There are some great benefits related to the new tariffs. We expect less counterfeiting, reduced intellectual property violations, and more manufacturing in developed countries. AERI has definitely been affected by the new tariffs. Generally, we look at the negative impact it has on our business; higher prices, confusing, more government interaction necessary, etc., but we have to consider the benefits as well.
The potential of reduced counterfeits hits closest to home for our industry. By our account, and that of every other source we have found, China is the largest offender in the counterfeiting of goods. One might ask, why is that the case? By our experience and research, it points to the lack of the Chinese government cracking down on counterfeiters. Through visits to Shenzhen and the surrounding cities producing counterfeits, it seems apparent that some government officials are actually trying to protect the counterfeiting industry. One has to be inconspicuous and careful when visiting some of the areas that the fakes are produced. Officials are watching visitors and discouraging examination and photography. The demands made by the U.S. on China reach into the production of fakes. There is a culture of acceptance of intellectual property theft and if flows all the way down to the counterfeiting of electronic components.
The other hope of this tariff war is that, although prices at Walmart may go up, Americans will have better and higher paying jobs to pay for the increases. Entire U.S. cities were financially devastated when trade agreements were put in place in our recent past. NAFTA, which meant to help Americans save money on cars, TV’s, and other products, while helping our neighbors, wiped out our auto manufacturing industry. What good are low prices on cars if you don’t have a job? It will take some time to see the positive effects of the new tariffs on American jobs, but many companies are already announcing that they are bringing manufacturing home. Let’s hope that we see some great positives that come from this difficult trade war with China.
Contact Us to learn more about how you can benefit from these international trade changes.
Another U.S. electronic components broker has been sentenced to prison. Check your supplier purchases to see if your company may have bought anything from one of his many different company names. If so, assess the risk to determine if any action is needed.
Rogelio Vasquez, a.k.a. James Harrison, last doing business as PRB Logistics Corporation in Costa Mesa California, was sentenced by United States District Judge Josephine L. Staton, who said, “Simply put, the scheme was endangering lives for the sake of illicit profit.” Vasquez was also ordered to pay $144,000 in restitution.
From July 2009 to May 2016 Rogelio instructed Chinese suppliers to refurbish and remark used or discarded electronic components to meet the requirements of defense subcontractors, as well as other industries. Some of the parts ended up being installed in a classified weapons system used by the U.S. Air Force. In a sting operation, Vasquez sold 106 counterfeit integrated circuits to an undercover federal agent.
Rogelio’s actions show no concern for the many lives he has put in jeopardy. It is sad that someone would purposefully put others lives at stake for their own monetary gain. Not only could his actions cause injury, but our country depends on the tools it uses to defend our country. It is good to know that the Department of Defense is paying attention to this huge problem and bringing those to justice who violate the law.
Rogelio Vasquez’s many company names included:
- PRB Logistics Corporation
- Devices Electronics Components
- End-Of-Line Components
- EZ Components
- Nexxon Circuits Inc.
- JJ Electronics
- Actual Assembly Inc.
- Chapman Distributors Company
- Electronics Today
- Advanced Thermal Design Inc.
- All Electronic Component
- All American Components Inc.
- Tekchips Inc
- Big Time Electronics
- IC Grid
To see how AERI can help you avoid buying fakes from criminals like these please contact one of our search experts.
Read More about Mr. Vasquez.
Alleging that China regularly uses e-waste to counterfeit electronics while returning these dangerous faux products, including critical military equipment, back into the market, a group of Congressmen on July 1 st introduced legislation to stop the export of electronic waste to the Asian giant. If passed by Congress and signed into law by the President, the Secure E-Waste Export and Recycling Act (SEERA) would stop the flow of e-waste from the US and would require domestic recycling of all untested and nonworking electronics, which will also promote the creation of thousands of new jobs in the United States.
Read the full article here.
To see how AERI can protect your company from receiving counterfeits go here to Learn More.
AERI’s reputation as a leader in counterfeit detection of electronic components led Electronics Sourcing magazine to reach out to us for a “How To” article. This article gives a detailed overview of how to detect fakes in the ever evolving counterfeit market. Contact Us to find out how we can help you detect counterfeits and keep your production lines moving.
Life’s no fun without challenges. While detecting counterfeits we face obstacles every day. Try to get to the die of a part the size of ground pepper. Thanks to the latest technology of automated decapsulation and skilled engineers we can get the job done. One of our lead engineers shared this challenge with us and sent us pictures just for kicks.
Getting access to the die of encapsulated parts is a key process in the detection of counterfeit electronic components. Doing it well assures that you can distinguish all of the important part information. Many test houses just blast the parts with acid, leaving a half-eaten piece with lots of scars. They may be able to get some helpful information, but many times from our experience using a few external test houses, we were unable to authenticate the parts with what was left of the die. Well trained engineers with quality equipment make all the difference. Try us out and compare our die images to any of your previous test facilities. We are sure ours will impress you and give you confidence in our assessment.
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Between the incredible consumption of passive products by the boom in IoT, double ordering for safety buffering, and the time and lack of motivation for manufacturers to increase their production, the shortage has no end in sight. It is the perfect storm. Everything we use is slowly being connected. Even the latest toothbrushes connect to the internet now so you can see how much pressure you are applying and how long you are brushing. What is next!!! This boom will continue and manufacturers need to respond. But from what this article states, they are not rushing to fix the shortage. These products have low margins and are old technology. The manufacturers have little motivation to make large capital outlays to increase production. For now, they may just enjoy the ability to reap higher margins on their products. And in the meantime, users will continue to double order in an attempt to hedge their supply creating an even bigger problem.
Great news!!! Reported counterfeit electronic components were down for 2017. One might think that with the ramp up of the shortage even more counterfeits would be discovered, but exactly the opposite has occurred. Some speculations for this decrease are;
- More counterfeit avoidance is being done in the purchasing process. Weary buyers have likely been more selective who they are ordering from.
- Government seizures of counterfeit product have potentially caused some international suppliers to give up trying to ship to the U.S.
- Increased awareness and detection techniques may have stifled sellers attempts to pass counterfeits through previously naïve buyers, causing sellers to give up trying.
The report at this link only has data up to 2017, but our organization has noticed a decrease in received counterfeits this year as well. We will have to wait another few months to get ERAI’s final 2018 numbers, but we predict there will not be an increase over 2017.
ERAI, which was originally created to serve electronic distributors with collection and reporting needs, has been collecting reports of counterfeits for over a decade. They have branched out from accepting reports from distributors only to manufacturers and government as well. Their database is by far the largest in the industry. The database is only available by membership, but it is free to report. Please feel free to ask one of our search experts if you would like us to see if your parts have ever been reported.
The Chinese government has organized a very complex plan to infiltrate the U.S. government and company data through a tiny microchip installed on thousands of high-security server motherboards. Months of investigation have uncovered what most cyber threat analysts believed was near impossible. The Chinese government planned and implemented the installation of chips on key servers that enabled them to hack valuable information. The planning was long and calculated, which displays that they are quite capable of performing complicated operations to steal from and harm our country.
The short story is that the Chinese created a very tiny chip, secretly installed it on San Jose based, Chinese manufactured SuperMicro server motherboards which were then shipped to U.S. government and industry users. The article states that these “servers could be found in Department of Defense data centers, the CIA’s drone operations, and the onboard networks of Navy warships.” With almost all information digitally stored, this new found attack shows that anything is accessible if someone really wants to get access to it. This link will take you to the full Bloomberg news story unveiled a few weeks ago.
On August 23rd almost every electronic component made in China will have an additional 25% cost due to sweeping tariffs on Chinese products. As of yesterday, the US has officially added the following important electronic component segments to their new tariff rates.
- Integrated Circuits, Processors, Controllers, Memories, Amps
- Voltage Regulators
- Connectors, Electrical Protection & Switching
- LED’s & LED Displays
Including the tariffs on products that went into effect on July 6th this 2nd group means almost all electronic components made in China will have the 25% tariff. In order to avoid these extreme tariffs and keep your costs down order your parts from AERI by Wednesday August 15th and we will try to get them through customs before the deadline.
To learn more about the changes see the following articles.
US Government announcement
We look forward to partnering with you to make this transition as smooth as possible.
Please contact your AERI search expert for more information.
The US postal service does not require any content documentation from international shippers making it very difficult for Customs and Border Patrol (CBP) to flag and inspect counterfeit or dangerous products entering our borders. All other shippers, such as UPS and FedEx, are required to provide content lists. At a growth rate of 232% in the last 4 years, the number of small parcels imported through USPS is alarming and a threat to all industries and public safety. Just to name some of the illicit material getting through; there are fake medicines, aerospace electronics, auto safety products such as brake pads, and fake batteries which are famous for exploding and causing injury.