SIA launches fight against fake chips

The fake chips are often rebranded parts claiming greater performance than they actually have to earn the sellers a fast profit. No one has accurate numbers on the size of the counterfeiting problem, but the SIA shares several anecdotes from its members.

One company has seen fakes of 100 separate part numbers appear in the last three years. Another member reported 19 cases involving 97,000 chips. A third has seen customs officials seize fake versions of its chips four times in the past two years, each seizure capturing between 6,000 to 60,000 chips.

"Over the last two years many of the components we have found were destined for use in avionics, many of them in military applications," said John Sullivan, chairman of the SIA’s Anti-Counterfeiting Task Force and director of worldwide security for Texas Instruments.

No crashes or other catastrophic failures of life-critical systems have been attributed to fake chips to date, but the threat looms, especially as military systems increasingly use off-the-shelf silicon. "This problem is really rising to the level of national security, public health and safety," said Sullivan.

Right dealers
To counteract the trend, the SIA is stressing the importance of buying chips only from authorized distributors. Distributor Rochester Electronics volunteered to put together a manual of major chip manufacturers and their authorized distributors available upon request by email. It is also creating a Website where it will post the information.

"This will be the phonebook for purchasers of components," said Curt Gerrish, founder and CEO of Rochester.

"They were the ones who brought this counterfeiting issue to our attention and really were a catalyst in forming the task force," said Daryl Hatano, VP of public policy for the SIA.

The Web directory is still under construction with listings available for only about 10 of 60 major chipmakers. The group hopes to round out the effort in the next couple weeks, Hatano said.

The directory currently provides incomplete listings of authorized distributors even for established giants. The TI listing, for example, includes companies such as Hitachi and Toyota listed as authorized distributors but provides no phone or Web contact information about just what parts of those companies to contact.

"This is not a final product, but a second draft at this point. The first draft had so many holes you could drive a Mac truck through it," said Sullivan.

The SIA is clear that even when the data is all in place it will not come with any guarantee buyers won’t ever get fake products from authorized dealers. "We can’t say 100 percent of authorized distributors are not passing on counterfeit product inadvertently," said Hatano.

Chip brokers may chafe at the underlying assumption here that as a way to avoid counterfeits buyers should not use their services.

"There’s a need for a legitimate broker supply chain, but there is also a proliferation of people who turn a blind eye to where their chips are coming from," said Sullivan, adding that most fake chips are sold through brokers.

Brokers say they serve an important role helping system makers get parts that are out of stock or offering lower prices in some cases. To address concerns about counterfeiting, some have joined to form groups such as the Independent Distributors of Electronics Association (IDEA), a non profit trade group that develops standards and processes for testing the authenticity of chips.

Getting a product warranty, something only chipmakers and their authorized dealers can offer, is another way to assure chips are authentic. Certificates of compliance are also useful, although they, too, can be forged, Sullivan said.

China problem
Shenzhen, the capital of China’s Guangdong Province where many companies assemble system-level products, is one of the biggest sources of counterfeit chips, according to the SIA.

Hundreds of small and a few large illicit dealers operate routinely here, said Sullivan. He visited and secretly took pictures of some of them including a large warehouse with a wide variety of re-labeled chips and systems.

"It’s like going to a big department story, a Macy’s for electronic fakes. But if you get caught with a camera in there it can be worth your life," he said.

One distributor in Shenzhen had 61 percent of the goods it shipped to the United States examined and found to be counterfeit. "This is the tip of the iceberg," said Sullivan.

He described the rebranding in China as a "cottage industry" and a "throw back to an older culture that fuels the local economy so people have turned a blind eye to it, but now they are realizing it is hurting them," he said.

The SIA is working with enforcement groups that lobby the regional authorities to crack down on the fakes. To promote legitimate businesses, China’s electronics ministry kicked off a program in January to certify local distributors with about 18 companies taking part so far.

"It’s a question so of how aggressive they want to be," said Sullivan. "The only way they are going to get investment into Shenzhen is by clearing up this mess," he added.

In another effort to address counterfeiting, a number of service companies have been promoting labeling semiconductor shipments with secure, encrypted codes. The scheme would let buyers check the contents of individual shipments against information on secure servers at the chipmaker’s office.

To accelerate adoption of such a process, the SIA is helping spearhead standards efforts in the area. "We are hoping we can get a standard finished by the end of the year," Hatano said.

- Rick Merritt
EE Times