© 2011 Rochester Electronics, LLC

Page 7

September 2011

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times. And there is a constant pressure to lower production costs. In fact, in some industries, particularly in the

military, procurement personnel have been forced to base purchase decisions on lowest price. This practice leads

them right into the hands of counterfeiters and purveyors of substandard parts.

Genuine and counterfeit semiconductors are manufactured in

low-labor-cost regions of the world.

It is estimated that more than 45% of the world’s legitimate semiconductors are manufactured in regions of the

world where low labor costs are available. The size of this labor force is increasing every year in many areas of

the world. Experts estimate that the majority come from China; however other countries are also involved:

Taiwan, India, Nigeria, Southeast Asia, the United Arab Emirates, Turkey, Brazil, South Africa, Ukraine, and

Russia. Many U.S. manufacturers, for example, own facilities in these countries. Many other manufacturers

subcontract to independent companies in these countries for diffusion, assembly, and testing of their products.

Some counterfeiters find ways to take advantage of the fact that the expertise, the facilities, and the IP are locally

available. The fact that so much scrap electronic material is exported to certain countries for “disposal” just makes

opening a counterfeit operation that much easier. The raw material is there for the taking and sorting. In addition,

counterfeiting in most of these countries is not considered or treated as a “bad” endeavor. Authorities often turn a

blind eye to “entrepreneurs.”

In 2003, when China became a member of the World Trade Organization (WTO), the Chinese government

changed export laws to remove stringent export regulations and allow almost anyone to export. This has enabled

countless counterfeiters to set up shop – from street-corner operations to sky-scraper-dwelling super dealers.

There are lots of ways to produce a counterfeit or substandard part.

There are many methods of producing counterfeit parts; some are sophisticated and some are remarkable

unsophisticated. Some substandard parts are actually authentic parts that have been damaged through improper

handling, storage and shipping procedures, including exposure to contaminants or electrostatic discharge (ESD).

Parts can be subject to assembly problems due to incorrect dry packaging.

Once the counterfeit parts make their way into the supply chain, there is no way to identify them or keep track of

them. Often, for example, gray market distributors take parts as returns back into stock without verifying

authenticity, and mix them in with other similar parts. Even they can’t tell which are “good” and which are not.

But that is just the beginning of the ever-increasing, ever-more-sophisticated counterfeit game. The

Semiconductor Industries Association (SIA) Anti-Counterfeiting Task Force (ACTF) has determined the following

three-point definition of counterfeiting:

1. A substitute or unauthorized copy of a product

2. A product in which the materials used or the performance of the product have been changed without

notice by an entity other than the original manufacturer

3. A substandard component misrepresented by the supplier

Here are some methods currently in use to produce counterfeit and substandard semiconductor components:

•

Re-marking to indicate higher performance capabilities: This most common counterfeit scheme

targets markets that require devices that perform at extreme limits of temperature, speed, and vibration.

These devices are expensive because they are complex and require stringent testing during the