These original Kirt's Cogitations™
may be reproduced (no more than 5, please) provided proper credit is given to me, Kirt
– noun: Concerted thought or reflection; meditation; contemplation.
Kirt [kert] – proper noun: RF Cafe webmaster.
Caveat emptor - let the buyer beware. A wave of "gray market" components
has saturated the supply chain that is causing both OEMs (original equipment
manufacturers) and CMs (contract manufacturers) to work overtime trying
to separate the wheat from the chafe. Gray market parts are manufactured
by shops that specialize in counterfeit products that are often times
nearly indistinguishable from the genuine parts.
counterfeits work well, but often premature failure is experienced,
and the unsuspecting OEMs and CMs are left having to honor warranties
that were based on MTBF calculations and empirical lifetime testing
performed using genuine components. In many instances, a failed component
is returned to the manufacturer that supposedly provided the part, only
to discover that it is a knock-off of something they make. The intended
supplier loses money because some counterfeiter has part of his market
share and the OEM loses money by having to service fake parts and suffer
the bad public relations that results.
Ample reports come out
of trade shows in China where salesmen (and saleswomen) brazenly canvass
the floor with a basket of goods and a handful of fake labels offering
to sell as many of the counterfeit parts as the prospective buyer needs
- branded with the genuine company's logo. A couple years ago, an epidemic
of gray market power supply capacitors caused massive damage; fires
started in chassis, flying parts injured the unsuspecting users, electrolyte
oozed out of cans onto PCBs, and generally wreaked havoc. A lot
of inventory was scrapped. Every few weeks we hear another report of
counterfeit cellphone batteries are still catching on fire. Vendors
like Nokia have gone to placing holographic labels on their batteries
to mark them as authentic.
A number of websites have popped up
to track the gray market parts (1,
3), but it is a monumental task. Although they admit that it is
only an educated guess, the World Customs Organization estimates that
counterfeiting accounts for 5% to 7% of global merchandise trade, equivalent
to lost sales of as much as $512 billion in 2004. Seizures of the bogus
parts by U.S. customs agents jumped by 46% in 2004. To put it in perspective,
the total gray market for all goods, not just electronics, is believed
to be larger than the total narcotics trade.