense, with mission-critical apps, and healthcare and medical devices, with life-saving apps.

Counterfeit components are increasing in transportation. It is estimated that over $2 billion is lost yearly due to counterfeit tires and batteries alone. This is largely due to the rapid increase of online sales platforms. It leads to vehicle malfunctions, safety hazards, and product recalls. Modern vehicles equip numerous electronic systems. These include safety features, entertainment, and engine control and connectivity.

We also have the Automotive Anti-Counterfeiting Council (A2C2) that looks after the automotive industry.

Why should you care?
So, why should you care? We already have had $250 billion worth global losses. There were production delays and shutdowns. Defense sector has a 15% counterfeit rate. We have had $100 billion electronics industry losses. There were costly recalls and replacements, with $4.88 million as the average breach cost.

Counterfeit electronic parts comprise ICs at 67%, transistors 5%, capacitors 1.7%, diodes 1.2%, optoelectronics 1.2%, and the rest at 3.5%, respectively.

Next, about 11,000 jobs were lost in the US semiconductor industry alone. Mission-critical system failures can be life-threatening. Damage to customer trust and brand value is huge. Besides these, there are examples of high-speed train braking system failure, airport landing light failure, IV medication system failure, and pacemaker failure.

Counterfeit electronics enter the supply chain from many points within the processes. They can enter via raw materials, manufacturing, distributions, and point of sales. Even legitimate parts may be produced beyond contracted quantities, and sold without authorization. There are supplier audits, material inspection, and verification testing. Authentic inspection and testing, is followed by customer authentication.

Supply chain integrity
There are key principles of supply chain integrity. We have verified chain of custody. Risk assessment and mitigation, authorized distribution channels, and proper documentation and certificates. Always verify supplier credentials and part authenticity. Next, maintain complete records, from manufacturer to end user. Share information and concerns throughout the supply chain. Regularly update procedures and training.

This matters to you, personally! Understand the business impact of counterfeit electronics. Learn to identify red flags. Discover your specific role in supply chain integrity. Take away the practical tools you can use immediately. Every person in the supply chain plays a crucial role in preventing parts from entering our systems. You don’t need to be an engineer to make a difference!

Authorized suppliers that also sell material as an unauthorized supplier should be considered as a high-risk distributor. Warning signs include: pricing significantly below market, reluctance to provide documentation, limited or no quality certifications, and history of quality issues. Unauthorized suppliers may either be independent distributors, stocking distributors, brokers, and contractor excess.

Preventing counterfeit electronics can positively impact sustainability!