Stephen McMinn Altera Corp.

The truth lies somewhere in between, and every customer should be aware of the implications of purchasing product via broker channels. Customers that routinely purchase product from even "reputable brokers" will ultimately pay the price of production delays, system field failures, or, if theyre lucky, the discovery up front that the parts are counterfeits.

The most likely source of brokered parts is electronics manufacturing service (EMS) corporations. Most enjoy the right to purchase a variety of products on behalf of large OEMs at highly discounted prices due to the volume of business those companies do with the semiconductor suppliers. Also, the temptation can be great. If an EMS company can purchase franchised product from a reputable supplier or distributor at a 50 percent discount and re-sell those parts for a 25 percent markup to a broker who in turn will sell them to a smaller customer for another 25 percent markup, it looks like everyone wins. The EMS provider makes money, the broker makes money, and the small customer typically saves a few bucks.

So who are the losers in these dealings? The first loser is the semiconductor company that forfeits their margin on the sale to the end small customer because the sale never happened. The second loser is the supplier/distributor engineer who spent long hours working with the customer engineer to figure out why his board did not work and never gets compensated. The third and potentially biggest loser can be the customer when they discover that the devices somewhere along the shadowy delivery path may have been remarked as faster speed grades, marked as a different part number, or even left out in the rain on a tarmac at some airport. Even these "reputable brokers" rarely understand exactly the circuitous path that the devices they supply, take to reach their final destination.