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Beware! Counterfeit Components Put Safety and Security at Risk

 

 

 

 

Summary  

Introduction ................................................................................................................................... 2 Counterfeit Electronic Components – Facing the Industry Hazard .............................................. 3 Mechanical risks with counterfeit components ............................................................................. 4 Electrical risks with counterfeit components ................................................................................ 6 Detecting counterfeit products in the supply chain ...................................................................... 8 Financial and Economic Implications ........................................................................................... 9 Summary ..................................................................................................................................... 11 References ................................................................................................................................. 12

 

 

 

 

 

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Introduction  

Counterfeiting, or the knowing misrepresentation of a trademarked product, has been a part of the worldwide economy for hundreds of years. When an inventor or designer comes up with a reputable product they will sell that product at a price that helps them to recoup their investment, however, many people worldwide who cannot afford the true market value of the product will look for a cheaper alternative creating a large opportunity for unscrupulous counterfeiters. While we may be familiar with the notion of traveling to a third world country to find cheap knock-offs for handbags, Hollywood movies and electronics; few people realize the true far-reaching prevalence the issue of counterfeiting has on all markets worldwide including the electronic components industry. The counterfeiting market has grown out of control and infiltrated all areas of our personal and professional lives putting our very safety and well being at risk.

A pivotal case in the medical industry brings to light the risk that counterfeiters bring to all industries. Cancer treatments depend on carefully formulated protocols that maintain the correct levels of active ingredients in a person’s system to be effective but when these protocols are not followed the results can be deadly. Such was the case for one woman who was diagnosed with cancer in 1998 named Maxine Blount who underwent a two-phase therapy of chemo and recovery treatment. The initial phases of the treatment protocol were highly successful and M. Blount was able to go about her life and maintain a good quality of life, however, in 2002 the treatment protocol she had been following suddenly stopped working and she lost control of the cancer and passed away.1 An investigation revealed that the drug she took only had 5% of the required active ingredients for successful treatment. Additionally, the drug had been purchased from a reputable pharmacy showing how counterfeit products are starting to infiltrate even reputable chains and businesses.

This case was heard by the United States congressional commission and launched a variety of initiatives to protect consumers and businesses at all levels from the risk counterfeit products and components bring to the market in all market segments throughout the world.

The issue with counterfeits extends well beyond the medical field and has infiltrated every aspect of our lives making everyday items suspect. For example, counterfeit materials in shampoos have been contaminated with bacteria from counterfeit ingredients made with substandard production processes resulting in infections and hair loss for unsuspecting users. Children’s clothing and costumes that were purportedly made with flame retardant materials were unknowingly fabricated with counterfeit materials and caused children to be injured. Counterfeit toys are a popular item with parents who want to provide their children with the most popular toys, but instead buy cheap knockoffs that are constructed with inferior materials, which then break or shatter causing injury. The automotive industry has been victim to counterfeit parts as well with the best-known examples being brake pads that have resulted in drivers and passengers being killed with pads did not function.2 Counterfeits are everywhere

                                                                                                                         1 “The Fake and the Fatal: The Consequences of Counterfeits”, Kevin Lewis, The Park Place Economist, Volume XVII, https://www.iwu.edu/economics/PPE17/lewis.pdf  2 “The Facts on Fakes”, Adele R. Meyer, 2015 NARTS: The Association of Resale Professionals, http://www.narts.org/i4a/pages/index.cfm?pageid=3313

 

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and they have inundated our lives from the foods we eat to the vehicles we drive, no industry is sacred, including the electronics industry.

But what is the true risk to our industry and why should we be concerned?

Counterfeit Electronic Components – Facing the Industry Hazard  

The issue of counterfeiting components has come to the forefront in recent years, as the public has become more aware of the risks that counterfeited parts bring to unsuspecting users. There are many real and anecdotal stories that have become popular highlighting the risks but unfortunately, there is little to no quantitative data showing the true risk that we are facing in the industry. Many times, when catastrophe strikes, the evidence remaining is so inadequate that it is difficult to pinpoint the exact cause, which is when the anecdotal evidence arises, that counterfeit components could have contributed to the issue.

The issues facing the manufacturing industry are real and they are inundating all industries from the small commercial components sector to high-end semiconductor industries and even the military. Unfortunately, we may not know the entire truth and we go about our lives trusting that the electronics we deal with on a day to day basis will be there for us and operate reliably, when in reality they could be a ticking time bomb waiting to malfunction when put to the test.

Counterfeit components lack the traceability of their authentic counterparts and as a result manufacturers do not truly know where these components originated. They could be older, legitimate versions of the part itself and have undergone reprocessing making them highly suspect in quality or they could be legitimate fakes that counterfeiters are trying to pass off as real.

Despite the best efforts of our engineering and purchasing departments, it is still possible to contaminate otherwise good components with counterfeit ones. Counterfeiting is a very lucrative industry and those who take advantage of this this illegal market have developed many ways to make their counterfeit components appear identical to the real thing.

The Senate Armed Services Committee of the United States has published numerous reports regarding problems caused by counterfeit parts inundating the industry and being built into military weapons, aircraft and other military vehicles and transports. For example, the Navy, in partnership with the Boeing Corporation, found defective hardware on the P-8 Poseidon, a large aircraft utilized by the armed forces. In this case, a counterfeit electronic part was identified in the ice detection system, which will alert pilots when ice is present on the aircraft.3 The part was traced back to a P-8 subcontractor who had been sold refurbished parts. The part had been removed from obsolete electronics, relabeled and resold as new to the unsuspecting supplier, which put the entire airplane, and its future passengers at risk.

                                                                                                                         3 Counterfeit Parts Found on P-8 Posiedons, John Reed, November 8, 2011, DefenseTech Where Technology & Defense Intersect, Military.com, http://defensetech.org/2011/11/08/counterfeit-parts-found-on-new-p-8-posiedons/  

 

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This is just the tip of the iceberg when it comes to the illegal counterfeit component industry that is present and active in the industry.

There are two primary technology risks that the electronics industry faces when dealing with counterfeit components. The first risk is to the mechanical integrity of the counterfeit component and whether or not the component will be mechanically sound under the potentially stringent conditions faced in the field. The second risk is to the electrical functionality. Reprocessing within the counterfeit operation can easily compromise the electrical integrity of the component. The component may have easily been compromised based on the intensive processing these counterfeit components face when being repurposed and relabeled for resale. The additional processing and obviously illegal actions by counterfeiters are placing people’s lives at risk from a variety of different failures in the field.

Mechanical risks with counterfeit components  

As technology advances worldwide, a whole different form of waste has developed called ‘e-waste’. E-waste or electronic waste are broken, outdated and discarded electronics that no longer contain the latest and greatest technology. These outdated electronics are broken down and stripped of all their components for repurposing. Components are unsoldered from printed circuit boards (PCBs) and then processed using any combination of sanding, acid baths and relabeling to remove any identifying features from the component. Leads are straightened or reattached; components are re-balled and baked to prepare them for manufacturing making them candidates for sale to unsuspecting manufacturers and component suppliers as brand new parts. The processing on these parts has become so sophisticated it is not always apparent to the naked eye that these components are counterfeit without doing detailed analysis. Consider the below image, on the top is the legitimate component showing the smooth patterns on the surface of the component in the grain structure of the material. The picture on the bottom shows the grain structures that have been damaged as a result of processing for sale as a counterfeit.

From the initial look, the two components could be legitimate (despite the box around the labeling) however, with further analysis under the miscroscope you can see that these components are actually different and have received all sorts of reprocessing making their

 Surface  structure  analysis  of  counterfeit  component  

 

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quality levels highly suspect to the unknowing purchaser. The component at the bottom has been processed and relabeled making the component suspect. Reprocessing steps do not follow proper manufacturing processes or protect the component from electro-static discharge (ESD) damage, which means the integrity of the component could be compromised. Mechanical processing and abrasive handling also damages the component making it mechanical suspect as well.

Another example of the risks around counterfeit components can be seen when you consider the processing that these components endure when being prepared and remanufactured for sale.

Consider a processor that has been removed from a circuit board in order to be resold. In today’s markets many

processors use a land grid array (LGA) or pin grid array (PGA) interconnect when can be easily removed from the circuit board and resold. However, these two types of interconnects rarely make it to these counterfeiters but instead the low-end processors with a ball grid array (BGA) travel with the circuit boards to the electronic junkyards. Once these processors are identified the first step is to remove them from the printed circuit board (PCB) using a selective reflow process, which heats the BGA joints to reflow temperature allowing the operator to remove the component from the board. Next, the component is reheated again and the leftover solder is wicked away to prep the interface for re-balling. Solder paste is then printed, often by hand, onto the processor and solder balls are then placed on the paste prior to reflowing again to attach the solder balls. The remanufactured components are then packaged and resold with unknown quality levels due to the number of heat cycles the components have received. Numerous studies have shown that these components will have substandard quality levels once they are manufactured.

One study4 that was conducted when the industry faced the conversion to Pb-free solders and materials within all products looked at key mechanical performance characteristics, especially, shock resistance in electronic components. Part of the study analyzed the reprocessing processes that impact mechanical performances especially the decrease in shock resistance each time a BGA component is re-balled. The re-balling process results in BGA joints that were significantly lower quality than their non-reworked counterparts.

The study utilized BGA components with pitches at .8 mm and began by analyzing the manufacturing processes and their key characteristics within the processes. (Note – this study

                                                                                                                         4 Re-balled Ball Grid Array Reliability Under Shock and Vibration, Joelle Arnold, Dr. Nathan Blattau, DfR Solutions, www.dfrsolutions.com, http://www.dfrsolutions.com/wp-content/uploads/2012/06/Reballed-Ball-Grid-Array-Reliability-Under-Shock-and-Vibration.pdf  

PGA  form  factor  component  showing  the  pins  that  form  the  interconnect  with  the  socket  on  the  PCB.  

LGA  component  showing  the  pads  on  the  bottom  side  of  the  component.  

BGA  showing  the  solder  balls  that  will  be  soldered  to  the  printed  circuit  board  forming  the  interconnect.  

 

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was not completed using counterfeit components but instead was conducted using known good parts to remove one potential variable from the results.) Once the test process was identified they completed the re-balling process and conducted x-ray, thermal cycling, cross section, vibration, and shock testing to determine the resulting capabilities of the re-balled components. The testing conducted was part of the standard qualification processes used by major manufacturers to qualify their products and utilized similar stresses.

The results of the testing showed the following summary results:

• X-ray inspection showed increased solder voids due to the presence of flux in the solder paste process

• Cross-section of the solder joints showed differences in thickness of the joints and overall consistency in the grain structure

• Thermal cycling showed no significant difference in time to failure for the joints

• Vibration testing showed that re-balled components perform in a variety of different manners and depend on the capability of the person who completed the re-balling process (skilled re-ballers components performed better than less skilled counterparts)

• Shock testing showed similar results where drops to failure depended on the capability of the re-baller

Each of these performance criteria’s are critical to the high quality performance of electrical components in the industry and demonstrate the mechanical risk faced by counterfeit components that have been released into the market.

Electrical risks with counterfeit components

Imagine the flight you were about to board had been built using counterfeit components and even if they had previously met the outgoing quality inspections implemented by the manufacturer these airplanes were flying time bombs.

The real question is when would these counterfeit components fail?

The simple reality is that components are designed to withstand a certain amount of time under a specified set of use conditions and when those conditions are exceeded failures can occur. A multitude of failures can be caused by exceeding the useful life of the part, improper

Solder  voids  seen  during  cross  section  –  Credit  DfR  Solutions  

Pad  cratering  caused  by  excessive  mechanical  stress  on  the  solder  joint  

 

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processing and dubious production controls counterfeit components must endure before they are resold.5

Below is a list of potential failure mechanisms that electrical components may present when supplied by counterfeit sources:

• Corrosion within the component from element exposure and processing can directly impact the internal electronics and change the electrical level within the part

• Excessive thermal cycling can stress the internal gates within the component and cause it malfunction electrically

• Mechanical processing including both sanding and grinding damage the internal and external circuitry

• ESD and static electricity impairment can damage or destroy the component

• Thermal stress will reduce the remaining life in the component shortening its usefulness

• Shock and vibration over time will place stress on the component causing fatigue and deterioration in performance

Each of these factors is carefully controlled in the electronics manufacturing environment to ensure that latent issues, or problems that will greatly reduce the effective life of the component are not affected. Manufacturers go to exacting extremes in the design, manufacturing, shipping and storage processes to ensure the components will meet all requirements and not fail when put into service. Obviously, none of these controls exist in a counterfeit manufacturing environment.

From the initial raw material selection and purchasing all aspects of the production process are tightly controlled and monitor to ensure only the highest quality components will be produced. For these reasons, once the component has been shipped from production and then assembled into a final product, the end customer can be assured the product will function properly and the manufacturer and company who own the brand will stand behind the product should any issue arise when the customer uses it after purchase.

But when counterfeiters try to imitate these brands and sell inferior quality products; the damage to the company image can be detrimental and customers can potentially be injured due to faulty products.

                                                                                                                         5 Failure Mechanisms of Semiconductor Devices, Panasonic, T04007BE-3, 2009.4, 3-54, http://www.semicon.panasonic.co.jp/en/aboutus/pdf/t04007be-3.pdf

Electrically  compromised  component  

 

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Detecting counterfeit products in the supply chain  In a recent survey of design engineers and purchasing representatives, over 41% of engineers reported that counterfeit components were of primary concern for them. Unfortunately, removing counterfeit components from the supply chain is not an easy task. In the counterfeit clothing and handbag sectors there are often key indications that the item is counterfeit but this is not the case for electronic components.

There are a variety of methods being employed by today’s incoming quality inspection laboratories to identify the presence of counterfeit components including:

• Visual inspection for faulty markings, indentations or appearance

• Decapsulation or destruction of sample components to analyze the inside of the component

• Electrical testing to validate performance

• X-ray inspection to view traces and internal circuitry

• Scanning Electron Microscopy (SEM) to view the internal structure and the elements that make up the component

• Physical measurements and go, no-go gauges for pins and leads

• Weighing the component to determine if it meets prescribed formats

Electronics manufacturers have dedicated millions of dollars to combat both the influx of counterfeit materials and weeding out poor quality products to ensure they will not make it to the end customer and put their brand or image at risk.

But unfortunately, this may not be enough to stop the spread of this problem.

X-­‐ray  imaging  comparing  good  and  counterfeit  component.  

 

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Financial and Economic Implications  

The consumer electronics and computers/accessories make up a small portion of the overall impact being faced by the commodities industries. For example, the U.S. Department of Homeland Securities reported that these two industries combined for 11% of the total issues for the fiscal year 2013.6 While this can be seen as an argument that it is a small portion of the overall issue, the implications for a defective electronic component malfunctioning within a critical electronic device is much more serious than having an inferior handbag or wallet. The implications may be similar in that they are putting brand and reputation at risk, it is unlikely that a counterfeit handbag will put someone’s life at risk.

Out of all the counterfeit products that are currently being tracked and monitored within the United States, consumer electronics, parts and computers make up 11% of the total counterfeiting issue.

The United States has been working to fight the battle of counterfeit components and reported that for the fiscal year 2013 the total quantity of seizures continued to rise by 7% from the previous year and totaled over $1.7 billion dollars in genuine parts.7 And despite the best efforts of a variety of organizations the issue continues to grow as counterfeiters all try to take advantage of the lucrative opportunities.

As technology advances and new innovations appear on the market almost daily the opportunity for counterfeiters has attracted the attention of opportunists and criminals all over the world. The counterfeiting opportunities abound as manufacturers look for lower cost options to necessary components to purchase components. This gives the counterfeiter the “in” to sell their inferior goods and it is up to the purchasing departments of your businesses to ensure that the components they receive are legitimate.

But just where do these components come from and how do they get into the industry?

                                                                                                                         6 Intellectual Property Rights Seizures Statistics Fiscal Year 2013, U.S. Department of Homeland Security, http://www.cbp.gov/sites/default/files/documents/2013%20IPR%20Stats.pdf  7  Intellectual  Property  Rights  Seizures  Statistics  Fiscal  Year  2013,  U.S.  Department  of  Homeland  Security,  http://www.cbp.gov/sites/default/files/documents/2013%20IPR%20Stats.pdf    

 Electronics  and  computers  contribution  to  the  counterfeit  issue  

 

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Efforts to curb this trend continue and focus on one major contributor to the influx of counterfeit components, China. China’s contribution to the counterfeit component trade is more than 8

times that of any other contributor and this trend shows no sign of changing. Without the help from the Governments of the culprit countries, the issue will continue to get worse forcing the local Governments and overseas anti-counterfeiting agencies to shoulder the burden of protecting consumers.8

Currently the burden falls on the manufacturer to protect their brand reputation and ensure that the components   they use within their products are in fact legitimate.

Manufacturers, OEMs and suppliers must put in extensive cumbersome tracking systems to   monitor and record the life of a component from the raw materials to the end customer. But despite these cumbersome systems, counterfeiters are still able to slip in their products and put everyone at risk.

As a part of their efforts to curb the influx of counterfeit components, the United States Government has implemented strict disciplinary procedures if a contractor or manufacturer knowingly sells counterfeit goods or has not made a reasonable effort to verify the components then they will be penalized. Penalties are quite steep going up to $15 million which essentially gives manufacturers incentive to inspect for counterfeit parts themselves rather than risk the penalty.

But it’s not just the cost of being caught that drives manufacturers to put extensive controls with full product traceability in place for their product; the company’s reputation and brand is at stake with every product they ship to a customer.

                                                                                                                         8  Electronic  Parts,  Joshua  Israelsohn,  Director  Technical  Media,  ECN,  4/8/2015,  http://www.ecnmag.com/article/2015/04/components-­‐risk-­‐counterfeit-­‐electronic-­‐parts    

Total  Seizure  Contributions  Source  -­‐  Office  of  International  Trade,  US  Customs  and  Border  Protection,  US  Department  of  Homeland  Security  

 

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Summary When it comes to manufacturing electronics, there is the constant pressure to reduce costs while still keeping profit margins high. Low component prices may be appealing when you look at the bottom line but the risks those bargains bring are very high and end up costing the company considerable money, fees and irreparable damage to their reputation when the parts do not function as they intended. Best case, the customer will bring back the part and ask for the money to be returned but worst case, disaster will strike and the part will fail in a critical application resulting in the loss of property and even lives.

Counterfeit parts are manufactured with dubious quality and in many cases improper manufacturing processes. The end product that they eventually sell is at risk of early lifetime failures or poor performance in the field if it functions at all. Obviously, this type of risk is unacceptable in critical products. From the electrical performance with the risk of trace damage inside the component to the suspect mechanical performance that could be at the risk of breaking due to fatigue once it gets into the field.

Companies all over the world have implemented a rigorous purchasing and inspection process that helps to prevent counterfeit parts from entering their supply chain. Before a supplier is selected they must undergo a rigorous qualification process that looks at their internal controls and quality processes including their incoming supply chain of raw materials. Once qualified, the supplier must adhere to strict contractual obligations on the production of the material and perform regular inspections to ensure the part meets all specifications and stays within the operating parameters. All changes to the raw materials suppliers, production equipment, test procedures and even shipping packages are thoroughly qualified before approval is received and the change as allowed. In coming quality inspections must be maintained to thoroughly verify the visual, structural and electrical properties of the components to ensure that the part meets every specification. These stringent requirements are what is necessary to ensure parts are legitimate, but, despite all these control measures, counterfeit parts still manage to slip through and enter the supply chain.

To help safeguard your company, your customers and your reputation you must maintain 100% traceability for every component and its entire ‘pedigree’ of subcomponents. This starts in the early phases of product development and extends through the lifetime of production. Every part, every lot, and all its subcomponents must be thoroughly tracked and suspect materials must not be allowed to enter.

The risk is not worth the short term savings when it comes to counterfeit parts which is why it is essential to establish a stringent incoming inspection process as well as validating the credibility of all component suppliers before letting their components into your warehouse and assembly process. With vigilance and continued testing you can avoid these ticking time bombs that threaten your company and your customers.

 

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References Electronic Parts, Joshua Israelsohn, Director Technical Media, ECN, 4/8/2015, http://www.ecnmag.com/article/2015/04/components-risk-counterfeit-electronic-parts

Intellectual Property Rights Seizures Statistics Fiscal Year 2013, U.S. Department of Homeland Security, http://www.cbp.gov/sites/default/files/documents/2013%20IPR%20Stats.pdf

Intellectual Property Rights Seizures Statistics Fiscal Year 2013, U.S. Department of Homeland Security, http://www.cbp.gov/sites/default/files/documents/2013%20IPR%20Stats.pdf

Failure Mechanisms of Semiconductor Devices, Panasonic, T04007BE-3, 2009.4, 3-54, http://www.semicon.panasonic.co.jp/en/aboutus/pdf/t04007be-3.pdf

Re-balled Ball Grid Array Reliability Under Shock and Vibration, Joelle Arnold, Dr. Nathan Blattau, DfR Solutions, www.dfrsolutions.com, http://www.dfrsolutions.com/wp-content/uploads/2012/06/Reballed-Ball-Grid-Array-Reliability-Under-Shock-and-Vibration.pdf

Counterfeit Parts Found on P-8 Posiedons, John Reed, November 8, 2011, DefenseTech Where Technology & Defense Intersect, Military.com, http://defensetech.org/2011/11/08/counterfeit-parts-found-on-new-p-8-posiedons/

“The Fake and the Fatal: The Consequences of Counterfeits”, Kevin Lewis, The Park Place Economist, Volume XVII, https://www.iwu.edu/economics/PPE17/lewis.pdf

“The Facts on Fakes”, Adele R. Meyer, 2015 NARTS: The Association of Resale Professionals, http://www.narts.org/i4a/pages/index.cfm?pageid=3313  

“Counterfeit Goods and the Public’s Health and Safety”, Michele Forzley, JD, MPH, International Intellectual Property Institute, July 2003, www.iipi.org

“The ‘Ticking Time Bomb’ of Counterfeit Electronic Parts, Matthew Shindell, Todd Kramer, Stanley H. Salot Jr., Counterfeit Avoidance Mark, Industry Week, July 22, 2013, http://www.industryweek.com/procurement/ticking-time-bomb-counterfeit-electronic-parts

“Counterfeit Electronics: Another Security Threat from China”, Tom Sharpe, The Hill, July 5, 2015, http://thehill.com/blogs/congress-blog/246792-counterfeit-electronics-another-security-threat-from-china

“The Serious Risks from Counterfeit Electronic Parts”, Eric Savitz, Forbes, July 11, 2012, http://www.forbes.com/sites/ciocentral/2012/07/11/the-serious-risks-from-counterfeit-electronic-parts/

“The Campaign against Dangerous Counterfeit Goods”, John Anderson, International Criminal Police Review, 54th year, Number 476-477, 1999

 

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“Buyer Beware, Counterfeit Components Can Kill”, All Kiel, April 17, 2014, Secure Components, http://blog.securecomponents.com/buyer-beware-counterfeit-components-are-endangering-you

“Dangerous Fakes”, Brian Grow, Chi-Chu Tschang, Cliff Edwards, Brian Burnsed, October 1, 2008, Bloomberg Business, http://www.bloomberg.com/bw/stories/2008-10-01/dangerous-fakes

“Under the Hood Special Report: Counterfeit parts, Legitimate Woes, Gregory A. Quirk, Semiconductor Insights, EETimes, August 6, 2007, http://www.eetimes.com/document.asp?doc_id=1281183