President Obama signed the $700 billion Defense Act on New Years Eve. It is packed full of many controversial issues and one which relates directly to the semiconductor industry. Buried in this act is an amendment which requires defense contractors to eliminate counterfeit electronic components from their manufacturing process. Suppliers will now have increased legal liability if they sell counterfeits into the military supply chain whether or not they created the counterfeits or even if unknowingly distributed them. The detailed language of the amendment describes how the contractors are responsible for avoiding counterfeits, detecting them in their supply chain, and if they are unsuccessful in doing so, pay for the replacement and rework of the equipment. Previously the taxpayers might have footed the bill if there was a major expenditure due to counterfeit components in military products. There is also a clause that would eliminate the contractor from supplying future products to the U.S. Military if they are not diligently working to keep counterfeits from their production lines. To read more about this important legislation please click here.