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88 SMT Magazine • February 2014 by Todd Kramer SECUrE CoMPoNENTS llC KraMer ON COuNTerFeITS ColUMN The Counterfeit epidemic That Can Kill In August 2011, a prime contractor warned the United States Navy that there were suspect, reworked parts that should never have been placed on one of their aircraft and that should be replaced immediately. How is it possible a trusted, world-renowned manufacturer detected that it had installed a suspect or fraudulent part in its aircraft? The prime had subcontracted with another sub- prime contractor, who was retained to produce ice detection systems for the aircraft. In a mes- sage to the U.S. Navy marked "Priority: Criti- cal," the company blamed the part, a Xilinx field programmable gate array, for the failure. This critical component was not bought from Xilinx direct or from one of their authorized distributors. Rather, this suspect part was traced upstream within the supply chain and had made its way through independent distributors in California, Florida, Japan, and China. If you are thinking that perhaps this is an anomaly, consider this. The U.S. Senate Armed Services Committee investigation revealed that more than 1 million counterfeit components likely exist within the U.S. military supply chain. If the supply chain of the finest military in the world can be infiltrated by 1 million counterfeit components, it's more than likely it can hap- pen to your supply chain. billions Lost to Counterfeiting The problem is not just limited to those who supply government agencies. Recent re- ports show consumer and industrial businesses are losing approximately $250 billion each year because of counterfeit components. One report notes the automotive industry alone lost $3 bil- lion in sales, while another shows the semicon- ductor industry takes a $75 billion annual hit. How Does this affect your Organization? Liability laws to protect the supply chain are changing within our government, which culminates with an end user. While most of the current focus by legislators is on the aerospace and defense supply market, proactive business- es are addressing the issue and not waiting on a government mandate to protect their business and their clients. The questions that need to be asked today are numerous: Do we have a counterfeit avoid- Figure 1: Critical parts are needed for landing gear.