Counterfeit parts represent $169B annual risk

April 05, 2012 // By Dylan McGrath
The five most prevalent types of semiconductors reported as counterfeits represent $169 billion in potential risk per year for the global electronics supply chain, according to market research firm IHS iSuppli.

The five most commonly counterfeited semiconductor types are analog integrated circuits (ICs), microprocessors, memory ICs, programmable logic devices and transistors, all of which are commonly used in commercial and military applications, according to data provided by IHS. Together, these five component commodity groups accounted for slightly more than two-thirds of all counterfeit incidents reported in 2011, IHS said.

The sum total of the application markets where these five most reported commodity groups are used represented $169 billion worth of semiconductor revenue in 2011, according to data derived from the IHS's application market forecast tool. These commodities are used widely throughout all major semiconductor applications.

“There has been a great deal of focus on the issue of counterfeit parts in the defense industry, but the majority of reported counterfeit incidents are for commercial components which have broad use across both military and commercial applications,” said Rory King, director of supply chain product marketing at IHS, in a statement.

King said that one of every four counterfeit parts reported is an analog IC, a component that is used in everything from industrial and automotive products to wireless devices, computers and consumer electronics."A single counterfeit could impact end products in any of these markets and the potential problem is pervasive, amounting to billions of dollars of global product revenue subject to risk," King said.

The total global analog IC market was worth $47.7 billion in 2011, according to IHS. The consumer electronics segment in 2011 consumed $9.8 billion worth of analog ICs, or 21 percent of the global market, IHS said. Automotive electronics amounted to $8 billion, or 17 percent; computing represented $6.7 billion, or 14 percent; industrial electronics was at $6.5 billion, or 14 percent; and wired communications was $2.9 billion, or 6 percent, according to IHS data.

"A faulty counterfeit analog IC can cause problems ranging from a mundane dropped phone call to a serious tragedy in the aviation, medical, military,