Risk minimization through obsolescence management - detecting counterfeits and ensuring shelf life

From allocation to poor quality and counterfeiting to discontinuation – there are various reasons for obsolescence and the risks are increasing due to current supply shortages. One approach to a solution that will be of great importance in the future is long-term storage.

In the interview, Holger Krumme speaks, among other things, about the challenges and requirements associated with long-term storage in order to provide efficient obsolescence management. A basic prerequisite in his opinion consists in: examination of the individual use case.

Interview with Holger Krumme

DKE:?Mr. Krumme, could you briefly explain obsolescence using your work and HTV as an example?

Krumme: Obsolescence has concerned us at HTV for many years. First of all, because we examine components for authenticity. Many customers turn to us because they don't know if components that they have purchased on the market are actually originals from the manufacturer or counterfeit – or whether they have already been installed before and are simply "refurbished". Often there is also the question as to what exactly is in the particular components or whether a chip is the original chip.

The investigations that we perform for customers are very extensive. We carry out electrical tests to verify the data sheet values, as well as inspections in order to determine whether any traces of tampering are visible from the outside: For example, has tinning been carried out subsequently? With the help of component openings we also check whether the original chip is still available or whether there is any damage due to electrostatic discharge.

We are often approached by customers now in particular, where there is a shortage – that is, allocation – of semiconductor components. Their need to procure components on the market because they are not available from the original manufacturer is quite real.

And then there is obsolescence due to components that have been discontinued because manufacturers cease production. This can be due to many reasons. Sometimes it's company mergers that result in the elimination of redundant product lines, so to speak, and the respective component is therefore no longer available. This can happen overnight. Customers who have durable products on the market are then often faced with the problem of still having to manufacture their products with identical components.

It is difficult to simply replace one component with another – particularly in the fields of safety engineering, aerospace, aviation, mechanical engineering and, to some extent, medical devices. Sometimes there are certifications that prevent a component from being replaced. In railroad technology or aviation as well, a component or assembly often has to be manufactured again in precisely the same manner as it has always been manufactured or approved. The topic of obsolescence is in this case quite pervasive.

As HTV we come in at this point by storing the components that customers purchase in large quantities due to discontinuation in our long-term storage facility. In this case we have developed a unique process – our TAB process – with which we can store components for up to 50 years, virtually without aging.

It is confirmed: "Planned" obsolescence exists and its environmental impact is disastrous

DKE:?The term "obsolescence" is often associated with "planned obsolescence". In this case devices are built in such a way that they fail after a relatively short period of use, often shortly after the warranty has expired. Have you done any research on this at your laboratory? What have you experienced?

Krumme: That is a very interesting topic. We encounter obsolescence in a variety of ways and are often approached by newspapers, trade journals or even TV shows, where planned obsolescence is often presented with a view to appeal to the consumer. A few years ago we began doing research on this and looking into whether there were devices where planned obsolescence could be determined. This went all the way to the government level, when we were called in by the German Federal Environment Agency as a specialist partner for the subject of planned obsolescence.

In the meantime, there is even a test mark – the HTV Life mark of conformity – which is awarded for devices where there is no planned obsolescence. At the time, I was a bit naive in my approach to the subject. I always thought and hoped that this mark of conformity would be of interest to many high-quality manufacturers in Germany. After all, there are many equipment manufacturers that are considered to be premium brands. Although we didn't even want to make money with the topic, but simply aimed to push it – because I think the existing situation is disastrous from an environmental point of view – I came to the realization after quite some effort that interest on the part of the manufacturers was reserved. I spoke to the product marketing departments of major manufacturers at various trade exhibitions. There it became clear to me why: The service life of devices is already planned during development. Accordingly, there is also planned obsolescence, namely the planned obsolescence or failure of devices.

Every developer must know the service life of his or her device and if he or she wants to, every engineer can calculate it or commission a relevant study. In the final analysis every developer knows how quickly the device will fail. Of course, no manufacturer wants to have such a device fail prior to the end of the warranty or guarantee period, because they would then have to bear enormous costs due to recalls or complaints.

Thus it became clear to me that industry is not that keen on showing its cards with regard to the calculated service life for its devices. Because that was our demand: Everything has to be disclosed for the HTV Life mark of conformity. We would then have known about the service life of a particular device.

Major studies have already been carried out by the German Federal Environment Agency on the subject of planned obsolescence. It has already been established that the useful life of appliances has decreased over the past few years. For example, whereas a washing machine used to last ten or 15 years, today it may only be all of six years. That is disastrous when it comes to sustainability. In my opinion, it is up to legislators to create regulations that result in longer service life and better repairability of products.

Even cheaper products can deliver good quality. The price alone is not decisive.

DKE: Were you able to see a difference between premium, mid-range and low-cost? For example, does it make sense to pay premium prices in order to have a device for ten years instead of just six?

Krumme: We usually don't do proper life tests over the long periods of use. We look at the devices and are often called in as experts in various TV reports, for example, when it's a question of comparing how devices are constructed, as in the SWR program: Marktcheck. However, these do not involve quantitative studies in which the service life of the devices is determined. It is merely a question of their design and whether there are indications of a probable shorter service life due to poor workmanship or construction, for example. Differences can certainly be seen here, but not in the case of all products.

With some products it is obvious that customers who pay more get something better. But it is also possible that a simple manufacturer provides good quality and functionality. For example, we recently reviewed electric blankets and there weren't many differences here. They all have 60 watts of power, produce a good amount of heat, and the workmanship is relatively similar. Thus it is difficult to make a blanket statement.

Long-term storage helps to prevent supply bottlenecks and make obsolescence manageable

DKE: The topic of allocation, i.e. material scarcity, is currently a major issue. The supply chains have become disrupted due to the corona virus. The result is similar to discontinuation: A manufacturing company does not obtain the necessary parts. On a car, for example, the USB interface is omitted or the desired radio is not available – so the more expensive radio has to be installed instead. This causes additional frustration on the part of customers who have already spent a lot of money on a car. How do you think companies can better prepare themselves for such risks?

Krumme: You are right to observe that this is also part of the obsolescence issue. The just-in-time principle, which has been favored in past decades, is detrimental in part because it makes supply chains much more vulnerable. When delivery periods sharply increase in the short term as is currently the case, then there is hardly any room to maneuver. I suspect that we will have to do some rethinking in the future, also with regard to our dependence on the Far East. After all, delivery periods are also related in part to the fact that transport options such as ocean-going vessels or other transport options are not sufficiently available. For a variety of reasons ships can no longer get into the ports. As a result, transport prices and thus product prices go up. I would like to see some rethinking here, and have certain technologies brought back to Europe in order to protect and strengthen the European economy.

One important problem though is that even if companies adopt new strategies and plan for larger buffers, electronic components cannot be stored for arbitrary periods of time. One or two years are possible, but then at some point they are finished and can no longer be processed or lose their functionality. However, since the strategy is now moving in the direction of companies stocking up more in the future, long-term storage that protects components is needed. We are already noticing a corresponding increase in demand in this area.

Long-term storage is an individual process. Standardization can provide support.

DKE:?So for you, long-term storage means anything beyond two years?

Krumme: Strictly speaking, long-term storage means anything that goes beyond the manufacturer's specifications for shelf life. If, for example, the manufacturer of connectors states that they can be stored for a maximum of six months, then long-term storage is anything that goes beyond that. Many components have a shelf life of between one and two years. Up to that time they can be stored normally. However, if it is clear that a component must be available for a long period, then it is imperative that it is placed in appropriate long-term storage from the outset and that the process is suitable for this purpose.

DKE:?Your long-term storage facility can store components for up to 50 years. Do you follow existing guidelines and standards or have you developed your own methods?

Krumme: That's a good question. We have been developing and specifying our own type of storage for almost 20 years and have often been invited to collaborate on certain standards in the field of long-term storage.

In order to achieve long-term storage as we do with our thermal absorptive gas barrier or TAB process, it is necessary to know the precise properties of the component involved. It is not possible to make a blanket statement about a particular component. Instead, it must be examined very closely. We look at the given risks for the component and document everything in a comprehensive report for the customer. In the end, this can result in a 60-page investigation report with a wide variety of analyses. The initial condition is recorded first so that the customer knows exactly what the component looks like.

Based on this we formulate corresponding recommendations as to how it should be stored as well as a period of time in which we think the component can survive storage without a problem. Here we make conservative estimates such as ten to 15 years or 15 to 20 years and carry out regular annual inspections as support. In this manner the customer knows for certain that there will be no change in the components. If there is a slight change, then we document it and adjust the storage method if necessary.

The preliminary tests also specify the precise storage conditions. This means temperature, humidity, particular absorption materials, special functional films and gas mixtures. And this measure, which we create individually for each storage facility, is continuously monitored by process control.

Of course, there are certain points that can be specified in general. There are certain principles that dictate what is good and what should not be done when it comes to storage. This can also be seen in the standards. However, we are convinced that not everything can be done according to standards, but that many items have to be examined in detail. Often, storage is carried out according to certain conditions, because it "can't hurt". But then it is not really examined by the user. We at HTV have carried out numerous studies over the past two decades and constantly researched the subject of storage of the most diverse components such as OLED modules, connectors, operating elements or liquid crystal displays. Simply storing according to a standard does not work in this case. It is not wrong, but storage periods of ten, 15 or 20 years are not achieved. It is important to look at the individual case and stay on the ball.

DKE: There are definitely standards that simply describe a procedure and the process and not automatically the technical solution. Such process standards indicate that a corresponding evaluation of the component must be made and a suitable process found individually. For example, there is a guideline for long-term storage, DIN EN 62435. It more or less describes what thoughts are necessary, but does not specify any technical procedures. Whatever the user decides on, he or she must therefore find out for him- or herself.

Krumme: Yes, that's clear. Of course, we also have a lot of standards available here and are naturally interested when there is something new.

Wipe test, ultrasound, etc. - Counterfeit components can be detected with the right methods

DKE: The third pillar that exists alongside planned obsolescence and long-term storage is the topic of testing and determining the authenticity of parts. Here we also talk about counterfeit parts, also known in aviation as "suspected unapproved parts" or "bogus parts". Can you tell us something about this? How does this happen and what is the risk when such parts are used?

Krumme: We have ascertained – especially when components are not available – that there are entire groups in certain countries who are just waiting for these allocations. So-called component counterfeiters look at the market to see what is in demand and how this demand can be met, and then they offer parts at very high prices. Right now, we can observe how components that are currently available on the free market are sometimes being traded at ten times the price. A component that normally costs one euro now costs ten, 15 or sometimes even as much as 100 euros. The demand for some components is extreme, and this naturally attracts component counterfeiters onto the market.

There are certainly many independent electronics dealers from the region, from Germany or even from Europe, who do serious work. But even they have sources where it is not certain where the parts come from. Then there is also the need to check the parts – on your own initiative or if such is requested by the customer.

There are various strategies on the market to detect counterfeit components or as we like to say "tampered parts" – after all, they do not have to be counterfeit, they can also be desoldered or the like. "Unapproved parts" is therefore also an important term and means that it has not been verified or it is not certain where components come from and what their life cycle has been.

On the one hand, there is the refurbishing of components. This can be a solution if the components have been well tested, function reliably and comply with the data sheet parameters, even if they have already been used once. But then there are also situations in which real falsification takes place. That is, for example, when the component labeling is changed. We determine this by performing certain tests. For example, there is the so-called wipe test, in which a wide variety of chemicals are used to check whether a different marking has been subsequently applied and is therefore counterfeit.

What is also very interesting and what we have developed as an additional method is the detection of false component labels using an ultrasonic microscope. In addition to SAE standard AS 6081, according to which we examine counterfeit electronic components in our laboratories, among other things, we have developed this ultrasonic microscopy. Where the wipe test or other methods fail, the ultrasound detects whether there was already an original laser marking. You can see the contours created by the inscription. We found this discovery to be very fascinating. In that way, you're a bit of a detective.

It can be a real problem for customers when counterfeit components behave like the original part. They have a certain functionality, the customer uses them and they also work in the circuit. But then they suddenly are no longer functional under certain limiting parameters, such as increased ambient temperature. These are the really difficult cases.

DKE: Could you briefly explain what the SAE standard is exactly? This should be interesting for others as well.

Krumme: SAE standard AS 6081 is an American standard. It was not so common here in Europe in the past. Recently, however, it has been requested more often by various companies. This is a very complex test that can cost several thousand euros because certain quantities or batch sizes and random samples have to be adhered to.

If not just one component has to be opened, but ten or 20 – depending on how large the inspection lot is – then it becomes expensive. However, the inspection can be customized. So you don't have to work one hundred percent according to the standard, but it can serve as a useful basis.

DKE:?That's it: The application of standards is in essence voluntary . They only become mandatory for the contractor when they are requested by the customer.

Krumme: Exactly. We always make certain that it remains practical. It is possible to work completely according to the standard, but ultimately this always involves costs for the customer. For example, with 1,000 components it makes sense to take out and examine five of them from in between and not from the beginning or the end of the roll. The counterfeiter would have to be very precise in this instance. In this case, the customer already has a good safeguard at reduced costs.

When it comes to all of these examinations, the experience that we offer is crucial. Among other things, we carry out component openings, solderability tests and visual inspection. Whether or not a component is counterfeit or suspect only becomes clear with the corresponding experience.

Counterfeits pose a safety risk and they are on the rise

DKE: Can counterfeits be a safety hazard, depending on where the parts are used? For example, if a user receives an electric shock or a fire starts from a cell phone charger due to an overvoltage?

Krumme: The user will probably not experience an electric shock from a cell phone charger, but a battery can be overcharged. And when a lithium battery is overcharged that is not funny, it's quite critical. Related to this is the issue of switching regulators used in such chargers. At the moment we are testing many different types of switching regulators and here testing is not that simple, because there are many possibilities of falsifying them. The different components then differ only in a few parameters and it is difficult to detect a counterfeit. This then requires a high level of expertise.

DKE: Have counterfeits increased in the past twelve months in particular? Since the price has risen due to supply and demand, surely it has become more attractive?

Krumme: Absolutely, quite clearly. And goods are also being reactivated that previously were just lying around somewhere and otherwise no longer used. For example, we are currently dealing with components with bent connection pins: Electrically okay, but in some cases with clear mechanical damage, or oxidized, and thus only solderable again after appropriate treatment.

Normally, it would not be worthwhile to repair the component connections of such parts, because under normal circumstances this service costs much more than the component itself. But if the component is not currently available on the market, then it may be worth 100 or 1,000 euros. In such cases it is sometimes necessary to go out of the way and resort to sources that include scrapped or discarded components. This, however, calls for reworking.

The corona pandemic drives obsolescence with far-reaching consequences

DKE:?Would you say that the corona pandemic is to blame for increased counterfeiting over the past twelve months?

Krumme: There are certainly a number of reasons. I do believe that the pandemic has something to do with it, but of course I don't know the details. But one hears that bottlenecks are also due to home office and teleworking, as well as electronic games, entertainment media and the like. The corona period has certainly helped these areas quite a bit. People didn't go on vacation, preferring to invest their money in a PlayStation, a new TV and everyday items. We also see this in the supply problems, which are not just in the electronics sector, but in all sectors: construction, raw materials and even simple stones from the quarry. Prices have gone up by 100 percent within one or two years.

In my opinion, all this certainly has something to do with corona, because the money is simply spent elsewhere. And if production capacities are limited, as is the case with electronic components, a new wafer production facility cannot simply be set up overnight to compensate for this demand. That takes years to complete and costs many billions of euros. In that case, manufacturers will think very carefully about whether to build a new wafer production facility or whether they are already too late and would only have overcapacities afterwards.

Another example is that some countries, such as China, have dealt very strictly with the pandemic. They implemented a radical lockdown, even though there have only been a few cases. Of course, that also results in production capacities not being utilized. In China there is also the problem that electrical energy is rationed in part. Then production cannot be maintained due to a lack of energy. There are a variety of issues that interact there.

Supply bottlenecks prevent a sustainable cycle through more e-waste

DKE: It can happen that electronic waste finds its way back into the supply chains as a result of supply bottlenecks. We therefore return to the topic of sustainability and obsolescence. Since 2005, the EU has been calling for an increase in the energy efficiency and environmental compatibility of energy-consuming household and industrial appliances with the Eco-Design Directive. Implementing regulations have been adapted and added for some product categories in 2021, so that in the future they will be more resource-efficient, easier to repair and the supply of spare parts will be guaranteed in the long term. How satisfied are you with the requirements? Do you still see a need for action in this area?

Krumme: I am not familiar with this directive in detail, but in terms of sustainability alone I think it makes absolute sense to work in this direction. HTV-Life and general measures against planned obsolescence ensure that devices are available and repairable in the long term and last a long time. That is of course very sensible for the environment and something to be absolutely welcomed.

The end of the line has not yet been reached on this issue, and there is certainly still some resistance to be overcome from manufacturers. However, I am of the opinion that it would instead help the European economy to promote products that have a long service life. Premium brands are a good example of this. They are all doing well, even with products that are long-lasting.

Overall, it is more important for companies to invest their energy in new products with new features so that they can stand out from the competition – especially from the Far East. However, this sustainability issue is not just about electronics, but ultimately about all products.

The interplay of standards, guidelines and obsolescence management promotes a sustainable economy

DKE: Our goal is to push the issue of Sustainable Development Goals (SDGs), which is also greatly important at the international level, more strongly. How do you assess obsolescence management in the context of the Sustainable Development Goals, such as SDG 12, which focuses on sustainable consumption and production methods?

Krumme: Guidelines that specify how a device is to be manufactured and configured are very important. Especially with regard to repairability. I believe that we as Europeans must also go our own way here through corresponding standards. Some take a negative view of our standards, purportedly because they block everything. But I think standards are good because they are a good way for us to create unique selling points. In this manner we can stand out on the market and differentiate ourselves from other countries like China.

DKE:?Do you have any other points that you consider relevant with regard to obsolescence? A few internal details perhaps?

Krumme: There are new aspects every day and it may be an exciting, but possibly also a sensitive and risky topic for customers if they do nothing when it comes to checking for authenticity. I think there are many who are lucky and get off lightly. But if counterfeit or manipulated parts have really been used and gone undetected, then the damage is huge. The costs of a test house investigation in advance would then have been negligible in comparison.

Nevertheless, many are not willing to spend the money for it. Instead, an engineer from the development department is supposed to look over the goods here and there and sign off on them. I don't think many people realize the consequences of this. As we can see, a lot of money is spent on components, but qualified examination of their authenticity sometimes falls by the wayside.

DKE: We can conclude that standards for obsolescence management are useful. There are places where proprietary solutions are more efficient and individual testing must be carried out as you do in your company. However, standards provide relevant guidelines and specifications. These simply need to be broken down to specific use cases.

Krumme: That's how it is. The user, the consumer, the customer, the industrial customer – many are only now confronted with this topic. Standards are very important here, of course. In the final analysis, not everything has to be implemented. It is also possible to pick out the appropriate aspects that should be implemented, either on one's own or together with a partner who has the required expertise.

DKE: Mr. Krumme, thank you very much for the interview!

For this interview we would like to thank

Holger Krumme

Managing Director Technical Operations, HTV Halbleiter-Test & Vertriebs-GmbH

HTV is the high-performance center for electronic components. Testing and inspection to analyze the quality and authenticity of electronic components, long-term preservation as well as research projects and seminars are among the company's comprehensive service portfolio.