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Counterfeit Parts Awareness


Title: Propellant Capabilities Author: Ann Prince Last modified by: Kyle LeFort Created Date: 3/11/1998 2:49:44 PM Document presentation format: Custom – PowerPoint PPT presentation

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Title: Counterfeit Parts Awareness

Counterfeit Parts Awareness
  • Avoidance, Detection, Mitigation, and Disposition
  • Requirements Are Based On
  • SAE AS5553 (Aerospace Standard)
  • IDEA-STD-1010-B (Distribution Industry Standard)
  • DODI 4140.01 (DOD Supply Chain Material
    Management Policy)
  • LMSSC TFUF-002599 (PMP Supplier Requirement)
  • PSEMC SQC 100 (Counterfeit Prevention)
  • PSEMC DI-ENG-322(HL) (PMP Engineering)
  • Last Revised March 19, 2014

Topics To Be Covered
  1. What is a counterfeit part?
  2. Is counterfeiting really a problem?
  3. The real impacts of counterfeiting
  4. Why are parts counterfeited?
  5. Description of the supply chain
  6. How do counterfeit parts get into the supply
  7. How are parts typically counterfeited?
  8. Re-marking methods and changes
  9. Indicators of reclaimed parts
  10. How can counterfeit risks be reduced?

What Is A Counterfeit Part?
  • DODI 4140.01 Material whose identity or
    characteristics have been deliberately
    misrepresented, falsified, or altered without
    legal right to do so. Examples
  • Improper internal construction (dies, mounting,
    wire bonds, etc.)
  • Used, refurbished, or reclaimed but represented
    as new
  • Different package style, surface plating / finish
  • Did not successfully complete the OCM process and
  • Up-screened parts (MIL, Hi-Rel, etc.) but not
    fully tested
  • Modified labeling or marking (manufacturer,
    country of origin, form, fit, function, grade, or
    date of manufacture)
  • Note Parts that have been refinished,
    up-screened, or uprated, and have been
    represented and documented as such are not
  • Parts are considered suspect until proven
    counterfeit by the OCM and/or suitable advanced

Is Counterfeiting a Problem?
  • From a U.S. Department of Commerce, Office of
    Technology Evaluation (OTE) Survey Report,
    January, 2010
  • OTE data revealed that 39 percent of 387
    companies and organizations participating
    encountered counterfeit electronics during the
    four-year period (2005 2008). Moreover,
    information collected highlighted an increasing
    number of counterfeit incidents being detected,
    rising from 3,868 incidents in 2005 to 9,356
    incidents in 2009.
  • Specific findings from the survey
  • 46 of surveyed discrete component manufacturers
    and 55 of surveyed microcircuit manufacturers
    encountered counterfeit versions of their
  • Counterfeit products were discovered in all 14
    discrete electronic component and six
    microcircuit product categories listed in the
  • QPL and QML known counterfeits increased by gt10X
    in four years.
  • The large majority of reported counterfeit parts
    were in the 1.00 - 100.00 retail price range.
    The full range was lt.01 to gt10,000.

Is Counterfeiting a Problem?
  • From a 2012 U.S. Senate Committee on Armed
    Services Report
  • Conclusion 1 China is the dominant source
    country for counterfeit electronic parts
    infiltrating the defense supply chain.
  • Conclusion 2 The Chinese government has failed
    to take steps to stop counterfeiting operations
    that are carried out openly.
  • Conclusion 3 The DOD lacks knowledge of the
    scope and impact of counterfeit parts on critical
    defense systems.
  • Conclusion 4 The use of counterfeit parts in
    defense systems can compromise performance and
    reliability, risk national security, and endanger
    the safety of military personnel.
  • Conclusion 5 Permitting contractors to recover
    costs incurred as a result of their own failure
    to detect counterfeit components does not
    encourage the adoption of aggressive counterfeit
    avoidance and detection programs.
  • Conclusion 6 The defense industrys reliance on
    unvetted independent distributors results in
    unacceptable risks.
  • Conclusion 7 Weaknesses in the testing regime
    for electronic parts create vulnerabilities that
    are exploited by counterfeiters.
  • Conclusion 8 The defense industry routinely
    fails to report cases of suspect counterfeit
    parts, putting the integrity of the defense
    supply chain at risk.

Is Counterfeiting a Problem?
  • General findings
  • All elements of the supply chain were directly
  • Nobody in the U.S. supply chain talks to anybody
  • Common assumption somebody else is testing the
  • Lack of traceability and accountability in the
    supply chain.
  • Recordkeeping is very limited or non-existent.
  • Who do you report counterfeit parts to?
  • Inventories need better testing and controls.
  • YES, there IS a problem!

Impact of Counterfeiting
  • Given Counterfeit parts exist in the supply
    chain. So what?
  • Safety concerns military systems, satellites,
    medical devices / healthcare systems, aerospace,
    and automotive
  • Erosion of business confidence
  • Intellectual property brand damage
  • Loss of sales
  • Reduces ability to sustain technology development
  • Adds costs to compensate for loss of trust in
  • Costly rework, corrective actions, and full legal
    liability. No government contract funding may be
    used to repair or replace products found to
    contain counterfeit parts.

Why Are Parts Counterfeited?
  • Because it is profitable!
  • Source material is cheap production scrap,
    reclaimed salvage (E-Waste), obsolete
    revisions, or out-of-date for use.
  • High product demand is created by
  • Out of stock (high short-term demand, lack of
  • Out of production (obsolescence),
  • Manufacturer-limited (poor yields, allocation to
    select customers),
  • Restrictions on country of origin, and
  • Pressure to reduce costs.
  • Ready sources of low-cost labor and lack of
    legal and environmental oversight China,
    Taiwan, Malaysia, Singapore
  • Under-utilized and low-cost manufacturing
    facilities in developing countries wafer fabs,
    device packaging lines, etc.
  • Ability to steal, buy, or reverse-engineer
    designs for high-value components.
  • Low risk poor record of detection,
    identification, and prosecution.

The Supply Chain
  • OCM the Original Component Manufacturer, the
    top of the supply chain. Sales are made to all
    the organizations below.
  • Authorized (Franchised) Distributors Authorized
    by contract with the OCM to stock and sell the
    OCMs product, often including marketing and
    technical support from the OCM.
  • Independent Distributors Do not have OCM
    agreements, purchase inventory on the open
    market, maintain stock, and resell back into the
    open market and to end users. They may or may
    not have the technical ability to evaluate
  • Brokers An agent with market knowledge who
    arranges transactions between two parties usually
    unknown to each other. Brokers are sometimes also
    called independent distributors, but do not
    typically carry inventory.
  • Sub-tier Suppliers PWA and contract assembly
    houses with turnkey procurement programs.
  • Outside Service Providers Testing labs, special
    process houses, chemical processing, lead
    forming, repackaging

How Do Counterfeit Parts Get In?
  • As many as 20 of the counterfeit electronic
    component incidents reported have involved the
    OCM/authorized distribution channels. There are
    multiple ways this can happen
  • 47 of authorized distributors buy parts from
    independent distributors, 29 from brokers, and
    27 from Internet-exclusive sources. (OTE
  • OCM or distributor employee fraud. Rejected
    wafers, dice or assembled parts are diverted from
    scrap containment and sold to counterfeiters for
  • OCMs accept returns or buy back surplus parts
    without adequate safeguards. Counterfeit parts
    are linked to legitimate traceability for
    previously purchased parts and are restocked.
  • Lack of verification of OCM shipments by
    legitimate authorized distributors because of the
    assumed integrity of the source.
  • Most OCMs still will not verify suspected
    counterfeit parts for independent distributors or
    end users.
  • U.S. front companies are set up to fraudulently
    sell mismarked Chinese-made parts as made in the

Good, Bad, Really Ugly
How Are Parts Counterfeited?
  • The most common is re-marking
  • Legitimate parts to a newer date code.
  • Down-rev parts to a higher or current level.
  • Change the manufacturer or country of origin of
    parts to be more salable to a wider market.
  • Similar but unequal parts to a different device
  • Next most common is reclaiming used parts from
    the E-waste stream and presenting them as unused,
    or as feedstock for re-marking. A counterfeit
    and ecological disaster.
  • Packaging surplus or rejected wafers or dice as
    if they were good parts from the original
  • Reverse-engineering and manufacturing in low-cost
    facilities, marking and selling them as the legal
    OCMs parts (the proverbial Chinese copy).
  • Sale of non-functional components (dummies to
  • Providing false traceability for all of the above.

Multiple Packages, Same Date Code
Blacktopped Parts
Re-marking Methods and Changes
  • Markings were originally sanded off, leaving
    sanding scratches and rounded edges.
  • Covering materials were painted or sprayed on
    (blacktopping) to cover original markings, but
    left a very different surface finish.
  • Powdered package material was added to the
    blacktopping and screened on to improve the
    surface appearance.
  • Application methods were improved to keep mold
    indentations from filling or losing their smooth
  • Laser marking capability became available with
    used/surplus equipment, but wear and poor
    maintenance leave visible signs.
  • Printing methods have been improved, but
    alignment is still mostly manual and
    character/logo formation are not up to OCM
  • The part bottom is not usually modified or
    re-marked, and top-to-bottom differences are
    visible until the parts are assembled.

Re-Marked Parts
Blacktop in the Mold Cavity
Reclaiming Indicators
  • Excess solder or flux, or cracks in solder, from
  • Missing, shortened, or bent leads
  • Leads extended by welding or soldering
  • Changes in lead width or diameter
  • Different degrees of oxidation on leads
  • Lead damage, evidence of mishandling
  • Insertion or probe marks on leads, showing prior
  • Component body damage, pry marks, contamination
  • Heat marks, scorching
  • BGA spheres oxidized, misaligned, or missing

Insertion Marks on Pins
How Can Risks be Reduced?
  1. Purchase only from OCMs or verified authorized
    distributors required by customer flow-down,
    DI-ENG-322, and Form 842 (SQC-100).
  2. Require only original signed certs and documents
    - no photocopies or scanned and printed documents
    that hide changes.
  3. Verify and preserve packaging labeling, seals,
    and materials. Counterfeiters dont invest
    heavily in things that usually get thrown away at
    the receiving dock.
  4. Verify LDCs and quantities for all parts in a
    lot against OCM and Distributor invoices (trace).
    Date codes can be checked on many OCM websites
    to verify they were actually used. (70 of known
    counterfeit date codes were after OCM end of
  5. Verify part carriers, labeling, part orientation,
    etc. Carriers are often reclaimed by
    counterfeiters, never by OCMs. Parts loaded by
    hand dont have the repeatability of machines, or
    the OCMs QC.
  6. Verify part number, manufacturer, part quantity
    for the full lot mixed date codes never come
    from the OCM.
  7. Visual part inspection per IDEA-1010-B checklist
    (100 or large samples).

Counterfeit Labels
Counterfeit Labels
How Can Risks be Reduced?
  1. Perform sample part marking tests
    (non-destructive) detects cheap or improperly
    cured inks.
  2. Perform sample surface tests (non-destructive)
    detects the presence of blacktopping covering
    the original markings.
  3. Verify and record sample dimensions
    (non-destructive) most commonly overlooked but
    useful for discrete components.
  4. Perform and record sample electrical, XRF, and
    leak tests (non-destructive) many counterfeit
    discrete components are not the correct value
    (saves inventory!).
  5. Perform and record de-lid or x-ray inspection
    (destructive) done on lot samples for each date
    code, or whenever another inspection or test
    identifies a lot as suspect.
  6. Document, verify, report, and properly dispose of
    suspected counterfeits so they cannot re-enter
    the supply chain.
  7. Regularly review counterfeit alerts (GIDEP,
    customer, etc.).
  8. Plan for obsolescence well in advance of possible

After Device Marking Test
After Device Surface Test
In Summary
  • Avoid Counterfeiting
  • Select, qualify, audit, and monitor suppliers
  • Enforce and verify flow-down to sub-contractors
  • Monitor customer/government sources of
    counterfeit information
  • Detection of Counterfeits
  • Associate awareness, training, and responsibility
  • A robust inspection and testing program
  • Integration into the PMP plan part of the
    Quality culture
  • Reduce Counterfeit Part Impact
  • Select high-yield and available components from
    reputable OCMs
  • Qualify alternate parts
  • Prepare for obsolescence before end-of-life
  • Safely Dispose of Counterfeit Parts
  • Comprehensive containment procedure
  • Full documentation and reporting of all incidents
  • Drive corrective actions back to the supplier