Counterfeiting still a top concern for distributors

It may not be the No. 1 issue for distributors, but counterfeit goods remain a top concern within the electronics supply chain, according to Robin Gray Jr, executive vice president of NEDA (National Electronic Distributors Association), a trade association representing authorized distributors.

At the May 2007 EDS (Electronic Distribution Show and Conference), Gray called counterfeiting the “number one threat the industry faces.” A year later, it’s still a principal problem, Gray reports.

“It particularly affects manufacturers because it’s their product that is being counterfeited,” he says. Meanwhile, authorized distributors have an opportunity to benefit. As customers become increasingly concerned about the risk of buying from a nonauthorized source, Gray says, they are turning their purchasing power to authorized distributors.

“[Counterfeiting] is a big, looming issue for the industry. It’s an issue that’s going to be in the spotlight politically, as the government and law-enforcement officials take a more active role in stopping it,” Gray says. “It means lost sales, [and] lost sales translate into lost jobs, less money spent on innovation and new technology, loss of IP [intellectual property], and damaged brands and reputations.”

Indeed, the threat has become so great that the United States and the European Union partnered to seize more than 360,000 fake ICs and components in a joint operation at the end of 2007. The ICs and components included more than 40 trademarks from Intel, Philips, and others and were worth more than $1.3 billion. The US Patent and Trademark Office estimates that counterfeiting and piracy drain approximately $250 billion and some 750,000 jobs from the US economy each year.

Gray will present on industry trends at EDS 2008 on May 6.