IHS projects rise in counterfeit chips
5/9/2012 1:50 PM EDT
Supply chain pitfalls
According to IHS, the issue of counterfeit parts is sometimes neglected amid the strain required to keep production lines up and running. But companies that fail to pay attention to the issue face a range of risks, IHS said. A 2009 survey conducted by the firm showed that electronics buyers have an array of concerns.
While buyers in the defense and aerospace industries are concerned about failures in aircraft safety and compromises to systems that are critical to national security, while buyers for commercial electronics firms worry about damage to company image, erosion in customer trust and loss of revenue and increasing risk of legal action, IHS said.
"To reduce counterfeit incidents, electronics buyers strive to restrict their purchasing activities to their customary supply chains, sourcing parts directly from their suppliers or from franchised distributors," Pierson said.
But Pierson acknowledged that the mandate for electronics makers is to keep their production lines running at all costs. To do this, they are sometimes forced to go outside of the supply chain to get parts, particularly in times of rising demand and short component supplies. Even franchised distributors sometimes buy excess inventory from other companies that could introduce counterfeit parts to the supply chain, Pierson said.
IHS recommends that electronics buyers develop a plan to ensure continuity of supply in order to mitigate the counterfeit problem. Such plans, similar to companies’ contingency preparations for disasters, require firms to update their listing of suppliers, parts/materials, life cycles, logistics and internal operations, IHS said.