Counterfeit Components Still Plague Global Supply Chain. What Is the Best Solution?

By Logan Wamsley

Although the supply of critical electronic components and semiconductors has increased in 2024, even to the point where excess inventory is again becoming a concern, this has not negated many of the risks typically associated with times of part scarcity. Chief among these risks is the continued rise of counterfeit components.

According to a recent report from electronics information firm ERAI, reports of counterfeit components increased in 2023 from 768 to 786. The most prevalent counterfeit parts reported were analog ICs (18%), followed by microprocessor ICs (16.6%), memory ICs (13.1%), and programmable logic ICs (13.1%).

Although ERAI cannot state the reason for these trends with certainty, we can get a key insight from a new metric introduced in this report: the availability status of a component at the time of counterfeit detection. Of the components reported, 45.7% of them were marked as obsolete. Additionally, 32.8% of the components were listed as active but had long lead times. This surprisingly high figure, says ERAI, indicates that “active parts are in no way inherently ‘safer’ than obsolete parts.”

Viewing these figures, it is clear that just because the economic outlook of the electronics market appears positive (at least in the short term), that does not mean that counterfeit components cease to become a concern. “Counterfeit semiconductors are so pervasive throughout the supply chain, that regulation and enforcement have proven to be ineffectual in stemming their supply,” says Rochester Electronics representative Ken Greenwood in a recent article by EPS News. “Customers’ purchasing policies and controls are the best and most credible line of defense.”

Among the most important of these policies is easily restricting purchasing channels to only authorized distributors or OCMs. Not only does this eliminate the window that bad actors use to enter the market, but it also guarantees the customer’s purchase will come with a full warranty for performance, reliability, and quality.

In order to maintain this policy, however, requires a degree of additional planning when obsolescence is factored into the equation. To avoid situations where the only remaining option to secure critical components for current builds without a costly redesign is unauthorized third-party vendors, OEMs need to acquire sufficient inventory well in advance. This can be challenging for a few reasons, namely the need for additional warehousing space and the upfront capital freed up to make such a large purchase.

This is why, even in a supply-heavy components market, OEMs require a detailed Inventory Ownership Solution such as what is offered by Partstat. Benefits include:

• Zero upfront loss in capital, which can remain free to invest however the customer sees fit.

• No need to use inventory space.

• Use of secure, climate-controlled facilities with best-in-class electronic component protection.

• Fully customizable delivery schedules, with inventory picked, packed, and shipped to the customer on their timelines.

• Annual carrying cost savings of up to 47% compared to self-storage.

For more information on how Parstat’s Inventory Ownership Solution can secure your supply chain and save you tens of thousands annually, contact a representative today. We’d love to hear from you!