Upgrade components grant bonuses (such as increased attributes or effects added to attacks) while wielding that piece.
The equipment must have an Upgrade Slot to accept a component, and most upgrade components require the item to be above a certain level. Upgrade components are items that can be added to weapons, armor, trinkets, and gathering tools. Double-click an upgrade, and then click on a piece of gear with an unused upgrade slot to fuse the upgrade to the gear. Upgrade items improve your equipment's performance.