Counterfeiting is on the rise! Richard Smith, Vice President of Business Development at ERAI, joins Counterfeit Chronicles: Episode 4 to deliver the data on counterfeiting during the first quarter of 2024. The numbers show an increase in activity this year compared to the last, particularly in North America and Europe.
This interview was edited and formatted for clarity.
Tyler Fussner, Managing Editor, Supply Chain Connect
Hello, and welcome back to Counterfeit Chronicles—the newest series at Innovation Destination. As always, I’m your host, Tyler Fussner, Managing Editor at Supply Chain Connect, and joining me again today is Richard Smith, the Vice President of Business Development at ERAI. Hey, Richard!
Richard Smith, Vice President of Business Development, ERAI
Tyler, good morning. Nice to be with you again as we kick off another quarter.
Fussner 0:34
I’m excited. Not too long ago, we got to speak about the counterfeit activity of 2023—which those of our audience who have not heard, can listen to that conversation on Counterfeit Chronicles: Episode 2—but today, you said it, we get to dive into the numbers of the first quarter of 2024. I am sure there is a lot to dissect here, so let’s dive into it. My first question for you, Richard: How many reported counterfeit parts has ERAI logged so far in 2024?
Smith 1:05
In review for those who either don’t know or haven’t heard Episode 2: In 2023, we published 786 counterfeit and non-conforming part reports. For Q1 2024, which covers January 1 to March 31, we have done 265 counterfeit, non-conforming part reports. That’s 33% of last year’s total. Now, one would expect that to be 25% being the first quarter, but it just shows us that the trend is up. If the numbers continue, we would expect to see more part reports published in 2024 than 2023.
Fussner 1:49
A little bit of a concerning or alarming start to the year. Of the reported parts that you are logging, are there any leading types? What’s the “type” of counterfeit parts that are at the top of the list in Q1?
Smith 2:03
Q1, top of the list is microprocessors at 21.5% of that number, the 265, are microprocessors. Than analog integrated circuits at 16%; programmable logic: 15%; memory devices at 13%. Then Others, which can be all sorts of components, are at 9%.
Now interestingly, these types often bounce around the top five spots. For comparison, in 2023, analog devices were number one at 18%; microprocessors were number two at 16%. So, those two have switched in the first quarter. Then we had memory in 2023 at 13% and programmable logic at 13%. Again, those two have just switched. In the first quarter, programmable logic was ahead of memory; and then ‘Others’ are the same at 12% and 9%, but the same in that they both come in the number five spot for both years.
Fussner 3:18
It’s interesting; it’s the same bad apples it seems. It’s the same parts; it’s the same pieces that you need to be aware of.
Smith 3:25
Well, let’s talk about that. I’ve mentioned in some of the other episodes what makes a part counterfeit-able. And the similarities to these five types are the high ASP, or average selling price, which the counterfeiters are going to put in the effort—they want to use the parts that they can get the most return for. These are, by and large, larger type components. They’re much easier to handle, which makes it easier to remove the old marking, resurface the device and then remark it with whatever part number or logo they’re trying to sell you. There’s demand for all of these parts, obviously, because they are in the top five spots, and—very important consideration—the counterfeiters have plenty of raw material to make the counterfeit devices. And that raw material, once again, is the barges and barges of electronic waste, e-waste, scrap PC boards that Europe and North America send to Asia each year.
Listen to the rest of the episode on the podcast player above or below, or wherever you listen to podcasts, picking up at the 4:31 mark!
