o A police raid on a suspected counterfeiter in China turns up $1.2 million in fake computer parts and documents--enough to produce not only complete servers and personal computers but also the packaging material, labels, and even the warranty cards to go with them.
o A capacitor electrolyte made from a stolen and defective formula finds its way into thousands of PC motherboards, causing the components to burst and leak and the computers to fail, and eventually costing more than $100 million to rectify.
o Dozens of consumers worldwide are injured, or merely surprised, when their cellphones explode, the result of counterfeit batteries that short-circuit and suddenly overheat.
That the world is awash in fake goods comes as no surprise to anyone who's ever strolled the streets of a major city and seen a gauntlet of sidewalk hawkers selling knockoff clothes and pirated motion pictures. But in recent years a less visible but no less insidious component of the illicit global trade has taken off: the counterfeiting of electronics components and systems, from tiny resistors to entire routers. In the May 2006 of IEEE Spectrum, Michael Pecht, a professor at the University of Maryland, discusses the scope and the implications of the problem.
According to the Alliance for Gray Market and Counterfeit Abatement, a trade group founded by Cisco, HP, Nortel, and 3Com to combat illicit trafficking in their products, legitimate electronics companies miss out on about $100 billion of global revenue every year because of counterfeiting. No company is immune. Counterfeit electronics have turned up in every industrial sector, including computers, telecommunications, automotive electronics, avionics, and even military systems. What's more, nearly every kind of component has been pirated, from low-level capacitors and resistors to pricey memory chips and microprocessors.
Unfortunately, most companies are doing little to keep counterfeit parts out of their supply chains. As the electronics supply chain grows more complex, with parts coming from many different suppliers all over the globe, it becomes even more difficult to police the problem. Meanwhile, the competitive pressure to slash manufacturing costs makes the trade in cheaper, less-than-legit parts ever more attractive.
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