Front End | Electronic Components Supply Network Looking into the rear-view mirror
The concept of ‘historic recurrence’ was first discussed over 2,000 years ago by the Syrian polymath Poseidonius. He theorised that “civilisations flourish or fail according to their responses to the human and environmental challenges” and believed that sometimes it’s useful to look back into history and see what may be learned from past experiences. In this article Adam Fletcher, chairman of the Electronic Components Supply Network (ecsn), reviews three topics he has previously written about in CIE and considers the industry responses and outcomes
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n my article ‘Just Say No...!’, kindly published by CIE in 2014, I discussed the plague of counterfeit electronic components on global markets and warned that the threat was evolving, in the wrong direction! What used to be a very low volume counterfeit ‘cottage industry’ that turned out very poor quality and often very obvious rip-offs of genuine components, was being taken over by highly organised ‘professional’ counterfeiting organisations with all the resources necessary to produce surprisingly convincing ‘fakes’ in high volume. Benefitting from high levels of investment in equipment, these professional counterfeiters employ hundreds of highly skilled personnel, many of whom previously worked for sub- contractors employed by Western organisations seeking to reduce their costs by outsourcing manufacture of their advanced technology to lower cost economies. It could be argued that the lack of care, control and oversight that Western technology companies took over the transfer of their intellectual property overseas all but actively encouraged counterfeiting, but I suspect it is more likely that the transfer of soft information and technology skills acquired by these organisations, their cultural indifference to IP concerns and their need to continue to generate revenue played a big part in creating the problem, as did a hungry market willing to purchase products from the grey/black market. Professional counterfeiters almost exclusively sell their output to customers directly or via a network of small local brokers, but the only way for systems integrators to be absolutely sure that they are buying 100 per cent genuine components is to source them from the original component manufacturer or their authorised distributor, both of which ensure they’re highly visible to the market. Best industry practice suggests that purchasing components from any
12 March 2024
other source poses a big threat to the integrity of an organisation’s product and therefore, to its commercial reputation. Professional counterfeiting today remains a very significant threat, just as it was in 2014.
Five years ago
In my article ‘Weaponizing trade’ (CIE 2019) I described how the historical tensions between Japan and South Korea that had been simmering since the end of the Second World War were ratchetting up, despite the diplomatic settlement for financial compensation that Japan made in 1965. South Korea continued to claim for additional compensation, culminating in the country’s Supreme Court seizing the assets of Nippon Steel, a large Japanese owned organisation. In response, the Japanese government announced on the 4th July 2019 that it was tightening the rules on the export of three chemicals critical for the manufacture of semiconductors and display technologies - fluorinated polyimide, EUV photoresists and hydrogen fluoride gas – citing reasons of ‘national security’. Surprisingly, weaponizing the trade of just a few chemicals had the potential to destabilise the entire South Korean economy and potentially knock on to impact growth in the global economy. These actions – together with the breaking of diplomatic and military alliances – also caused significant public unrest.
In my article I went on to suggest that a failure to resolve this ‘weaponizing of trade by national governments for political gain’ could make the UK’s then current Brexit issues seem like a ‘walk in the park’. Behind-the-scenes diplomacy by the United States encouraged a period of high-power shuttle diplomacy that culminated in a summit meeting between Japanese Prime Minister Fumio Kishida and South Korean President Yoon Song in New York in September 2020. Despite continued hostility
Components in Electronics
between their respective populations the two leaders agreed to improve their countries bilateral relationships by improving diplomatic and economic ties in order to overcome the immediate challenges and attempt to resolve the underlying problems. Sadly, the ongoing trade war between US and China is today amply demonstrating that the weaponization of trade is a major and ongoing problem.
Last year
In my article ‘Forecasting market demand or RIRO?’ last year, I reminded CIE readers of the well-established IT principle: if you put ‘rubbish in’ you get even worse ‘rubbish out’ (RIRO), often demonstrated when a change to a component manufacturer’s lead-time finds its way into a customer’s ERP system. The impact on the in-house inventory and safety stock
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