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.
Sometimes the 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
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
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Alliance for Gray Market and Counterfeit
Abatement | agmaglobal.org | Fremont,
AGMA's primary purpose is to mitigate
gray market fraud and counterfeit trade of high
technology products by implementing brand protection
practices and controls that render the movement
of unauthorized technology products difficult,
undesirable and unprofitable.
Are Counterfeit Parts Going Compliant? | sourceesb.com/configurable/article20060111.html
From Source ESB.
Business Week Article | Fakes! The global counterfeit business is out
of control, targeting everything from computer
chips to life-saving medicines. It's so bad
that even China may need to crack down.
CNET News.com | news.com.com/Net+tightens+gray-market+retail+vise/2100-1030_3-5628742.html?part=rss&tag=5628742&subj=news
Article - Net tightens gray-market retail vise.
Combating Counterfeiting and Grey
Market - A Challenge for Indian Corporates | in.kpmg.com/TL_Files/Pictures/Counterfeiting
Information from KPMG International.
Defending Against Counterfeit Electronic
Parts and Gray Market Practices | rocelec.com/downloads/Rochester_Anti-Counterfeit_Paper_Jan2007.pdf
Information from Rochester Electronics.
Design Chain Associates | designchainassociates.com/counterfeit.html
866-322-7676 | San Francisco, CA
- Counterfeit Electronic Component Resources.
Electronic Business Online | reed-electronics.com/eb-mag/article/CA371012?pubdate=01/01/2004
Article - Don't get burned by bogus parts, by
Elliott Sound Products | sound.westhost.com/counterfeit.htm
Article - Counterfeit Semiconductors with text
and diagrams, by Rod Elliott.
IEEE Spectrum Online | ieeexplore.ieee.org/xpls/abs_all.jsp?tp=&arnumber=1176509&isnumber=26410
Article - Leaking Capacitors Muck up Motherboards.
Fighting Back Against the Grey Market
GenuOne, Inc | genuone.com
| 866-436-8663 | Boston, MA
with the technology and the tools to distinguish
undesirable but legal gray market from black
Maxim - Dallas Semiconductor | maxim-ic.com/sales/counterfeit_parts.cfm
408-737-7600 | Sunnyvale, CA
The Electronics Source Book | sourceesb.com/configurable/article20050309.html
Article - Counterfeit components: Phony parts
are clogging the supply chain.
The PC Guide | pcguide.com/buy/des/specGray-c.html
Article on Gray Market Components.
TransportGistics, Inc. | insourceaudit.com/WhitePapers/supply_chain_integrity.asp
Article - Supply Chain Integrity, A Basis to
Upset Gray Market Distribution.
Understanding the Flow of Counterfeit
and Gray Market Goods though the U.S. Automotive
and Commercial Vehicle Parts Marketplace | mema.org/pdf/SRFlow.pdf
The Brand Protection
Council of the Motor & Equipment Manufacturers