Business
Countering the counterfeiters
Semiconductor profitability is being hit hard because between 1%
and 10% of electronics include counterfeit components. Paul Dillien of
High Tech Marketing discusses a tagging system for semiconductors
Issue I 2009
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from Algotronix that is designed to battle counterfeits. .com
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lgotronix has launched a actions. These include recommendations to use
oasiasemiconductor
novel concept in tagging only authorised or franchised suppliers, and they
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to help to counter the are working on improved security of labelling.
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rapidly growing trade in Algotronix technology supplements such efforts.
counterfeit chips. The There are two common ways that devices
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financial cost to the industry has been estimated are counterfeited. The first method is for a
at $2B to $3B
1
, but this is only the direct fraudster to acquire low speed devices and
revenue impact. The Alliance for Gray Markets boost their values by making them appear to be
and Counterfeit Abatement, an industry group higher speed parts, or take commercial devices
consisting of Hewlett Packard, Cisco and other and label them as higher screening options.
top tier electronics OEMs, estimates the loss to These will probably pass the production and test
electronics manufacturers alone at more than flows undetected if they are run at nominal
$100B
2
. The hidden costs of lost revenue, voltage and temperature. Problems could
damaged reputations for the semiconductor manifest themselves in the field under more
vendor and reliability issues for the end extreme conditions, where the cost and
customer are more difficult to quantify. implications of failure are at their highest.
Counterfeit passive components have been Counterfeit devices can also be introduced into
recognised for years, but sophisticated the supply chain by a different deception. Here
semiconductor devices are now finding their way fraudulent devices are created by taking a
into the supply chain
3
. Mass market devices second source for, say, a memory and
such as memories are attractive to fraudsters relabeling it to appear to be a DesignTag provides
because of the huge number of consumers. premium brand from a proof of counterfeiting
The Semiconductor Industry Association leading vendor.
(SIA) set up an Anti-Counterfeiting Task Force in In order to put an
June 2006. An indication of how widespread estimate on the loss of
the problem is comes from the SIA statement profits suffered by a
that in a recent joint custom’s operation 360,000 semiconductor vendor, let
counterfeit ICs bearing over 40 different us make a few calculations.
trademarks were seized at a handful of border Assume that a memory vendor
controls over a three week time frame
4
. The SIA has revenues of $1B, and 5% of
President, George Scalise, says “Counterfeiting the parts purchased are counterfeit
is a serious and growing problem in the by falsely remarking the speed grade.
worldwide electronics industry”. The SIA also If the parts have a speed adder of 4%
points out that “many of the counterfeits between 266MHz and 333MHz, then the lost
originate in China”, and calls for a number of revenue (and associated profit) will be $2M.
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