Fakes cost IT industry $100bn per year

The IT industry is losing up to $100bn per year from counterfeit products, audit firm KPMG estimates.

Based on the firm's interviews with electronics industry executives, as many as one in 10 IT products sold is counterfeit.

Richard Girgenti, a partner in the KPMG ForensicSM practice, said in a statement: "Counterfeiting is one of the most significant threats to the free market. It not only steals the value of intellectual capital, it stifles innovation and robs customers of the quality they expect from a brand."

The International Chamber of Commerce has estimated that counterfeit goods account for six per cent of world trade in 2003, valued at $456bn.

According to FT reports, China is the biggest producer of counterfeit products - which include switches, memory and hard drives.

The audit firm said counterfeit IT products are sold on the internet instead of street corners, so most end users are unaware they are buying fakes.

Illegal replicas of brand name technology products are damaging revenues and counterfeiting, though a relatively recent problem, is turning out to be one of the most challenging issues for the IT industry, the company said.