The Number of Counterfeit Chips Rises in Shortages

Crisis, for someone, always breeds opportunity — although sometimes that opportunity is not what society considers ethical. One example that typically arises in global chip shortages is the radically increased numbers of counterfeit chips that find their way into designs ranging from basic consumer tech to highly specialized equipment such as healthcare devices and military and defense equipment.

We are unfortunately in the middle of one of those times. According to analyst firm Gartner, semiconductor shortages are poised to last well into 2022, and wafer order lead times could come up to 12 months in the coming months. “For some companies,” said ZDNet discussing the shortage, “this will mean finding an alternative way of stocking up on chips or shutting down production lines. In other words, the current times are opening up a golden opportunity for electronic component counterfeiters and fraudsters to step in.”

One of the greatest tragedies of counterfeit is that it most often affects companies that are most vulnerable to market shortcomings. The greater likelihood that an OEM is facing shutdown from global shortages or indefinite production delays, the more susceptible they will be to bad actors looking for a quick profit. Large, established OEMs typically have the means and permissions in place to purchase inventory direct from component manufacturers — or even already have long-stocked NOS parts on hand in warehousing they can rely on in times of need.

And once acquired, many of such counterfeit chips can be difficult to differentiate from authentic components. Most counterfeits, as opposed to being simply “gray market” versions of genuine parts, actually originate as overbuilds or reworked failures and actually do perform indistinguishably from the part they are emulating. The only issue is that these components are very unstable and, without meaningful quality control, can have no assured reliability. In industries where very real lives can be on the line depending on the reliability of the equipment (in a hospital, for example), that reliability goes well beyond having any monetary value; it very much is priceless.

The simplest and most secure solution to avoiding these markets is to purchase directly from the component manufacturer or authorized distributor, although that can be easier said than done. Having a reliable third-party supply chain partner such as Partstat in place gives OEMs a direct link to guaranteed, reliable inventory streams with no middlemen or unanswered questions regarding authenticity. Every single component or semiconductor purchased through an Inventory Ownership Solution is guaranteed to be fully traceable, and with Partstat’s dedicated inventory storage options, no OEM has to have concern about stockpiling too much inventory early in the design process. Even OEMs who have no onsite storage capabilities can have a way to fully guarantee the entire lifecycle of their product without ever having to resort to unauthorized sellers or resellers.