A newly defined EMS role would vastly improve counterfeit detection results.
The commercialization of counterfeit mitigation has levied lower efficacies. Underequipped test houses are teaming with brokers to offer low-cost counterfeit detection services. Brokers, in turn, are clouding the origins of the testing and are not producing validation of the results. OEMs and the US Department of Defense may not be aware of the loose variances in testing and the degree of testing applied with every authenticity certification. Authenticity certifications, whether valid or recklessly applied, quell concerns of all parties involved: EMSs, OEMs and the DoD. Hence, there’s a false sense of security blanketing the counterfeit mitigation industry.
The industry is in dire need to reduce and eliminate watered-down authenticity certifications. The solution does not come from test houses, brokers or the US Defense Logistics Agency. Instead, the solution comes from a practice used in EMS to address an entirely different matter.
For over three decades, the EMS industry has served its customers with complete transparency of costs through the use of the “open book” format. This format includes the all-important bill of materials (BoM), whereby model numbers, manufacturers and unit prices are manifested. In some cases, options of components are provided for the purpose of the OEM (customer) to consider and choose accordingly. Such options may involve components with varying tolerances, wider temperature ranges, larger memory storage, material differentiators, and so on. For counterfeit component considerations, the open book format is a tool to give OEMs and the DoD the full makeup of authenticity testing, costs involved and the participating test house and broker. All these factors will weigh in to the OEMs’ degree of comfortable assurance needed to come up with the best possible counterfeit detection path. In practice, the EMS is turning the tables and handing over the critical decision to the OEMs, in short asking, How much testing assurance are you comfortable with? This passing of responsibility from EMSs to OEMs and the DoD signals a major paradigm shift in the counterfeit mitigation industry. No longer would any claim of authenticity be accepted without direct scrutiny and insight by those who will be impacted most. The access to such information by OEMs and the DoD would limit unqualified decisions made by price shoppers who demonstrate a lack of awareness of authenticity validation.
Under this concept, a full review of test procedures and associated costs, along with listed test house and broker, would be included in the BoM. To be effective, the EMS would add options, perhaps running from least expensive to most expensive. What is presented is no different than anything else manifested in a BoM or typical hardware store. The decision tree is no more complicated than a “good, better, or best” scenario. These options are to be weighed by OEMs or the DoD, which would use the insight and technical knowledge provided to select the appropriate level of assurance toward preventing counterfeits from their end-devices. As an aside, such requests to the OEMs and DoD for a “selection” of counterfeit mitigators may in fact reduce, or negate, the EMS’s liability should counterfeits show up in production.
Why the EMS industry must go to these lengths is the result of a consistent failure to recognize the desperate situation it is now in. But there’s a gap between what high-end (read: capable) and low-end test houses can detect, and the emphasis to date has been on keeping costs as low as possible, not on ensuring components are valid.
To fully understand the urgency of why this solution is needed, however, we must look at how we got here. And the story starts not with the counterfeiters, for every market has its con artists, but rather with those who don’t take the necessary steps to protect themselves.
Gray market mistakes. Purchasing electronic components from the gray market is the absolute last resort to solve component obsolescence. The gray market is littered with increasing levels of counterfeit components from increasing numbers of active overseas counterfeiters. Fueling this activity is the shorter lifespan of ICs, creating accelerated time to obsolescence.
These trends have incented American companies to jump into the business of counterfeit mitigation. Today, more than 50 independent brokers provide counterfeit detection services to the electronics market. Given so much muscle one would believe the counterfeit invasion has been neutralized. Instead, the struggles against counterfeits are growing worse, with an alarming gap between counterfeiters and their pursuers, the counterfeit mitigators.
The simplistic objective of counterfeit mitigators is to keep close pace with the highly sophisticated counterfeiters of today. There’s an inherent gap between counterfeiters and counterfeit mitigators, with the latter in a constant state of catch-up with new counterfeiting techniques. The alarming fact is the gap between these two bodies increases over time. It is important to comprehend the market conditions enabling this gap and how we, the greater electronics market community, can temper this perilous situation by exercising a shift in industry practice.
Back in 2011, the US Senate Armed Services Committee requested a joint effort between the counterfeit mitigation community and the US Department of Defense to construct detection procedures and guidelines. One of the panel members invited to this hearing was Tom Sharpe, vice president of SMT Corp., a noted test house and independent distributor. Sharpe’s inclusion to this hearing is no surprise; he is unofficially considered an evangelist of counterfeit mitigation. (A video of this hearing is found at smtcorp.com/senate-armed-services-committee.)
False security. Over the past four years, I have come to know Sharpe through my own efforts to resolve counterfeiting issues that were corrupting programs I managed. From my dealings with SMT, I was exposed to the shocking undertow within the counterfeit mitigation industry.
“The electronics marketplace is operating under a false sense of security when it comes to counterfeit mitigation,” Sharpe explains. “The current test standard guidelines address counterfeiters’ technologies first identified in the 2009 to 2011 timeframe. While these same levels of mitigation testing remained fixed, the counterfeiters did not rest during this period.” While SMT continues to update its testing processes to keep up with the evolving counterfeiters, Sharpe doesn’t mince words in stating industry practices today are diluted and off track. “The pass/fail (go/no-go) criteria commonly applied by the bumper crop of test houses provide nothing more than ambiguous test reports opening opportunities for any broker to grant authenticity certifications for components that have been inadequately evaluated.”
Integra-Technologies is another accomplished test house and recognized as a leader in counterfeit mitigation testing. I approached Integra for its points of view on the industry. Sultan Lilani, technical business development manager at Integra, says, “For the most part, test houses have caught up with mechanical and material evaluation. However, comprehensive electrical testing is virtually neglected by the many secondary test houses that have popped up.”
Commercialization is degrading the effectiveness of counterfeit mitigation. An absence of an industry-wide comprehensive counterfeit detection test plan leaves buyers in the dark for comparing levels of tests and competencies of counterfeit detection. Because OEMs and the DoD can contract testing services at considerably lower costs from lower technology test companies, state-of-the-art test houses like SMT and Integra feel the pricing squeeze. “Buyers will select the best pricing based on what is perceived as equivalent services,” Lilani asserted. As such, they perpetuate a major faux pas, the belief high-end houses provide the same services as secondary shops.
As an industry practice, or non-practice, the majority of authenticity certifications are not supported by test results. Sharpe claims many lower-end test houses provide no more than a one- or two-page test review. Such test reports are brief, and lack content covering the relevant testing parameters, he says. This thinking reveals the weakest link in the handoff of components from the gray market to the counterfeit mitigators and on to the OEMs and DoD.
Is the DLA to blame? When asked about the DLA’s role in keeping up with revised specifications, Lilani noted that “electrical testing is not a simple process, and testing parameters and guidelines for what is considered necessary are complex.” Effective electrical testing requires time and understanding of the device functionality and application, he adds. As such, he says, “The (US) government is in a difficult situation. It is not in position to issue effective standards by itself and hence is collaborating with all parties to come up with effective counterfeit mitigation test services.”
Attack of the clones. Compounding the problem is the latest entry to counterfeiting, IC clones. The developing clone epidemic was raised by Sharpe at a CALCE-SMTA conference held in June. It has been reported that 20 active wafer fab foundries are operating in China, and likely a few are now producing IC clones. Sharpe views clones as the next huge challenge in counterfeit mitigation. “Clones exhibit mechanical specifications as good, and sometimes even better, than the original ICs,” he says. “By definition, detection will only take place with extremely sophisticated electrical tests performed by skilled engineers and technicians, which SMT has been developing since we first identified clones two years ago.” Lilani concurs that clones entering the supply chain are a major issue, stating, “Sophisticated electrical testing is the only true means to uncover a clone IC.”
For an added perspective, we queried a Tier 2 EMS’s component test team about these clones. The team, which has counterfeit detection experience, reported they have yet to come across clones in their supply chain. It begs the question, Are clones that good?
Conclusions. The remedy proposed at the start of this column may be viewed as somewhat simplistic. However, it is centered on the convenient assumptions and oversights that proliferate the counterfeit mitigation industry. Setting up real-time informational exchanges among the EMSs, OEMs/DoD and test houses/brokers will focus on the imperative decisions to be made regarding the give and take of test levels, risks and costs.
The counterfeit problem we face today is the perfect opportunity for the EMS sector to make good on its own mantra: “We are a solutions provider.”
In concert to the newly defined EMS role is the formation of a much broader electronics industry union. A discussion of this solution path will be addressed in a subsequent column.
is a senior executive with 30 years in the global EMS marketplace, 25 with Singaporean, Chinese and US EMS and systems companies in sales and marketing;