Smith’s COO, Art Figueroa, explains why shortages create conditions for counterfeits and how stronger sourcing, inspection and testing protect OEMs’ schedules, margins and reputations
Combating counterfeits in the time of shortages
Shortages are on the rise across the electronics industry. The past five years have seen a half-dozen major shortages caused by a wide range of unpredictable factors, from shifting production priorities to seemingly random geopolitical turns, that are not showing any signs of slowing.
Artificial intelligence continues to maintain its exponential upward trajectory and, as such, the commodities that support it, such as DDR5, high-bandwidth memory, enterprise CPUs and high-capacity HDDs and SSDs, are expected to continue to be in short supply in the months ahead.
This ongoing and rising threat has made it more important than ever to incorporate anticounterfeit strategies into procurement processes. By developing and implementing a comprehensive plan for quality assurance, OEMs can reduce the risk of counterfeit components entering their supply chain and disrupting their production schedule.
While it is always important to validate component integrity, it becomes even more paramount during a shortage. Nefarious actors seek to profit from desperation and with supply constraints come an unfortunate uptick in counterfeiting. As genuine components become scarce and expensive, cheaper substitutes may start to seem more appealing, opening the door for inauthentic parts to flood the market.
Having to pay for the same products twice—the original purchase and the replacement—is always a serious issue, but it becomes even more problematic when prices are increasing daily or even hourly. Given the trend indicated by the drastic price increases for DDR4 and Nexperia products in 2025, the costs associated with replacement parts are likely to be even higher in coming years. Moreover, counterfeit products cost more than just their market value—OEMs pay with their reputation and security if they remain undetected prior to distribution.
The first step of counterfeit-part risk mitigation is avoidance. Suppliers must be carefully selected, qualified and continually evaluated to ensure their ability to provide products that meet requirements. By partnering with a distributor with robust anticounterfeit protocols, OEMs can ease the burden of detecting suspect or counterfeit components on their procurement team, without compromising quality.
A strong supply chain partner should offer a full suite of sourcing, inspection and testing solutions to help maintain a steady stream of reliable parts and ensure manufacturing lines can stay up and running. The more checkpoints in their processes, the better able they are to consistently deliver top-quality components.
Distributors’ third-party certifications and accreditations can serve as an indicator of their dedication to quality excellence. Standards such as CCAP-101, AS6081 and ISO/IEC 17025 AS6171 accreditation verify that a supply partner consistently upholds best practices for quality assurance in their products, services and procedures.
While OEMs won’t always know when the next shortage will happen, a qualified distributor can serve as a partner in helping them prepare for the worst-case scenario. By carefully evaluating their ability to take proper precautions, OEMs can ensure their supply chain and business are effectively protected against the risk of substandard products.
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