☛Want the latest procurement and supply chain news delivered straight to your inbox? Sign up for the Supply Management Daily
7 April 2012 | Adam Leach
Faulty and fake semiconductor components that find their way into products from mobile phones to airplanes risk creating malfunctions with serious consequences.
Information and analysis firm IHS has found two thirds of the components that were reported as counterfeit were analog integrated circuits (ICs), microprocessors, memory ICs, programmable logic devices and transistors. The market for these components is around $169 billion (£106.8 billion) a year. The HIS study found incidents of counterfeit parts, which are often cheap substitutes or salvaged from waste, has tripled over the last three years.
“There has been a great deal of focus on the issue of counterfeit parts in the defense industry, but the majority of reported counterfeit incidents are for the commercial components which have broad use across both military and commercial applications,” said Rory King, director of supply chain product marketing at IHS.
“A faulty analog IC can cause problems ranging from a mundane dropped phone call to a serious tragedy in the aviation, medical, military, nuclear or automotive areas,” he added
The rise in the number of reported incidents of counterfeit components has resulted in businesses coming under increasing pressure to take steps to mitigate against the risk. In the US for example, the National Defense Authorization Act, which came into law at the end of 2011, mandates companies implement procedures and systems to analyse, assess and act on counterfeit (and suspected counterfeit) components throughout their supply chain.
Last year the Aerospace Industries Association warned the amount of fake parts is rapidly increasing, with the US customs having seized $4 million worth in 2009. The industry organisation called for improved purchasing procedures, the creation of official lists of suppliers and distributors and greater training to more easily identify phony parts.