02 November 2009

Bill Goldie, managing director, Retronix

Bill Goldie, managing director of Retronix (Asia) discusses the problem of counterfeiting with Chris Shaw

Retronix was founded in 1992 and since then has grown into a multinational company represented in the Americas, Europe and Asia in both the PCBA and semiconductor arenas. The company offers what it describes as unique cost reducing services to OEM and CEMs by recovering components for reuse, at a margin of the cost of new components. The test and inspection arm, Retronix Certified, offers not only counterfeit component testing, but also identified refurbished components that may have been sold as new.

Retronix' key sectors in the low cost, high volume regions are high volume telecoms, games sector and pc based products. In Europe the company carries out a range of board and component repairs for the high end and military markets.

Goldie explained: "Currently we are repairing and refurbishing devices that our customers are still manufacturing (normally devices on boards that have failed debug), the decision to repair and reuse is normally commercially driven and often due to difficulties in replenishing the stock of devices still on non working boards."

Talking to buyers and with strong links to China, Bill has seen first hand, the conditions in which some of the counterfeit components are made. "I've seen devices being processed on the streets, then another batch of components arrives, delivered in a plastic bag. Obviously there's no ISO compliance! A lot of it is rebranded stock - it has nothing inside it and has been laser etched to specify another component. But there's no die!

"We also see a lot of regarded stock – for example 16Mb memory chips, re-etched as 128Mb. However, recovered stock is perhaps the main concern. There are scrap yards in Hong Kong where electronic waste is dumped, then simply recovered by counterfeiters and components are removed illegally." Goldie says that approximately 90% of counterfeit components in Asia are recovered in this way.

"As counterfeiters in China recover devices and sell them as new, often changing date codes, genuine Chinese brokers then suffer. How are they going to compete with someone advertising a fake 'new' component, if they are honestly selling it as a refurb?"

So what are the key distinctions between illegally rebranded stock and legally refurbished stock? "The key distinctions are opposite ends of the spectrum," explained Goldie. "Retronix has been audited and approved by many global OEMs and all global CEMs. From the safe handling (ESD protection), safe processes that ensure no thermal shock to the testing at the end of the line that removes 'non functioning devices'.

"The unauthorised refurb houses focus on the cosmetics, trying to ensure the device looks like new, Retronix do not do anything to enhance the look of the device, but focus on the functionality. We have not received any negativity from the industry due to the illegally rebranded sector as we currently work directly with the factories and not via distribution."

According to Goldie, the buying system adds to the overall problem of counterfeiting. "Everyone says, 'no, no, we never buy from China' – yet lots of components are mysteriously sold from China. Some suppliers are so evasive when you question where they are buying components from. The bill of materials says that the buyer can't buy from China, so they go to a broker, who may have bought from another broker and the line gets clouded from thereon.

"If an OEM is looking to cut costs and has the choice of a component for $60 or for $5 on the grey market, he could well be tempted to go for the latter. There are too many people burying their heads in the sand."

So what are the independent non franchised distributors' place in the supply chain and would counterfeit components be less of an issue if buyers did not use them? Goldie insisted: "I firmly believe there is a place in the supply chain for brokers and the vast majority offer a much needed service. There is no doubt the issue of counterfeit components (illegal rebrands) is clouding the size of the issue on unauthorised refurbs. There are still hundreds of thousands of unauthorised refurbs being sold each month and it is clear the current system of stating on a PO that parts must be new and not purchased in China is not working. There must be a better way and we would certainly welcome the opportunity to work with organisations such as ECSN to find a solution."

Author
Chris Shaw

Supporting Information

Websites
http://www.retronix.com

Companies
Retronix Ltd

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