Once they have been through the counterfeiting process, parts are shipped to Shenzhen or other cities to be sold openly in the markets or on the internet. When the process is complete the parts can look brand new. State of the art printing equipment may then be used to put false markings on the parts. In a process known as "black topping," the tops of the parts may be recoated to hide those sanding marks. Once washed and sorted, parts may be sanded down to remove the existing part number, date code (which tells you when a part was made), and other identifying marks. From Hong Kong, waste is trucked to cities in mainland China, such as the counterfeiting district of Shantou in Guangdong Province, where electronic parts may be burned off of old circuit boards, washed in the river, and dried on city sidewalks. Much of the raw material of counterfeit electronic parts is salvaged electronic waste (e-waste) shipped from the U.S. Nearly 20 percent of the remaining cases were tracked to the UK and Canada - known resale points for counterfeit electronic parts from China. In more than 70 percent of those cases, the trail led to China. ![]() Of those approximately 1,800 cases, staff tracked well over 100 backwards through the supply chain. The investigation uncovered approximately 1,800 cases of suspect counterfeit electronic parts being identified by some companies in the defense supply chain, with the total number of suspect parts exceeding 1 million. Over the course of the ongoing investigation, staff has reviewed in excess of 100,000 pages of documents from the Department of Defense and more than 70 private companies, including defense contractors and subcontractors, manufacturers and distributors of electronic parts, and independent testing laboratories that conduct testing to determine the authenticity of electronic parts. The Commerce Department's report raised concerns about the threat that counterfeit electronic parts pose to DOD's supply chain. China was identified nearly five times more frequently than any other country. ![]() The report highlighted "an increasing number of counterfeit incidents being detected, rising from 3,868 incidents in 2005 to 9,356 incidents in 2008." The Commerce Department asked respondents to identify particular countries suspected or confirmed to be sources of counterfeits. In January 2010, the Department of Commerce's Bureau of Industry and Security published the report, "Defense Industrial Base Assessment: Counterfeit Electronics," which included the results of a survey of 387 companies and organizations in the defense supply chain, including electronic parts manufacturers, distributors, assemblers, defense contractors, and the Department of Defense (DOD). ![]() The hearing will explore sources of counterfeit electronic parts and how they are made, cases where counterfeit electronic parts have penetrated the defense supply chain, and the cost and potential impact of counterfeit electronic parts on defense systems. On November 8, 2011, the Committee will hold a hearing on the investigation.
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