Counterfeit components find new markets

By Rob Spiegel - April 9, 2009

Although it’s impossible to know for sure, industry experts estimate counterfeiting cost at $100 billion to $200 billion annually, or nearly 10% of all electronic equipment sold worldwide. Most industry experts claim that the problem is escalating and note that, although the federal government and several industry associations have taken measures to limit counterfeiting, it continues to plague the components industry.

Counterfeiters are even targeting low-cost, passive components. “Everything is getting counterfeited,” says Robin Gray (photo), executive vice president of NEDA (National Electronic Distributors Association). “It’s not just the high-value items, [such as] semiconductors. It can be connectors, resistors, anything that can turn a good profit, anything that’s on allocation, anything that’s in high demand.”

In the past couple of years, counterfeiters have found a new market in hard-to-get parts and obsolete parts. One major market for obsolete parts includes the industries exempt from environmental-compliance laws, such as ROHS (restriction-of-hazardous-substances) directives. According to Tom Sharpe, vice president of independent components distributor SMT Corp, the military, aerospace, and medical industries are still using products containing lead. Many of these products are obsolete, and the chip manufacturers no longer support them, so counterfeiters target these parts.

Military purchasers in particular are turning to the open market to find non-ROHS parts. “A lot of counterfeiting comes from the fact that military customers cannot buy through the channels they are comfortable buying through,” says Steve Schultz, director of strategic planning and communication at Avnet Logistics, a division of distributor Avnet Inc. “If I have 10 military customers, at least half of them will raise the question of counterfeiting.”