Counterfeit electronics puts consumer brands at risk

14 May 2010

An investigation by the IET has revealed that counterfeit electronic components are regularly infiltrating legitimate supply chains

An investigation by the Institution of Engineering and Technology (IET), has revealed that counterfeit electronic components and accessories are regularly infiltrating the legitimate supply chain and inventories of well known consumer electronics companies.

Speaking to manufacturers, component distributors and testers, the research revealed that at least 5% of the global electronics supply chain consists of counterfeit consumer electronics components and accessories which often cause critical failure or can put an individual’s data at risk.

Furthermore, the Trading Standards Institute has indicated that the amount of seizures of counterfeit components and accessories, destined for use with consumer devices, is growing.

In addition to the possibility of causing critical failure, trading standards officials also warn that most counterfeit storage components and accessories (such as USB keys, memory cards and digital photo frames) contain viruses or other types of malware that could compromise the security of consumers’ personal data.

Apparently, the origin of most counterfeit components is China, but India is also a major source. Much of the counterfeit consumer electronic components originates from so-called ‘grey’ and ‘green’ market sources. The grey market is the trade of a product using distribution channels that are not sanctioned by the original manufacturer. The green market is the trade of second hand and used goods. Both forms of trade are legal and often necessary for aftermarket support.

The investigation uncovered evidence that these goods are often passed off as new and sourced directly from the original manufacturers by brokers who trade through Internet brokerages. The green market is growing particularly fast due to global trade in e-waste recycling where goods are often transported to India and China to be broken down so that the materials and components can be harvested for re-use.

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