Counterfeit electronic parts are increasingly becoming so much of a problem that it is costing “the U.S. government and its contractors billions [of dollars] each year” while consumer and industrial businesses are losing approximately $250 billion annually. Industry Weekly explains the process in which these counterfeit parts are constructed. E-waste, or scrapped electronic parts, is collected and sent to China where it is washed in “dirty river water, and dried on the sidewalk.” These parts are modified to appear new and sophisticated electronic parts with fake markings replacing the serial numbers previously sanded off. These previously scrapped parts are then sold as cheaper black market alternatives to legitimate electronic parts that are priced on performance and respectable manufacturing processes.
The issue is being regarded as a growing problem, and the article goes on to describe the necessary actions the White House has made. The National Defense Authorization Act for Fiscal Year was passed in December of 2012, and Section 818 of the act is recognizes the counterfeit issue. The law requires all Department of Defense contractors to purchase electronic parts from DOD contractors and subcontractors to obtain electronic parts “from ‘trusted suppliers'” or they will face a penalty of $15 million or even jail time. Additionally, if there is reason to suspect parts are counterfeit, contractors are allowed 60 days to report the issue to the GIDEP to stay compliant with the law.
The effort of the government is to regulate focuses on avoidance of these counterfeit electronic parts. The law will also provide the DOD with valuable leads to the sources of counterfeit electronic parts. However, as effective as avoidance and detection this solution may be it is just a temporary solution. A more permanent solution to the counterfeit solution is an efficient system to verify electronic parts and their sources.