Counterfeit airplane electronics? Coming from Guess Where? Yeesh

Counterfeit electronics from China are flooding the global electronics supply chain -- you know it, I know it, the U.S. Department of Commerce knows it. It's a story we've seen in the electronics industry news again and again and again and again.

And so, again. This time, from Bloomberg Businessweek:

Chinese Producers Dominate $8.2 Billion EU Counterfeit Market

Chinese producers, with the aid of organized criminal networks, control the $8.2 billion European market for designer-clothes knockoffs, fake electronics and uninspected airplane parts, the United Nations says...“There are a dramatic number of counterfeits in manufacturing,” [Antonio Maria Costa, director of the UN Office on Drugs and Crime] said. “When we climb on a plane, there is a risk that some of parts have been pirated and therefore don’t meet specifications.”

Have we really have we come to such a pass? What is going on? The editors at the UK's Aviation-Database.com have a clue:

Obsolescence in electronic systems design has prompted a market in counterfeit electronic components which appear genuine, but which actually are substandard, altogether different, or in the worst cases, simply empty packages. Counterfeit integrated circuits (ICs), capacitors, amplifiers, batteries, connectors, power-management devices, and other electronic parts already are making their way into mission-critical military and aerospace systems, some of which depend on the utmost reliability.

Some of these electronic components simply begin life as manufacturing overruns. Some come from well-meaning manufacturers who believe they have equivalent parts. Others come from unscrupulous shops seeking to exploit a hot market and a trusting set of buyers.

Rhetorical question time: Do you really want to fly in a plane that is using counterfeit electronic components to manage the flight controls?

So, what to do? As we've reported on this website, counterfeit avoidance demands 'zero tolerance' policies. Along those same lines, the folks over at the website of American Electronics Resource have posted a remarkable article featuring a series of detailed images, regarding detection of counterfeit electronic parts through a process of microscopic visual inspection.

And thankfully, manufacturers and distributors aren't on their own in combating this problem.As was reported this past March in IHS's Aviation and Defense Industry Trends newsletter, last year, SAE International released its first-ever standard designed to help companies ensure they are procuring and installing legitimate electronic parts rather than counterfeit ones.

The standard, "AS5553, Counterfeit Electronic Parts; Avoidance, Detection, Mitigation, and Disposition," was created at the behest of NASA, which is concerned about the rising number of counterfeit electronic parts in the supply chain. The document is aimed primarily at companies in the aerospace and defense industry, and has since been adopted by the U.S. Defense Department.

"The problem is, things like aircraft and certain spacecraft like the space shuttle have such long lives that the companies that originally manufactured the parts often go out of business or no longer make the parts," noted Bruce Mahone, director of Washington operations, aerospace, for SAE International. "So you can't buy directly from the manufacturer or from one of his authorized distributors. You end up going to a broker who basically buys up old parts."

We'll continue to cover this story at Interconnection World, and here's hoping the U.N. and the Federal Government will continue to do their jobs in an effort to rectify -- not to say eradicate -- the problem.

Meantime, if you happen to be sitting gateside, waiting to board your flight, and reading this...sorry about that.

The summer of WiMax?

Here's a good wrap-up of the major happenings at this year's WiMax Forum Global Congress in Amsterdam by someone who really knows what they're talking about (that would not be me). I've been looking at this WiMax news all week trying to make sense of it, but this writer lays out the major points and explains why they're important:

Major developments included the following:

-- A show of solidarity by WiMAX's marquee players in support of enhancements to the current 802.16e mobile WiMAX profile. The improvements will increase the performance and capacity of current WiMAX networks to meet the higher data demands that are being experienced by users of 4G networks.

-- The recent Indian BWA auctions and attendant shrift given to TD-LTE technology could find many operators scrambling to safeguard their technology choices with a clear migration path, should they choose to switch protocols in the future. To ease such concerns, Motorola rolled out a platform that allows operators to deploy available 4G technologies while saving the option to re-use equipment should they eventually end up deploying other technologies. The company says its single RAN [radio access network] system allows operators to reuse 70-80 percent of a base station's hardware, and up to 100 percent of other major network components such as IP/MPLS core, backhaul and device management.

-- Finally, the WiMAX Forum and the Femto Forum jointly announced the publication of the first WiMAX femtocell standard, so that vendors might start development of standardized femtocells and equipment based on the IEEE 802.16e profile. "Femtocells add a powerful tool to the WiMAX arsenal by allowing operators to cost-effectively improve coverage indoors and in rural areas, while also adding capacity in urban locations," noted Ron Resnick, president and chairman of the WiMAX Forum.

So there you have it. A blog about a blog, posted on another blog, regarding this week's big WiMax happenings. TGIF!

Maquilador-AHHH!!!

Doing business in Mexico? Never for the faint of heart. To say the least.

From this week's AP news wire:

Mexican reporters on gov't tourism trip kidnapped

MORELIA, Mexico — A government media tour to promote tourism in southwestern Mexico went awry when machete-wielding Indians briefly kidnapped 13 reporters on the trip, officials said Sunday. Fifteen people trying to film a beer commercial were also abducted.

Thankfully, no one was harmed. I sure hope there were a few cold ones around the film set. Because after getting abducted, who wouldn't need a drink?

Connector Specifier has covered Mexican manufacturing options for connector and wiring harness manufacturers. There's been a lot of good arguments for it. This, from the website of Maquiladora Management Service - Made in Mexico Inc.:

Discover the Cost-Saving Benefits of Mexico Manufacturing with Maquiladoras -- Inexpensive labor, possible duty-free importation into Mexico, favorable U.S. tariffs, reduced freight cost and turnaround time, and more - competitive advantages abound with Maquiladoras. Unfortunately, so does red tape.

Yeah, and so does the possibility of getting abducted. You know, they say kidnapping is also a growth industry, south of the border.

These days, you couldn't get me to even go to Mexico -- never mind set up a contract manufacturing operation. The AP story cited above is mild in comparison to some others. As the story goes on to note:

Last month, gunmen opened fire on a group of European and Mexican rights activists, journalists and teachers union representatives who were attempting to reach a Triqui Indian village in central Mexico besieged by rival political factions. Two activists from Finland and Mexico were killed.

And there's other weird stuff happening in Mexico. Also this week, the Mexican government announced it would limit cash transactions with US dollars in an attempt to combat crime. Why? Because the drug gangs are getting so rampant down there, verging on completely lawless, in fact. Way, way out of control -- the government practically admits it.

How can this be a good environment for U.S. manufacturers to do business in? It seems contrary to logic.

So is outsourcing manufacturing to Mexico, once thought to be a good idea for U.S companies, now kind of a bad idea? Has it always kind of been? NAFTA having panned out, after all, as a kind of brutal, double-edged sword?

I'll say this, albeit without much qualification, but here goes: In quickly searching around Google for Mexican manufacturing pros and cons in the writing of this blog, my impression was that there's not much to be found out there of what you might call recent vintage. Even the cheerleading for it seems to have waned in recent years. Gut impressions here, admittedly. Would love to be proven wrong.

What about the idea of truly re-committing to the idea of manufacturing here, in the good old U.S. of A.? Some have suggested that more and more this option might be taking on the character of a national imperative. Because, while we're on the subject, let's take the topic of manufacturing in China. How's that been working out lately?

India wraps broadband wireless spectrum auction; Qualcomm, LTE prevail

Concluding last week after 16 days of bidding, India's Broadband Wireless Access (BWA) spectrum auction amounted to $8.23 billion for the Indian government, with chip vendor Qualcomm winning spectrum in four service areas. Qualcomm had previously stated that it intends to use TD-LTE technology in any newly licensed market, which may deal a bit of a blow to WiMax vendors such as Reliance Industries.

As has been noted, the BWA auction was hotly contested. The auction opens the door for winners to offer high-speed Internet access including telephony and TV services. More importantly, as noted in The Wall Street Journal, the winning companies can eventually leverage the bandwidth for voice and high-speed data services, amid some uncertainty over the granting of second- and third-generation radio bandwidth in the future.

Foxconn: No more suicide pay; Taiwan robot plants an option

Since the eruption of bad publicity from earlier this week, Foxconn has reversed direction on suicide payments to workers' families.

Meanwhile, the company's explicit plan is to pass the cost of employee wage increases to its customers such as Apple, Dell and Sony.

And, in response to massive criticism, Foxconn honco Terry Gou revealed at a shareholder meeting that the company would shift some factory operations to Taiwan, on the basis of authorities there offering attractive labor terms and other concessions at a number of planned free trade zones.

Interestingly, Foxconn already owns a plant on Taiwan that produces robotic arms; the company indicated that automated production lines to replace human workers in Taiwan and Vietnam are a definite possibility.

Industry experts are suggesting that all this labor unrest will serve to bring China to a long overdue political and economic crossroads.

Viewpoint: Foxconn salary relief will stress EMS / OEM matrix

Around the electronics industry, it's being dubbed "the Foxconn Effect." The question: Where will electronics be cheaply made if Chinese manufacturers are forced into submitting to an outcry for across the board employee wage hikes?

Foxconn's sudden doubling of employee salaries was a move widely seen as having been prompted by a number of highly publicized worker suicides, as reported in the Wall Street Journal and elsewhere. The deaths of 10 apparently severely depressed people in the electronics plant have opened up a discussion about the human cost of breakneck global economic growth.

Some cogent analysis in EE Times by Bolaji Ojo suggests that the Foxconn salary hike will inevitably stress the OEM supply chain. As noted in the piece:

Foxconn might have been responding to the black eye it is receiving from the public over a spate of suicides at its facility but the decision to jack up salaries will have significant implications for the entire high-tech sector.

The contract manufacturer is widely used by Western, Japanese and Asian OEMs and has risen quickly to the top of the food chain by offering the lowest prices to customers coupled with the quickest production turnaround and manufacturing efficiency.

The salary increase announced by Foxconn has significant implications for the entire market. Companies like Foxconn and its EMS rivals have taken over a large chunk of manufacturing activities for the biggest global OEMs and reversing the outsourcing trend will be extremely difficult because OEMs have not only sold their facilities but in many cases have lost the manufacturing expertise needed to maintain a competitive edge.

Ojo goes on to conclude that:

The EMS business is a cutthroat business where companies work like elephants but eat like rodents, giving them awfully low single-digit margins and even smaller profits...although the focus so far has been on Foxconn’s operations, its EMS rivals are in more or less the same predicament and pressure will grow on them too to raise wages at not just their China facilities but at other low-cost centers worldwide.

Interesting times. What do you think?

Feds intercept bogus electronics at O'Hare

According to recent reporting in the Chicago Sun-Times, Federal agents at O'Hare Airport intercepted 25 cartons of counterfeit electronics coming in from China and bound for Florida.

An estimated $1.2 million worth of bogus brand-name electronics were seized, including cell phones, game systems and head phones.

U.S. Customs and Border Protection agents flagged the shipment earlier this month after becoming suspicious of its paperwork during a routine inspection, officials said.

Yikes, and oh by the way, haven't you heard? The counterfeit electronics trade is killing the industry.