LX Group discusses the danger of counterfeit electronic components

5th October 2012
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During almost every stage of the product design and use, all of us including engineers, technicians, OEMs, contract manufacturers, maintenance contractors and of course end users are all in some way consumers of electronic components. The success of your final product is highly dependent on the quality and reliability of the components used within it. And the cost of poor quality is paid in time, money and reputation. This is a cost that you simply cannot experience and one that can be easily avoided.

As an unsuspecting buyer you will be left having to honour warranties that were based on MTBF (mean time between failure) calculations and empirical lifetime testing performed using genuine components. Furthermore there is the chance that even one counterfeit component can void guarantees for entire systems and installations, resulting in possibly severe financial losses and liabilities.

But how do these counterfeits enter the supply chain? In the past purchasing electronic components was generally a simple affair – locate a supplier, negotiate prices and delivery dates then await supply. However with the rise of globalisation, the opening of China, and a general drive to keep final product prices low the dark hand of counterfeiters has now moved into our industry.

This has lead to a variety of entrepreneurs making a range of efforts to sell counterfeits into the supply chain. They can source their wares using several methods, such as:

  • Second hand parts – simply parts that are removed from discarded electronic items which are “cleaned up” to appear as new
  • Third-shift manufacturing – where the owners of a component plant who subcontracts to a component manufacturer will run another shift on their own time, using sub-standard materials or simply creating the component housing and passing them off as the real thing
  • Finding manufacturing rejects – where the supplier has contacts in the factory who can give them rejects which are then sold as new
  • Relabelling cheaper components as a more expensive type in the same housing. For example, scraping the label from an LM555 timer and relabelling it as an Atmel ATtiny85 microcontroller
  • Reverse engineering – a manufacturer will make their own functional equivalent of a part that doesn’t meet the standards of the original
  • Simply making “slugs” – some will manufacture physical imitations of components which are simply plastic and metal. Consider the following image: the original is on the left, the slug on the right:

Some of these can be easily spotted – such as logos or fonts that “don’t look quite right”, or basic spelling mistakes on production packaging. And these are the worst type, as suppliers will generally never look at individual parts when supplying them to customers.



As technology advances, new methods will appear and more “bargain” suppliers become prevalent. These can range from online auction sellers, to those with a telephone, the internet and a very professional-looking website. These independent distributors can range from having full knowledge of what they are selling, to those with honest intentions but have limited to no means of ensuring product integrity.

Inexperienced or rushed buyers can often fall prey to these sellers and have little to no recourse, with the best outcome usually being the chance of a refund of the original purchase price. So how do you get the real parts? There are several very simple methods of determining whether or not a supplier is offering the real thing. Your first action should always be to check the manufacturers’ website. Here you can see the usual lead time, average cost per thousand unit – perfect indicators of expected supplier pricing and delivery time.

For example, if you need two thousand popular microcontrollers that the manufacturer quotes as being out of stock with a seventeen week lead time, but your new friendly supplier can deliver them next week at a much cheaper price – walk away. Otherwise you risk a very high chance of being (in no other words) ripped off.

And even if you felt the supplier was genuine – how could you be sure? Do you have access to a laboratory to perform microscopic analysis to check the parts, or the time to perform tests on random samples from the supplier? The answer to these would generally be “no!”.

So how do you avoid all this and buy the real thing?

Start with the manufacturer – they will always direct you to a legitimate supplier of their products, or if the volume is great enough deal with you directly – the optimum solution. However if your volume isn’t great enough you may need to find wholesale or commercial-retail suppliers and distributors.

When you have chosen a supplier, ensure that they have met international quality standards for operation such as ISO9001, including the ANSI/ESD s20.20 for an ESD control program, and can supply an audit paper trail back to the manufacturer.

Furthermore you need to be realistic with component pricing. Chasing the lowest price possible will always direct you to the shadier suppliers as described earlier which can only lead to trouble. Awareness of competitive but sensible pricing needs to be gained by all stages of your product design team, otherwise unrealistic final product costs can create budget problems and the viability of the entire project.Finally, for older and uncommon or application-specific components that are used on a regular basis – contact the manufacturer about the expected life of these older parts, as you may need to do an “end of life” purchase to keep production moving. However this should also be a catalyst for your engineers to improve or redesign the product to use more commonly available components.

If you are considering bringing an idea or product to market, and don’t have the human or financial resources to worry about these problems – the solution is very simple. Partner with an experienced organisation who can lead you through the entire process and remove the burden of effective component procurement as part of the manufacturing process.

Here at the LX Group we can manufacture your electronic products, whether prototypes or volume production. Our staff are trained and equipped to handle delicate and sensitive electronic assembly tasks, ensuring high-quality and reliable products. LX has in-house capabilities for PCB manufacture, SMT assembly and inspection, conformal coating and potting.

We can manage the entire manufacturing process including component sourcing and procurement, inventory management and high volume production. Our manufacturing partners have a range of quality assurance certifications including ISO 9001 and ISO 13485, UL, RoHS and WEEE.

LX can meet your manufacturing needs, and offers:

  • Express low-volume prototyping in as little as 48 hrs
  • Turnkey high-volume production in Australia and offshore
  • We offer a complete spectrum of manufacturing services, including:
  • PCB manufacture and laser stencil fabrication
  • Component procurement and inventory management
  • PCB assembly (PCBA) and complete end unit assembly
  • Production line testing, inspection and yield analysis
  • PCB cleaning, conformal coating and potting
  • Custom membrane keypad and LCD manufacture
  • CNC machining laser cutting, labelling and screen printing
  • Labelling and packaging

For more information or a confidential discussion about your ideas and how we can help bring them to life – click here to contact us, or telephone 1800 810 124.

LX is an award-winning electronics design company based in Sydney, Australia. LX services include full turnkey design, electronics, hardware, software and firmware design. LX specialises in embedded systems and wireless technologies design. https://lx-group.com.au

Published by LX Pty Ltd for itself and the LX Group of companies, including LX Design House, LX Solutions and LX Consulting, LX Innovations.

LX GroupLX Group discusses the danger of counterfeit electronic components

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