Counterfeiting is not unique to semiconductors; in fact, it’s not even a new idea.
Counterfeit and substandard products enter the global supply chain every day and have a negative effect on many industries: money/currency, stamps, clothing/fashion, wine, toys, computer hardware and software, electronic devices, semiconductors… and I’m sure you can think of others.
Earlier this year, US electronics retailer Newegg confirmed that counterfeit Intel Core i7 920 CPUs had made their way into its inventory, and several had been shipped to customers. (See: Newegg Axes Supplier Over Fake Intel Chips.) The counterfeit Intel Core i7 920 CPUs, sold as standalone or boxed chips, had spelling errors on the box, a blank instruction manual, a heat sink made of epoxy or plastic molding, and a picture of a CPU fan glued to the top of the plastic heat sink! The CPU was comprised of layers of metal and PCB with a fake IHS on the top and a sticker attached with typical Core i7 information.
Not exactly the most sophisticated counterfeiting operation, and yet the counterfeit products passed through all of the testing and verification of authenticity procedures, only to land in the hands of end customers. With counterfeiting operations developing new and advanced techniques, it is alarming to see such a simplistic counterfeit scam work.
In coming months, I will be discussing in this column the global semiconductor supply chain, semiconductor manufacturing and distribution trends, end-of-life events, semiconductor counterfeiting and substandard procurement concerns, anti-counterfeiting measures and tactics, and what original semiconductor manufacturers, OEMs, and government agencies are doing to reduce illegitimate product from reaching the end user. I look forward to exchanging ideas with you and reporting on ways we can all work to improve the semiconductor industry.
Sadly, the technology to not only identify counterfeits but keep them out of the channel exists. There are RFID tags, holograms and a number of other authentication technologies that are proven. They are still prohibitively expensive for the supply chain and there is another problem: everyone has to agree to use the same process or it's useless. Supplier A uses RFID and supplier B uses a hologram. Authorized distributor C has to invest in RFID and hologram scanning equipment--big bucks. Supplier E uses barcoding and so on...
Now, another wrinkle: investment in scanning equipment differentiates C for awhile because they can say the products are authentic. But then nonauthorized distributor D also invests in the equipment and D can prove the parts are authentic too. What then differentiates Distributor C? A proprietary system is one answer, but that would require everyone in a single supply chain to agree to and use that technology. What if you have a mom and pop supplier that can't afford it? So we are back to the beginning.
Counterfeiting occuring in the semiconductor industry not only invalidates authenticated products but also a decrease in buisness heights which lead to a loss for further rapid growth. This could be avoided only by watermarking and also using holograms. This could be developed in a semiconductor industry or could be imported from the concerned manufacturer who sells the products to retain the authentication of the valuable products in a semiconductor industry.
Bolaji, that's incredible and certainly doesn't make me feel safer in my bed at night. What's next - fake parts for nuclear reactors in the US, or real ones for the reactors in Iran? (sorry, bit political)
Steve, The U.S. Navy was indeed stung by counterfeiters but it was not alone. The entire U.S. Department of Defense was impacted. In a report, the three military branches admitted to having seen their supply chain infiltrated by counterfeiters. The Navy bought counterfeit routers "that had high failure rates and the potential to shut down entire networks." The Air Force said it bought microprocessors for its F-15 flight-control computer that turned out to be fake while the Army bought seatbelt parts "made from a grade of aluminum that was inferior to that specified in DoD's requirements." The report is available here.
this doesn't say much for Newegg's inspectors!! Their should be some sort of watermark for electronics components imilar to what they have for brand sports equipment, but tiny. This seems like a problme with a solution to it for an industry as innovative as the electronics world
I'd like to hear more about the inspection and verification procedures the Newegg chips passed. Here's why: inspection may not do a lot of good without comparison data--in other words, what does this thing look like vs. the original? I know of an organization that published a catalog of real vs. fake devices and I used to think that was awfully simplistic. Now I'm not so sure.
There is no disputing that Counterfeiting among Global Electronic Manufacturers (especially the most popular ones) is a very serious and growing menace.
There are in (my opinion) two ways to tackle the problem-
1)Make your products and the supply-chain more robust and difficult to duplicate
and 2)Make your products cheap enough there is no incentive for a counterfeiter to counterfeit your products and under-cut you on price.
Both these ideas will work wonders to eliminate this terrible problem (which could also put peoples lives at risk,through faulty products..).
I heard of this story as well. I felt bad for Newegg since everyone will blame them for not being able to detect the fraudulent products. But I saw a few instances close to home where people were burned by counterfeit products. What's worse than NOT getting what you pay for is the additional damage that will be done to your other products. For instance, if you built your custom machine, a counterfeit CPU might cause harm to your other 'real' components.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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