The counterfeiting market has grown out of control and infiltrated all areas including the electronic components industry. This White Paper will unveil the risks involved and the financial and economic implications.

1.
1
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

2.
2
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

3.
3
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/

4.
4
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

5.
5
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.

6.
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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

7.
7
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

8.
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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.

9.
9
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

10.
10
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

11.
11
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.

12.
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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

13.
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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