At SMT Corporation–

Blumenthal Gets A Lesson On Electronics Counterfeiting

By John Voket

When Senator Richard Blumenthal heard testimony from Tom Sharpe, a principal of Newtown’s SMT Corporation, during a recent Senate Armed Services Committee meeting, the former state attorney general was intrigued and wanted to learn more about the high tech firm tucked away down a securely monitored cobblestone driveway near the Monroe town line in Botsford.

Sen Blumenthal got a crash course in the economic and national security implications of counterfeit electronic parts, and the increasing role SMT is playing in identifying and isolating those fake components, when, on Monday, he made good on a promise to visit the firm.

The official and company owners invited The Newtown Bee to shadow that hour-long tour, after which Sen Blumenthal sat for an interview with the local newspaper, which focused in part on concerns raised during the SMT visit. (See separate story.)

Founded in 1995, SMT Corporation is a global, independent stocking distributor of electronic components and related peripherals. With more than a billion components in stock representing more than 600 major component manufacturers, SMT maintains one of the largest “ready to ship” electronic component inventories in the world, according to company information.

After some brief welcoming introductions by Mr Sharpe and First Selectman Pat Llodra, the trio headed off through the 72,000-square-foot facility, which houses various labs, testing chambers, a massive storage facility.

During the quick moving tour, Mr Sharpe made note of treated floors, monstrous dehumidifiers, and component handling areas that all utilize static electricity defeating measures and environmental controls to protect both the sensitive parts and testing equipment used at SMT.

He explained that the entire Botsford facility and grounds are protected by sophisticated fire detection, burglar, and video security systems.

Photographic Evidence

The tour concluded in the company’s boardroom where Mr Sharpe reviewed photographic evidence of what he saw during a trip he made to China. His presentation illustrated the sophisticated ways Chinese parts counterfeiters are working overtime to disguise their second-hand retreads of expensive and valuable microchips and circuit boards.

Mr Sharpe said that the problem of counterfeit parts in consumer products from calculators to tablet computers to flat screen TVs is at epidemic proportions. But it pales in comparison to his concerns about the inferior, second-hand circuitry getting into military and homeland defense systems that could be critical to the operation of everything from aircraft carriers to unmanned drones to gear carried into service to help protect America’s fighting forces.

“The open market is filled with garbage,” Mr Sharpe told Sen Blumenthal. And since SMT clients depend on his company to stockpile and provide surplus parts for sophisticated military and defense systems — some of which are decades old — the company has made it a primary mission to weed out the knock-offs from the original and sanctioned components.

In some cases, the variety of SMT equipment used to perform those delicate examinations of microscopic systems is second to none in the nation. And while Mr Sharpe said his company does have a few competitors, none have made the investment in equipment, facilities, and training personnel like the Newtown firm.

That is why in a recent federal audit, investigators ordered surplus parts from various sources around the globe to determine their authenticity and delivered them to SMT to be tested.

“They ordered 13 parts and sent them directly to SMT, where we determined that 13 out of 13 were counterfeit,” Mr Sharpe said. He said while there are certainly many other nations where counterfeiting is a daily occurrence, none can provide the volume and sophistication as those knock-offs coming from China.

The China Dilemma

“Their country does nothing to stop it,” Mr Sharpe told the senator, adding that during his China trip he saw piles of parts on sidewalks being washed by contaminated rainwater.

“You couldn’t even walk through the streets without stepping on piles of counterfeit parts. They have infiltrated the supply chains everywhere,” Mr Sharpe continued.

And while a higher number of those parts arrive dysfunctional from the supplier, the SMT official said it has no tangible impact because the originator is saving so much money already.

“In the marketplace, we know 30 to 40 percent of the parts are counterfeit, and 15 percent of those parts are dead on arrival, but the suppliers are saving 70 percent,” Mr Sharpe said. “And while the rest of the parts may be functional, they’re not going to perform the same or last as long because they may have already had a full previous life.

“This is what presents a danger to our war fighters — the implications are huge.”

The company owner appealed to Sen Blumenthal to take a lead role in communicating these dangers to his fellow lawmakers in Washington, and to try and take steps to stop it at the national level.

“Identifying who is selling them is not the biggest part of the problem. The biggest part of the fix is how to regulate who sells parts to the Department of Defense,” Mr Sharpe said.

Sen Blumenthal responded that defense contractors should have zero tolerance when it comes to acquiring and integrating systems containing counterfeit parts.

“We just can’t take that risk,” the senator said. Mrs Llodra agreed, noting that even at the municipal consumer level, there are many cost and public safety implications for electronics that may break or fail prematurely because they contain knock-off parts.

Mr Sharpe agreed wholeheartedly.

“The statement ‘we don’t know what we don’t know’ is particularly germane when it comes to counterfeit electronics.”