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By | Phil Muncaster 31st October 2012 06:05

China fingered as counterfeit parts flood tech supply chain

IHS warns all tiers to tighten supplier scrutiny

The number of ‘high risk’ suppliers, including some flogging counterfeit products to US government, military and commercial channels has grown by almost two-thirds since 2002, with China pegged as a key player, according to market watcher IHS iSuppli.

The firm urged all parts of the supply chain to tighten procurement and supplier monitoring – warning that 78,217 potentially dodgy suppliers were reported in the period 2002-2011.

The analyst warned last May that 2011 was a record year for fake parts, with 1363 ‘counterfeit incidents’ reported and Asian countries led by China implicated in the majority of reports.

Much of the problem is due to a breakdown in supply traceability and the use of untrustworthy or unauthorised sources for critical components, IHS argued.

In recognition of such issues, the US government implemented the US National Defense Authorization Act (NDAA), which requires suppliers to subcontractors to vet their own suppliers more carefully.

NASA has also been active in the past few years in trying to crack down on the increasing volume of counterfeit parts making their way into the aerospace industry, the market watcher said. It was the first agency to adopt the SAE International AS5553 standard – Counterfeit Electronic Parts: Avoidance, Detection, Mitigation, and Disposition.

IHS analyst Rory King warned that the falsification of key markings make it difficult to accurately identify the origin of counterfeit items and added that industry needs to work harder to improve traceability and identify the location of counterfeit perpetrators.

“The data in the news release I shared covers reports of counterfeits from supplier to buyer. This is the very last entity to provide parts to a given customer. The customer could be an OEM, EMS provider, or even another distributor,” he told The Reg.

“The data in the news release shows that the United States and China are the top two locations where suppliers are located who then engage in fraudulent, high risk or suspect counterfeit transactions. My point is, this is what data you see, and it does not address the issue of where parts are really originating from, nor traversing through.” ®

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