counterfeit avoidance through purchasing processes and supplier control - livingston

11 October 2009© 2009 BAE SystemsAll Rights Reserved No U.S. Government export controlled content. No U.S.G. export restrictions apply.

Counterfeit Avoidance Through Purchasing ProcessesHenry Livingston, BAE Systems Electronic Solutions

2© 2009 BAE SystemsAll Rights Reserved No U.S. Government export controlled content. No U.S.G. export restrictions apply.

Agenda

• Observations from counterfeit detection experiences

• Approaches to reduce the potential of acquiring counterfeit electronic components


Observations from counterfeit detection experiencesHenry Livingston, BAE Systems Electronic Solutions


Introduction

• BAE Systems issued eighteen (18) GIDEP Alerts from December 2006 to July 2007 reporting suspect counterfeit parts.

• This briefing presents observations from these examples …• Case summaries and supply chain analysis• Observations from counterfeit detection efforts


Counterfeit Case SummariesGIDEP Alert Findings …J5-A-07-01 Parts marked as Philips QML product with 2003 date code, but contained Intel die manufactured in 1980J5-A-07-02 Parts marked as Analog Devices QML product, but markings were not consistent with standard Analog Devices

markings for the device and device contained die of a different functionJ5-A-07-03 Parts marked as Cypress commercial product, but parts were salvaged from scrapped assembliesJ5-A-07-04 Received parts Jan-06 thru May-06 marked as On Semiconductor commercial product, but On Semiconductor

did not manufacture these partsJ5-A-07-05 & J5-A-07-07

Received parts marked as Seeq commercial product, but parts were salvaged from scrapped assemblies and remarked to appear as legitimate/unused product

J5-A-07-06 Parts marked as Philips QML product with 9852 date code, but Philips discontinued manufacture 31 December 1997

J5-A-07-08 Parts marked as National QML product, but major discrepancies in marking format and content, including date code and manufacturing location; Die contained in these parts were not manufactured by National Semiconductor

J5-A-07-09 2001 date code, but Intersil discontinued this product in 2000; marking missing country of origin; parts had wrong lead finish

J5-A-07-10 2004 date code, but Linear Tech discontinued this product in 2001J5-A-07-11A Parts marked as Analog Devices QML product, but incomplete or absent marking; incorrect lead finish vs part

number; reclaimed or refurbished; invalid test reportJ5-A-07-12 Part number and date code do not match the lot number identified in Cypress production recordsJ5-A-07-13 Suspect marking; evidence of remarking; part number and date code do not match Cypress lot numberJ5-A-07-14 Parts marked as Analog Devices “883” product, but incomplete or absent marking; incorrect lead finish vs part

number; reclaimed or refurbished; invalid test report; evidence of prior markingJ5-A-07-15 Parts marked as Cypress commercial product; leads have been re-soldered; evidence of a resurfacing on device

packageJ5-A-07-16 Parts marked as Xicor/Intersil QML product, but marking is not compliant to Xicor/Intersil brand layout; die not

associated with QML productJ5-A-07-17 discrepancies in device marking, lead finish and lead qualityJ5-A-07-18 parts appear to be reclaimed; the surface roughness the devices markings were stripped and remarked.


Supply Chain Analysis

Parts exchange hands several times before reaching the end user.

Eight (8) out of our eighteen (18) cases trace back to sources in China…… Perhaps more.

Same unique part type obtained through several suppliers.

Seventeen (17) unique part types.Broad variety of device functions. Ten (10) manufacturers represented.

Twenty (20) USA based suppliers

Eleven (11) China based suppliers

Full details available to GIDEP Participants. Others may apply for membership at the GIDEP Help Desk (951-898-3207)

Origin unknown for all cases

All involve Independent Distributors

Similar bogus test reportsSimilar bogus test reports

One (1) UK based supplierUSA1 USA2 USA14 USA15 ???J5-A-07-07 *

USA6

USA7

???J5-A-07-05 *

USA8

USA9

USA10

???

???

???

???

USA1 USA2 USA13 ???J5-A-07-03

USA1 USA2 China4 China5 ???J5-A-07-04

USA1 USA2 USA12 China3 ???J5-A-07-02



USA1 USA2 China8 ???J5-A-07-08


USA4 China10 ???J5-A-07-10

USA3

USA5 USA11 USA16 ???J5-A-07-11A **

USA6 ???J5-A-07-12

USA18 ???J5-A-07-13 USA17

USA19 ???J5-A-07-14 ** USA17

USA20 ???J5-A-07-15 USA1


USA1 USA2 ???J5-A-07-17 USA5

USA1 USA2

???

J5-A-07-18

UK1

USA14 ???


Observations from Counterfeit Detection Efforts (summary)

• Industry and Government inspection and test methods are designed to verify the integrity of authentic parts … not to detect counterfeits

• Visual inspection of marking for correct and accurate content can provide conclusive evidence of suspect counterfeits

• Production records may not be available for older parts

• Documentation may not be authentic

• Some parts show evidence of multiple exposures to tests

• Many parts show evidence of poor storage and handling conditions or termination refurbishing or reclamation


Observations from Counterfeit Detection Efforts

• Industry and Government inspection and test methods are designed to verify the integrity of authentic parts … not to detect counterfeits.

• External visual inspection methods (magnification levels, failure criteria) may not detect indications of resurfacing and remarking, termination refurbishing, reclamation.

• Marking permanency test methods may not be aggressive enough to detect indications of resurfacing and remarking.



• Industry and Government inspection and test methods … (cont.)

• Ensuring representative sampling for physical and materials analysis can be problematic.

• If part marking has been forged, however, a single lot/date code marked on counterfeit devices can disguise

• Parts originating from multiple inspection lots• Parts produced by multiple manufacturers• Different versions of the same part• Devices of completely different functions• Samples sizes must be large enough to account for this potential

• The user must make adjustments to physical and materials analysis evaluation criteria detect various forms of counterfeiting.



• Industry and Government inspection and test methods … (cont.) • Electrical testing can help reveal suspect lots, but may not detect counterfeit

parts without a test plan designed specifically for the device type under test. • DC electrical tests are frequently used as a low cost and fast detection

technique, but will not detect dynamic performance deviations attemperature extremes.

• While AC electrical and functional tests are most likely to reveal suspect product, testing of complex devices requires intimate knowledge of the original manufacturer’s test protocols.

• In addition, electrical testing alone may not detect damage induced by inadequate handling and storage, termination refurbishing, or reclamation.



• Marking quality, legibility, conditions vary significantly• Visual inspection of marking for correct and accurate content can provide

conclusive evidence of suspect counterfeits. • Observations based exclusively on marking quality, legibility, and

conditions, however, may be misleading. • Quality in device marking, marking legibility and overall marking conditions

for both authentic and counterfeit product can vary significantly. • BAE Systems has observed

• “bad looking” authentic parts • “good looking” counterfeit parts.



• Production records may not be available for older parts • The older the parts are, the less likely production records exist to aid in

authentication. • Original component manufacturer data retention practices may limit access

to production records for older parts. • In a few cases discovered by BAE Systems, the original component

manufacturer no longer had production records to support our investigations• In these cases, however, BAE Systems found other evidence sufficient

to conclude the parts were suspect counterfeit.



• Documentation may not be authentic • In one specific case, a test report was provided by the Independent

Distributor as evidence of • Authentic parts• Traceability back to the original component manufacturer

• Feedback from the original component manufacturer revealed that this test report was not valid.

• The manufacturer did not have test data for parts with the same date code as those sold to BAE Systems.

• BAE Systems, therefore, concluded that the original component manufacturer did not produce this specific product with this date code

• The manufacturer does not use the “Military Certification of Conformance” label and its content on authentic test reports.



• Some parts show evidence of multiple exposures to tests• BAE Systems discovered a case where additional marking on the device

indicated prior multiple exposures to electrical, mechanical or environmental tests.

• Without knowledge of the application of these tests or their specific conditions, BAE Systems was not able to judge the potential for damage to these devices or the effect of this previous testing on total product life expectancy.


Authentic perhaps, but where have they been? …

• Many parts acquired from Independent Distributors may be authentic, but show evidence of …• Poor storage and handling conditions • Termination refurbishing or reclamation

• To ensure confidence that parts are of the same quality and reliability as when first shipped by the original component manufacturer, usersshould apply a suite of test and inspection protocols to …• Detect counterfeits and eliminate defects associated with handling and

storage, and with termination refurbishing or reclamation. • Consider life testing as an option to obtain a high level of confidence of

failure free performance and to produce test results needed to support an assembly/system level reliability assessment.


Conclusions

• Inspections and tests can reduce the risk of receiving counterfeit parts from Independent Distributors, but there is no fail safe method …

• Individual methods may not …• Definitively distinguish authentic parts• Detect damage induced by inadequate handling and storage, termination

refurbishing, or reclamation• A suite of inspections and tests are necessary to …

• Detect counterfeits and eliminate defects associated with handling and storage, and with termination refurbishing or reclamation.

• Establish high level of confidence of failure free performance and to support an assembly/system level reliability assessment.

• The most effective approach to avoiding counterfeit electronic components is to purchase product directly from the original manufacturer, or from a distributor, reseller or aftermarket supplier who is franchised or authorized by the original manufacturer.


Approaches to reduce the potential of acquiring counterfeit electronic componentsHenry Livingston, BAE Systems Electronic Solutions


Franchised and Authorized Distributors

• The most effective approach to avoiding counterfeits is to purchase product …• Directly from the original manufacturer, or • From a distributor, reseller or aftermarket supplier who is franchised or authorized by

the original manufacturer • Franchise agreements between the original manufacturer and the distributor

typically include …• Original manufacturer warranty• Product integrity via proper handling, storage and shipping procedures • Failure analysis and corrective action support• Traceability via certificates of conformance and acquisition traceability

• Franchised distributors include large and small businesses, including Small Disadvantaged Businesses (SDB)

• A substantial number of products, however, are no longer available through these channels.

• Independent Distributors will continue fill this gap.


Independent Distributors

• Independent Distributors purchase new excess inventories from end users with the intention to sell and redistribute back into the market.

• Independent Distributors subsequently sell (re-distribute) the new parts from these excess inventories to fulfill inventory shortages with hard-to-find, obsolete, and competitively priced parts.

• End users are typically original equipment manufacturers (OEMs) and contract manufacturers (CMs) at locations all over the world.

• Independent Distributors do not typically have limiting contractual agreements or obligations to the components manufacturers.

From …IDEA-STD-1010-A, Acceptability of Electronic Components Distributed in the Open Market.Copyright © Independent Distributors of Electronics Association (IDEA) 2006 (http://www.idofea.org/)

http://www.idofea.org/


Risk Mitigation Methods to Avoid Counterfeit Electronic Components

• The following mitigation methods can be applied to reduce the risk of receiving counterfeit parts when purchasing from an Independent Distributor …• Traceability Documentation

• Without certificates of conformance and acquisition traceability, the purchaser takes on unknown risks.

• The Independent Distributor’s own acquisition certification should be in addition to the certificates of conformance and acquisition traceability provided by the manufacturer and previous distributors.

• Handling and Storage Verification• Compliance Verification (authenticity analysis)

• Visual Inspection• Testing• Physical Analysis


Counterfeit Detection

• GIDEP documents reporting suspect counterfeit cases provide further insight into detection techniques

• The SAE G-19 developed a new aerospace standard …• AS5553, Counterfeit Electronic Parts; Avoidance, Detection, Mitigation, and

Disposition (http://www.sae.org/ )

• The Independent Distributors of Electronics Association (IDEA) published a standard which includes inspection techniques for counterfeit detection …• IDEA-STD-1010-A, Acceptability of Electronic Components Distributed in

the Open Market. © Independent Distributors of Electronics Association (IDEA) 2006 (http://www.idofea.org/)

http://www.sae.org/



Strategic and Proactive Approaches

• Independent Distributor Selection

• Outsourcing Electronic Component Procurement

• Aftermarket Supply Monitoring

• Diminishing Manufacturing Sources and Material Shortages (DMSMS) Management


Independent Distributor Selection• Source selection should include an assessment of the independent distributor’s

ability to verify the authenticity of the products they offer. • Certificates of conformance and acquisition traceability• Compliance verification via visual inspection, testing and physical analysis• Purchasing and acceptance practices

• Examples of industry standards that can be used for evaluating the suitability of an independent distributor

• AS5553, Counterfeit Electronic Parts; Avoidance, Detection, Mitigation, and Disposition(http://www.sae.org/)

• JESD31, General Requirements for Distributors of Commercial and Military Semiconductor Devices. (http://www.jedec.org/download/)

• IDEA-STD-1010-A, Acceptability of Electronic Components Distributed in the Open Market.Copyright © Independent Distributors of Electronics Association (IDEA) 2006(http://www.idofea.org/)

• Vet the independent distributor in advance of procurement activity to ensure …• Suspect counterfeiting incidents have not occurred previously with this distributor • The independent distributor has the financial means to support any contractual

guarantees expected

http://www.sae.org/

http://www.jedec.org/download/



Outsourcing Electronic Component Procurement

• Some users outsource procurement to another entity• Electronics Manufacturing Service (EMS) provider • Contract Manufacturer

• The selection of an EMS provider or Contract Manufacturer shouldinclude audits of their methods and purchasing records to ensure their procurement practices mitigate the risk of acquiring counterfeit parts. • Refer to “Independent Distributor Selection”


Aftermarket Supply Monitoring

• Some aftermarket sources produce finished products from a die bank• Residual inventory of die no longer in production

• These aftermarket sources do not always issue End-of-Life notices or notify their industry and Government customers when die inventory is exhausted• In one case, DSCC (not the aftermarket manufacturer) issued a notice when

notified that die inventory had been exhausted• A review of the GIDEP database showed no DMS notices issued by this

manufacturer• End-of-Life notices were not published on the manufacturer’s website

• Users are encouraged to periodically contact aftermarket sourcesconcerning their continued ability to supply products


Diminishing Manufacturing Sources and Material Shortages (DMSMS) Management

• A significant driver for the use of Independent Distributors is the continued need for parts that are no longer produced by the original manufacturer.

• In order to reduce the likelihood of having to purchase parts through an independent distributor, Original Equipment Manufacturers should …

• Proactively manage the life cycle of their products versus the life cycles of the parts used within them.

• Engage customers on the necessity to support and fund DMSMS management approaches that eliminate the use of obsolete parts.

• Government and Industry documents …• SD-22: Department of Defense (DOD) Diminishing Manufacturing Sources and

Material Shortages (DMSMS) Guidebook• GEIA GEB1: Diminishing Manufacturing Sources and Material Shortages (DMSMS)

Management Practices, Government Electronics and Information Technology Association

• EIA-4899: Standard for Preparing an Electronic Components Management Plan• IEC TS 62239: Process Management for Avionics – Preparation of an Electronic

Components Management Plan


Summary

• In today’s supply chain environment, Original Equipment Manufacturers and Government users must be vigilant in order to avoid counterfeit electronic components.

• The vast majority of counterfeit cases reported are associated with purchases through independent distributors.

• The most effective approach to avoiding counterfeit electronic components is to purchase product directly from the original manufacturer, or from a distributor, reseller or aftermarket supplier who is franchised or authorized by the original component manufacturer.

• A substantial number of products, however, are no longer available through franchised or authorized suppliers.

• While they provide a necessary function within the electronic component supply chain, independent distributors are not all created equal.

• Original Equipment Manufacturers and Government users need to understand the independent distributor’s operations and business processes.

• When considering purchases through Independent Distributors, Original Equipment Manufacturers and Government users should use mitigation methods and strategic approaches to reduce the potential for acquiring counterfeit parts.

counterfeit avoidance through purchasing processes and supplier control - livingston

Documents

export restrictions

philips qml product

xicorintersil qml product

national qml product

analog devices qml product

date code

parts exchange hands

integrity of authentic