Counterfeit Electronic Components

1
Counterfeit Electronic Components

• Overview and observations from recent counterfeit
  detection experiences
• Henry Livingston, BAE Systems

2
What is a Counterfeit Electronic Component? An
Aerospace and Defense Equipment Manufacturers
View

• Counterfeiting often involves cases where parts
  are offered that present a risk both to the
  Government Equipment Manufacturer and to the
  Government user. Examples include
• Parts remarked to disguise parts differing from
  those offered by the original part manufacturer
  (e.g. original manufacturer, country of origin,
  specified performance)
• Defective parts scrapped by the original part
  manufacture
• Previously used parts salvaged from scrapped
  assemblies
• These are incidents that jeopardize the
  performance and reliability of electronics

3
What is not a Counterfeit Part? (BAE Systems view)

• The following methods are not associated with
  counterfeiting
• Refinishing parts to support assembly
  producibility and ensure equipment reliability
• Upscreening parts to satisfy customer
  requirements
• Uprating parts to assess their capability to
  meet the performance requirements of the
  application in which the part is used outside the
  manufacturers specification range
• These are methods applied by Electronics
  Manufacturers and Government users to assure
  parts will fulfill equipment performance and
  reliability requirements

4
Electronic Component Counterfeiting Is On The Rise

• The incidence and detection of counterfeit
  electronic and semiconductor components has been
  on the rise over the last few years.
• Companies e.g., independent distributors doing
  business in China are especially prone to this
  problem
• Enforcement of laws regarding counterfeiting and
  IP theft is poor in China
• China has been rapidly building up its
  electronics and semiconductor infrastructure over
  the past few years with knowledgeable and
  experienced engineers and managers and by
  building near start-of-the-art semiconductor
  fabs.
• This increasing capability to produce competitive
  product implies, among other things, an improved
  capability to produce counterfeits of higher
  value, more complex devices.
• Design Chain Associates, LLC (http//www.designch
  ainassociates.com/counterfeit.html)
• Trend data specific to electronic components is
  limited.
• perhaps 10 percent of the technology products
  sold worldwide are counterfeit electronics
  companies miss out on about 100 billion of
  global revenue every year ...
• M. Pecht and S. Tiku, Bogus Electronic
  Manufacturing and Consumers Confront a Rising
  Tide of Counterfeit Electronics, IEEE Spectrum,
  Vol.43, No.5, pp.3746, May 2006.

5
GIDEP Alerts / Problem Advisories Reporting
Counterfeit Electronic Components (as of July
2007)
Many other counterfeit cases have been discovered
by users, but were not reported via GIDEP. Data
shown does not reveal instances where a GIDEP
notice alerted another user who subsequently
found counterfeits as a result of the notice.
Component manufacturers are aware of
counterfeit cases involving their products, but
generally do not report those cases via GIDEP or
industry watch dog organizations. We have
been informed that one Government organization
has reportedly discouraged such GIDEP
notifications for fear of undermining a
government investigation, but have had other
Government agencies applaud GIDEP notifications
Data courtesy of GIDEP
6
Semiconductor Manufacturer Survey

• In June 2006, the Semiconductor Industry
  Association (SIA) established the
  Anti-Counterfeiting Task Force (ACTF) consisting
  of semiconductor manufacturing company members
  involved in the investigation of counterfeiting
  and coordination with law enforcement.
• Semiconductor Manufacturer disclosures
• Company A Over 100 part numbers have been
  counterfeited in last 3 years.
• Company B 19 cases reported involving 97,000
  units.
• Company C Since June 2006, there have been 4
  seizures of counterfeits of our products by U.S.
  Customs units seized ranged from 6000 to 60,000.
• Company D We estimate that 2-3 percent of
  purchases of our brand are counterfeit
• Company E A broker website indicated 40,000 or
  our devices available, but our company had only
  made less than 200 units of that device with the
  specified date code. If all 40K were available it
  would result in a 34 million loss.
• Types of problems
• Remarked product (most common), incorrect die,
  inferior packaging materials, reproduction of
  chip designs, packages without die, different
  labels on packages, and false RHOS notifications
  (whether the product contains lead.)
• Counterfeiters are now buying legitimate products
  from a distributor, making counterfeits with the
  same date code, and sending the counterfeits to
  the distributor as a customer return.
• Source Semiconductor Industry Association (SIA)
  Anti-Counterfeiting Task Force (ACTF)From SIA
  Talking Points (16 May 2007) provided by J
  Stradley, Chairman

7
EU, U.S. vow crackdown on computer
counterfeitsBRUSSELS (Reuters) - Feb 22, 2008

• EU and U.S. senior officials said they would
  crack down on counterfeiting of computer
  components after they seized over 360,000 fake
  items in just two weeks in a joint operation at
  the end of last year.
• Integrated circuits and computer components of
  over 40 trademarks including Intel, Cisco and
  Philips, worth more than 1.3 billion, were
  seized during the operation
• Traffickers and counterfeiters have become much
  more sophisticated ... They are no longer
  confining themselves to trafficking in some of
  the traditional goods we used to see them in,
  such as footwear or handbags
• There are increasing numbers with high-tech
  goods, goods that impact our critical
  infrastructure.
• Integrated circuits are used in a wide range of
  products including computers, aircraft, cars and
  telecommunications.
• http//www.reuters.com/article/domesticNews/idUSL2
  285388920080222

8
Observations From Recent Counterfeit Detection
Experiences

• BAE Systems issued eighteen (18) GIDEP Alerts
  from December 2006 to July 2007 reporting
  suspect counterfeit parts.
• This briefing presents observations from these
  examples
• Case summaries and supply chain analysis
• Observations from counterfeit detection efforts

9
Counterfeit Case Summaries
10
Supply Chain Analysis
All involve Independent Distributors
Seventeen (17) unique part types.Broad variety
of device functions. Ten (10) manufacturers
represented.
Same unique part type obtained through several
suppliers.
Twenty (20) USA based suppliers
One (1) UK based supplier
Eleven (11) China based suppliers
Origin unknown for all cases
Similar bogus test reports
Similar bogus test reports
Eight (8) out of our eighteen (18) cases trace
back to sources in China Perhaps more.
Parts exchange hands several times before
reaching the end user.
Full details available to GIDEP Participants.
Others may apply for membership at the GIDEP
Help Desk (951-898-3207)
11
Observations from Counterfeit Detection Efforts
(summary)

• Industry and Government inspection and test
  methods are designed to verify the integrity of
  authentic parts not to detect counterfeits.
• When applying industry and government standard
  inspection and test methods, must make
  adjustments to detect various counterfeiting
  techniques.
• External visual inspection methods
• Marking permanency methods
• Representative sampling for physical and
  materials analysis
• Electrical test plans
• Visual inspection of marking for correct and
  accurate content can provide conclusive evidence
  of suspect counterfeits.
• Observations based exclusively on marking
  quality, legibility, and conditions, however, may
  be misleading
• Production records may not be available for older
  parts
• Original component manufacturer data retention
  practices may limit access to production records
  for older parts
• Documentation may not be authentic
• Two cases involve bogus test reports intended as
  proof that parts were authentic
• Some parts show evidence of multiple exposures to
  tests
• Unable to judge the potential for damage or the
  effect on total product life expectancy
• Many parts show evidence of
• Poor storage and handling conditions
• Termination refurbishing or reclamation

12
Observations from Counterfeit Detection Efforts

• Industry and Government inspection and test
  methods are designed to verify the integrity of
  authentic parts not to detect counterfeits.
• External visual inspection methods (magnification
  levels, failure criteria) may not detect
  indications of resurfacing and remarking,
  termination refurbishing, reclamation.
• Marking permanency test methods may not be
  aggressive enough to detect indications of
  resurfacing and remarking.

13
Observations from Counterfeit Detection Efforts

• Industry and Government inspection and test
  methods (cont.)
• Ensuring representative sampling for physical and
  materials analysis can be problematic.
• If part marking has been forged, however, a
  single lot/date code marked on counterfeit
  devices can disguise
• Parts originating from multiple inspection lots
• Parts produced by multiple manufacturers
• Different versions of the same part
• Devices of completely different functions
• Samples sizes must be large enough to account
  for this potential
• The user must make adjustments to physical and
  materials analysis evaluation criteria detect
  various forms of counterfeiting.

14
Observations from Counterfeit Detection Efforts

• Industry and Government inspection and test
  methods (cont.)
• Electrical testing can help reveal suspect lots,
  but may not detect counterfeit parts without a
  test plan designed specifically for the device
  type under test.
• DC electrical tests are frequently used as a low
  cost and fast detection technique, but will not
  detect dynamic performance deviations at
  temperature extremes.
• While AC electrical and functional tests are most
  likely to reveal suspect product, testing of
  complex devices requires intimate knowledge of
  the original manufacturers test protocols.
• In addition, electrical testing alone may not
  detect damage induced by inadequate handling and
  storage, termination refurbishing, or
  reclamation.

15
Observations from Counterfeit Detection Efforts

• Marking quality, legibility, conditions vary
  significantly
• Visual inspection of marking for correct and
  accurate content can provide conclusive evidence
  of suspect counterfeits.
• Observations based exclusively on marking
  quality, legibility, and conditions, however, may
  be misleading.
• Quality in device marking, marking legibility and
  overall marking conditions for both authentic and
  counterfeit product can vary significantly.
• BAE Systems has observed
• bad looking authentic parts
• good looking counterfeit parts.

16
Observations from Counterfeit Detection Efforts

• Production records may not be available for older
  parts
• The older the parts are, the less likely
  production records exist to aid in
  authentication.
• Original component manufacturer data retention
  practices may limit access to production records
  for older parts.
• In a few cases discovered by BAE Systems, the
  original component manufacturer no longer had
  production records to support our investigations
• In these cases, however, BAE Systems found other
  evidence sufficient to conclude the parts were
  suspect counterfeit.

17
Observations from Counterfeit Detection Efforts

• Documentation may not be authentic
• In one specific case, a test report was provided
  by the Independent Distributor as evidence of
• Authentic parts
• Traceability back to the original component
  manufacturer
• Feedback from the original component manufacturer
  revealed that this test report was not valid.
• The manufacturer did not have test data for parts
  with the same date code as those sold to BAE
  Systems.
• BAE Systems, therefore, concluded that the
  original component manufacturer did not produce
  this specific product with this date code
• The manufacturer does not use the Military
  Certification of Conformance label and its
  content on authentic test reports.

18
Observations from Counterfeit Detection Efforts

• Some parts show evidence of multiple exposures to
  tests
• BAE Systems discovered a case where additional
  marking on the device indicated prior multiple
  exposures to electrical, mechanical or
  environmental tests.
• Without knowledge of the application of these
  tests or their specific conditions, BAE Systems
  was not able to judge the potential for damage to
  these devices or the effect of this previous
  testing on total product life expectancy.
• In addition to acquisition traceability
  documentation, the user should consider requiring
  documentation from Independent Distributors that
  reports all tests performed throughout the supply
  chain back to the original manufacturer.
• This requirement should be considered by industry
  and government standards organizations for
  incorporation into existing standards and
  specifications governing the procurement of
  electronic components.

19
Authentic perhaps, but where have they been?

• Many parts acquired from Independent Distributors
  may be authentic, but show evidence of
• Poor storage and handling conditions
• Termination refurbishing or reclamation
• To ensure confidence that parts are of the same
  quality and reliability as when first shipped by
  the original component manufacturer, users should
  apply a suite of test and inspection protocols to
  
• Detect counterfeits and eliminate defects
  associated with handling and storage, and with
  termination refurbishing or reclamation.
• Consider life testing as an option to obtain a
  high level of confidence of failure free
  performance and to produce test results needed to
  support an assembly/system level reliability
  assessment.

20
Summary

• In todays supply chain environment, electronic
  equipment manufacturers and Government users must
  be vigilant in order to avoid counterfeit
  electronic components.
• The vast majority of counterfeit cases reported
  are associated with purchases through independent
  distributors.
• The most effective approach to avoiding
  counterfeit electronic components is to purchase
  product directly from the original manufacturer,
  or from a distributor, reseller or aftermarket
  supplier who is franchised or authorized by the
  original manufacturer.
• A substantial number of products, however, are no
  longer available through franchised or authorized
  suppliers.
• While they provide a necessary function within
  the electronic component supply chain,
  independent distributors are not all created
  equal.
• Electronic equipment manufacturers and Government
  users need to understand the independent
  distributors operations and business processes.
• When considering purchases through independent
  distributors, electronic equipment manufacturers
  and Government users should use mitigation
  methods and strategic approaches to reduce the
  potential for acquiring counterfeit parts.