The problem of counterfeit semiconductors extends far beyond the borders of the United States.
The issue of counterfeit semiconductors in the supply chain extends well beyond the borders of the United States, of course. As we reported earlier this week, quantifying the size and scope of the problem is problematic, even for the semiconductor industry itself.
During a 2011 hearing before the U.S. Senate Armed Services Committee (SASC), Brian Toohey, then president of the Semiconductor Industry Association (SIA), testified that experts have estimated that as many as 15 percent of all spare and replacement chips purchased by the Pentagon are counterfeit. He said the SIA estimates that counterfeiting costs U.S.-based chip companies alone more than $7.5 billion per year.
A 2013 whitepaper by the SIA’s anti-counterfeiting task force explains that the problem of counterfeit semiconductors in the supply chain dates back to at least the 1970s, though awareness of it was limited. However, the problem grew in the 1990s, driven by a number of factors: the dot-com boom and later periods of high semiconductor demand that resulted in longer lead times and higher prices; an influx of new independent distributors and brokers setting up shop online through the rise of the Internet; purchasers’ increased focused on price and availability, which led them to buy from little known Internet brokers; and increased environmental awareness that lead to recycling of electronics waste (e-waste), which is the source of many counterfeit and re-marked semiconductors.
As with many counterfeit goods, a disproportionate number of fake chips are traced back to China.
“The issue of counterfeiting is a global problem,” said Thomas Ruzika, a senior product manager at SiliconExpert, an electronics parts search and component database firm affiliated with AspenCore, the publisher of EE Times. “However, in 2012, a Senate Armed Services Committee uncovered more than 1 million ‘bogus parts’ in the Pentagon supply chain. They estimated that more than 70 percent of the occurrences were traced back to China. There have been some major steps since then though for governments around the world to crack down on counterfeiting.”
The SIA’s anti-counterfeiting task force works with government agencies, law enforcement and customs officials throughout the world to spread awareness of the issue and methods for combating it. But as Lisa Maestas, chair of the anti-counterfeiting task force, told us, counterfeiters are getting smarter about adapting to this growing awareness and incorporating new tricks.
However, Maestas said, the good news is that the spotlight on the issue is growing in all major regions — including China. “The knowledge and awareness and understanding of the risks that are associated with counterfeit semiconductors is definitely growing,” Maestas said.
There are standards in place to ensure the authenticity and functionality of semiconductors. But once chips head out of the manufacturers’ authorized supply channels and hit the open market, anything goes—and there isn’t a mechanism for ensuring that the devices are authentic and function properly. During a 2011 hearing by the Senate Armed Services Committee, committee chair Carl Levin described how one set of suspected counterfeit parts passed through six different brokers in three countries before they were assembled into a system, according to the SIA whitepaper. With components changing hands so frequently, most people are not even aware when they have counterfeit chips in their stockpiles.
The SIA and all chip vendors recommend that chip buyers purchase semiconductors directly from them or through their authorized distribution channels. Beyond that, there are companies like SiliconExpert, which maintains a database of over 1 billion components and can enable engineers to reliability source and validate component data. Ruzika said SiliconExpert’s proprietary algorithm assigns a “counterfeit risk score” by assessing key motivational factors for counterfeiters like lifecycle, market shortages and price hikes.
“It goes beyond reacting to known counterfeit reports and allows its users to stay one step ahead of the counterfeiters,” Ruzika said.
—Dylan McGrath is the editor-in-chief of EE Times.