By Charles Arthur, Technology Editor

A scientist steals a secret formula for an electrical product from his Japanese employer and takes it to China. Then it is stolen again and turns up in Taiwan. But something goes wrong - and thousands, perhaps millions, of computers and electrical goods in the West begin to burn out or explode.

It sounds like the plot of a thriller, but it's reality. Thousands of computers have failed and nobody is sure how many more products might go wrong because their capacitors - essential components to control the power supply - were made with faulty materials.

"It could be all the way through to TV sets, hi-fis and even lighting power supplies," said Dennis Zogbi, president of Paumanok Publications, an expert on the market for "passive components". These are mundane electrical items such as resistors and capacitors that sell by the millions and whose reliability is essential. "People want Western quality at Chinese prices," he said. "Well, you can't have both."

The story began in 2001, when a scientist whose name is still unknown left the Rubycon Corporation in Japan and began working for the Luminous Town Electric company in China. Both companies made electrolytic capacitors. In China, the scientist developed a copy of Rubycon's electrolyte, the filling of which allows the capacitor to store and release electrical energy.

Later that year, the scientist's staff defected to Taiwan, taking with them a copy of the electrolyte formula so they could set up their own company. Taiwan supplies 30 per cent of the world's electrolytic capacitors and most of the big PC manufacturers get their machines assembled in Taiwan. But the defectors mis-copied the formula. After a few hours of operation, the electrolyte would leak hydrogen gas, before bursting the metal body of the capacitor. The electrolyte would then leak its brownish filling and could cause a fire.

"The only company that publicly confirmed it to us is IBM," Mr Zogbi said. Dell Computer, the world's biggest computer seller, has privately confirmed that the problem exists. Mr Zogbi said that even when the alarm had been raised, some companies in Taiwan were unwilling to listen.

Two questions remain: how many of the faulty capacitors are still in use, waiting to fail? And which company supplied the flawed formula? Mr Zogbi said most of the faulty parts had been tracked down. "But some of the large computer manufacturers just won't admit the problem," he said.