Counterfeit Chips Escalate Amid Shortages

With no foreseeable end, the semiconductor shortage has led counterfeiters to capitalize on the industry’s desperation.

The persistent semiconductor shortage has provided “fuel to the fire” for electronic component counterfeiters.  The desperation among electronic component buyers has given counterfeiters an opportunity to exploit the industry-wide panic buying and has led to an increased prevalence of counterfeit components.  It is critical that buyers of electronic components cultivate an increased awareness of these risks and develop a plan to combat counterfeit parts.

The market for counterfeit chips is growing with a worldwide value of $75 billion

According to Semiengineering, the market for counterfeit chips is growing and already valued at $75 billion worldwide.  Analysts have observed an increase in newly established companies offering large quantities of scarce parts with many of these semiconductors passing most visual inspections.  These chips are actually counterfeit products that present considerable safety and reliability risks when implemented into production.  Counterfeiting chips involves relabeling or replicating chips, or scavenging genuine parts, de-soldering them from the board, and refurbishing them to appear authentic.  The problem is that even a counterfeit chip can work well enough to pass an elementary inspection, yet still fail prematurely under a specific load or circumstance.  Since semiconductors are used in virtually every segment including military and medical applications, counterfeits have a dangerous impact on the health and safety of the user and can tarnish the productivity and reputation of an OEM.

What can buyers do to avoid counterfeit components?

Due to the pressure to meet deadlines and maintain operational efficiency, OEMs turn to unreliable sources for the chips they need, and they’re forced to cut costs when testing and inspecting the parts.  Once counterfeit components are created, it is very difficult to track them through the supply chain.  While the industry may lack a fail-proof solution, buyers of electronic components are still capable of combating counterfeit components in their supply chain.  The most efficient way of combating counterfeits is through a comprehensive sourcing structure.  Vetting and analyzing your sources can reveal indications of questionable transaction.  For instance, a newly established company offering a large quantity of a scarce product must be scrutinized and evaluated for authenticity.  Additionally, buyers should leave margin in deals for testing services to ensure that the parts receive a thorough testing and evaluation process.

At Aegis Components, our sourcing structure has allowed us to weather the storms of uncertainty in the electronics industry.  Our network of suppliers has received over a decade of scrutiny and evaluation.  Our strategically placed locations around the world allow us to visit and audit the headquarters of a company before making a purchasing decision.  Additionally, Aegis Components has partners with reputable test houses to provide the appropriate inspection and testing of a part before delivering it to our customers.  Our thorough approach to procurement combined with our exceptional logistics structure has allowed us to combat counterfeit electronic components, and rival the larger distributors in our industry.

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