Counterfeit Components in the Electronics Industry
27 November, 2024
Obsolete Components are a breeding ground for Counterfeits that infiltrates critical systems in the Aviation, Medical, and the Defense Industries
Photo above: Quality assurance lab at A2 Global
Guest article by:
Oren Gadel, Regional Manager, A2 Global Electronics + Solutions
A decade ago, I published an article addressing the dangers and the scale of counterfeit components in the electronics industry. The article highlighted the threats posed to supply chains, manufacturers, and critical systems due to unreliable and counterfeit components. Now, ten years later, I find it worthwhile to reflect on whether anything has changed and what is still required to combat the ongoing threat of counterfeit components, which today threaten industries more than ever.
A Brief History and a Look Forward
Ten years ago, the electronics industry faced widespread counterfeiting issues. Lack of transparency in supply chains, insufficient quality testing, unawareness and lack of oversight when dealing with the open market, and the pressure to reduce costs. All combined to create fertile ground for counterfeit components to enter the market. These components, which did not meet required standards, posed risks not only to product quality but also to the safety of many users. Counterfeits infiltrated critical systems in Aviation, Medical, and Defense industries, creating significant risks.
Has Anything Changed?
Between 2020 and 2023, the Electronics shortage became a critical issue affecting many industries, including automotive, medical, technology, and defense sectors. This shortage created a “perfect storm”: A combination of factors that created chaos unprecedented in the electronics world. The reasons included a sharp increase in demand for electronic devices and medical equipment due to the COVID-19 pandemic, supply chain disruptions caused by pandemic restrictions, changes in production priorities, and even natural disasters impacting critical manufacturing facilities.
Then came the war between Russia and Ukraine, further exacerbating the situation with a sharp rise in global defense demand and disruptions in the supply of essential materials used in chip manufacturing. As a result, the shock was immense, and the problem of counterfeit components worsened.
Obsolete Components: A Breeding Ground for Counterfeits
One of the major challenges—then, now, and likely in the future—is obsolete components. What Makes a Component Obsolete? Technological advancements, changes in standards and regulations, declining demand, raw material supply issues, manufacturers mergers and acquisitions, or simply the manufacturer’s economic impracticality. Obsolete components have become a particularly fertile ground for counterfeiting for several reasons:
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High Demand in the Open Market: Obsolete components are no longer available from original manufacturers and can only be obtained through the open market. This creates high demand from product manufacturers, maintenance companies, and critical industries that still need these components for repairing and upgrading existing systems. This high demand invites unreliable players to offer counterfeit components.
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Lack of Verified Sources: Once production of certain components ceases, finding reliable sources that ensure quality and reliability becomes challenging. Open market suppliers may not adhere to the same standards as original manufacturers, facilitating the entry of counterfeit components into critical systems.
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Difficulty Identifying Genuine Components: Obsolete components, especially those on the market for many years, may be harder to verify due to packaging changes, different markings, or material degradation. High-quality counterfeits can appear identical to the originals to the naked eye, making it difficult to spot differences without in-depth testing.
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High Costs: The scarcity of obsolete components drives up prices significantly, creating opportunities for counterfeiters to make large profits by producing and selling counterfeit components at prices close to the originals’ market prices.
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Use in Critical Industries: Obsolete components are often found in critical systems such as defense, aviation, and energy, where redesigning or upgrading an entire system isn’t always feasible or economical. The need for original components for maintaining and operating these systems, or fulfilling new orders requiring obsolete components that are no longer in production, makes this market especially vulnerable to counterfeits.
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Lack of Mandatory Standards in the Open Market: Unlike original manufacturers, the open market lacks clear and enforceable standards, making it easier for counterfeiters to introduce unreliable components. While major companies adhere to rigorous testing and verification protocols, the open market operates under looser rules, exploited by counterfeiters.
Beyond Counterfeits: The Challenge of Obsolete Components
Counterfeiting is a major threat, but it is not the only one. Obsolete components are often very old, have passed through multiple hands, and may have been stored in conditions that do not meet long-term preservation standards. As a result, even if a component appears authentic, it may be unfit for use due to issues like corrosion, material fatigue, loosened internal connections, wire bonding or reduced functional reliability.
Additionally, older components may not comply with current standards, and even those in good physical condition may suffer from poor performance or failure under extreme temperatures or different operating conditions. This poses a significant risk, particularly in critical industries such as aviation, defense, and medicine, where the failure of a single component can lead to severe consequences.
About the Author:
Oren Gadel, Regional Manager at A2 Global Electronics + Solutions, has over 20 years of experience in consulting and business management in the field of electronic components. Oren specializes in finding solutions for critical industries and works with a wide range of clients both in the Middle East and internationally.
A2 Global Electronics + Solutions provides supply chain management solutions in the field of electronic components: Global component sourcing, obsolete component management, shortage mitigation, and inventory management. Through a global network of offices and certified laboratories, the company conducts advanced quality testing and component verification using cutting-edge technologies to ensure the reliability and quality of components for clients in critical industries such as aviation, defense, and medicine.
Posted in: Electronics Industry , News
Posted in tags: A2 Global , Counterfeit Components
