The exploding mobile-phone battery is the clearest and most notable example of the threat of substandard handset components, but the problem does not begin and end there.
Mobile-phone makers face a dizzying array of perils when it comes to assembling a mobile phone. For example, Motorola Inc. and others suffered a shortage of camera-phone components in 2003, which in some cases affected stock prices and bottom lines. Several carriers dropped Siemens AG phones last year after the company warned of a software glitch in its 65-series devices. And Nokia Corp., Kyocera Wireless Corp. and others have faced complaints over exploding phone batteries.
Such missteps can ruin months of work. Usually the blame gets passed on to the companies that supplied the faulty components. Those suppliers generally travel under the radar, so the scope of the issue is difficult to calculate.
“How widespread is the problem? We’d like to know,” said Nick Davis, president of the Independent Distributors of Electronics Association and president and chief executive officer of independent electronics distributor Husky Electronics International Inc.
Davis said there are no clear numbers on fraudulent and substandard parts, so the financial damages from faulty components are hard to tabulate. IDEA was formed to give electronics manufacturers a secure, trustworthy source for parts, Davis said. The group’s 31 member companies all follow a set code of conduct and best practices to ensure their products are clean and functional.
Davis said all electronics manufacturers must deal with substandard and fraudulent parts. However, mobile-phone makers are perhaps more prone to the problem due to their posts at the cutting edge of the electronics market. Thus, component problems are relatively rare when the sheer size and complexity of the wireless industry is taken into account.
Nonetheless, manufacturers must maintain constant vigilance. Davis said electronics companies must protect against several different kinds of substandard parts. The first and most publicized type of substandard part is the counterfeit. Nokia has blamed counterfeit batteries-those not supplied by the company-as the reason behind several exploding Nokia phones. The company recently announced a program to label its original batteries with a special holographic image and authentication code to stem the sale of unsafe, low-quality products. Davis said counterfeit parts are a relative rarity because an illegal supplier must have the capability to make and sell them at prices below those of the true vendor. Thus, most counterfeit parts come from low-cost manufacturing countries like China.
“You got a lot of different problems there,” Davis said.
Electronics manufacturers and mobile-phone makers must also be on the watch for substandard parts-those components that don’t meet quality specifications. Other problems arise from the use of refurbished parts-components that have already been used but have been restored to working order. IDEA recommends that the parts be sold but marked as refurbished. Manufacturers also must be aware of remarked parts, which Davis said are components labeled as made from one material but that are actually made from a cheaper, potentially inferior material.
So in a market where components can number in the hundreds for one product line, how are phone makers to track it all? Davis said the best way is through an old-fashioned formula: trust.
“You need to have a safe place to go” for parts, he said. “They need to have a level of trust.”
Phone makers and other electronics companies must know who they’re buying parts from and what their policies are, Davis said. Specifically, manufacturers can detail precise return policies and can require documentation for legitimacy. IDEA’s member companies subscribe to the same basic principles, and membership is a source of credibility.
Electronics companies can also conduct routine parts checks and send out suspect parts for authentication tests.
“I do that all the time,” he said. “Substandard parts can arise anywhere.”
Substandard parts are a serious concern to some mobile-phone makers. Kyocera was forced to recall thousands of phones due to faulty batteries from Hong Kong supplier Coslight International Group early last year. Kyocera said at the time that it had discontinued its relationship with Coslight.
