Counterfeit Electronic Components

in the U.S. Supply Chain

Counterfeit Electronic Components

in the U.S. Supply Chain

Rochester Electronics, LLC

www.rocelec.com

This report summary has been prepared by Rochester Electronics, LLC,

an authorized distributor of semiconductors.

distribution, replication and re-creation, testing and certification, procurement and storage.

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The U.S. Department of the Navy is challenged to procure trusted electronic components that can

keep weapon systems and platforms in top working order even when they have outlived their original

end-of-life projections. More and more, these procurement efforts have succeeded in putting counterfeit

parts into the supply chain. And counterfeit components can cost lives.

As a result, Naval Air Systems Command (NAVAIR) requested that the U.S. Department of Commerce

Bureau of Industry and Security’s (BIS) Office of Technology Evaluation (OTE) conduct a survey to assess

the situation – in commercial, industrial, and defense supply chains. This survey is documented in Defense

Industrial Base Assessment: Counterfeit Electronics / November 2009. All quotes in this summary are taken

from this report.

The survey reveals that little is being done to avoid the infiltration of counterfeit parts into

the U.S. supply chain:

• All segments of the supply chain have been impacted by counterfeit parts

• Organizations in the U.S. supply chain do not communicate with one another

• Organizations and companies simply assume someone else is checking for counterfeiting

• There is a common lack of traceability of parts throughout the supply chain

• Organizations do not establish a sufficient chain of accountability

• Only a limited number of organizations keep records about counterfeit incidents

• Most organizations do not know which government agencies to contact to report counterfeit incidents

• Few organizations are aware of legal requirements and liabilities related to counterfeits

• Testing protocols and quality control practices are generally insufficient

Counterfeit parts cause loss of revenue through manufacturing downtime as well as product failure.

In the most regrettable scenario, counterfeit parts can cause personal injury or death. Throughout the

supply chain, organizations are “unaware of the legal requirements and liabilities related to counterfeits,”

unaware of “the requirements for management and disposal of counterfeit product,” and unaware of

General Survey Findings: Counterfeit Parts in the U.S. Supply Chain

“The number of counterfeit incidents for all electronic part types climbed dramatically from 3,868 cases

“Data suggests that the incident rates reported by survey participants do not fully reflect the size and scope

“The rise of counterfeit parts in the supply chain is exacerbated by demonstrated weaknesses in inventory

management, procurement procedures, record-keeping, reporting practices, inspection and testing protocols,