Danger: Avoid Brokered Parts!

The electronics component market has been very tight for years now.  This is a result of component manufacturers being reluctant to expand capacity, having been burned by the global recession that occurred soon after expanding their factories in the late 2000s.

Conditions ripe for fraud

When electronic component manufacturers have maxed out their manufacturing capacity, combined with a strong demand for their components, the condition is ripe for fraud to take place in the form of fake/counterfeit parts.  Counterfeit electronic components can be found not just in the high-end IC market, but also in the low-cost commodity capacitor market.

Counterfeiting: a trillion dollar enterprise

Counterfeiting is not limited to just consumer goods such as watches and purses; it also extends to even the electronic component market.  Forbes magazine list counterfeiting as the biggest criminal enterprise in the world at nearly $2 trillion dollars – bigger than drugs and human trafficking.

Impact on Electronic Contract Manufacturers

Companies in the electronic manufacturing service industry that use (either knowingly or unknowingly) counterfeit parts end up incurring a negative financial impact.  Typically, these fake parts don’t live up to the specification of the legitimate manufacturer.  As a result, there is a higher incident of test failures during in-circuit testing (ICT) and end of line (EOL) functional testing.  These test failures result in EMS companies having to do rework, which cost money.  Sometimes circuit boards that have counterfeit parts on them don’t fail inside the EMS company but out in the field.  Field failures are very costly both the EMS company and their customer.

Don’t use component brokers

An EMS company should always purchase and obtain components from well-established distributors or directly from the manufacturer.  When these distributors don’t have the component that an EMS company needs, a component broker (even a legitimate one) may think he has access to some but does not.  The parts he thinks are legitimate could be fake.  A broker typically cannot trace the parts he has access to all the way back to the legitimate manufacturer.