Europe, US warn of fake-chip danger to national security, critical systems

Scammers exploit global supply-chain crunch

Counterfeiters are making the most of the ongoing electronics supply crunch by peddling sham semiconductors to desperate buyers – and it's caught the attention of governments.

In a report [PDF] out this month, the European Union's law enforcement agency Europol highlighted the dangers of knockoff semiconductors to critical infrastructure as well as people's private devices.

The fear is that within the planet's complex supply chains, someone under pressure from customers to fulfill orders by any means necessary accepts components that turn out to be fake, and these will end up in equipment. These parts can be readily picked up from online marketplaces, and they look convincing enough.

"Counterfeiters are exploiting the global supply shortage in semiconductor chips," Europol's report reads.

Counterfeiters are exploiting the global supply shortage in semiconductor chips

"Supply chains are global and vulnerable to the introduction of counterfeits since typically several distributors handle components before they reach the manufacturing sites. Tracing the original supplier of the counterfeit semiconductors can be difficult when trademarked counterfeit chips are verified by the semiconductor firms.

"Disruptions in supply chains and the possible introduction of counterfeit components has the potential to cause serious failures in critical infrastructures. Semiconductors are an integral part of critical systems used in the healthcare sector, transport, defense, and trade. The risk of privately used electronic devices being affected is also high. Additionally, counterfeit electronic devices may also feature malware and other harmful software, adding the risk of data theft."

There are all sorts of fake chips and components. Some are imitations that try to work like the real thing. Some are worn-out or broken parts dressed up to appear new and working. Some are completely different components that are rebadged. Examples have been documented on YouTube here and elsewhere.

Europol also warned of imitation pharmaceuticals, toys, and consumer products. "EU-based criminal networks distribute imported counterfeit goods and, in some cases, operate facilities that assemble semi-finished products," the report stated.

ERAI, which tracks counterfeit electronic products across Europe, last year said scammers impersonated Digi-Key personnel to sell ST Microelectronic-branded microcontrollers. One of these chips, the STM32F437VIT6, is on backorder at Digi-Key. Mouser has put a 65-week lead time on the component, while Newark estimates it will receive stock of the microcontroller in April next year.

The US Department of Homeland Security tied counterfeit components to national security in a January report [PDF] about the semiconductor supply chain.

Many counterfeit or used components originating from China, which are branded as new and original products, could be used in aircraft or medical products, Homeland Security said.

"The concentration of production assembly in China has increased the risk of counterfeit or used components being inserted into products, potentially damaging product integrity and brand reputation and creating a possible security risk," the department report commented.

The Homeland Security report had one example of Chinese workers in assembly plants secretly producing extra products or repackaging rejected components as new products.

ERAI, which has a goal to fight counterfeit components and devices, has seen more and more members from automotive and similar industries join its ranks, particularly since 2019 when demand for semiconductors for electric cars went up. Fake electronics can be anonymously reported to ERAI, which provides intelligence to its members so they can vet vendors and avoid counterfeit kit.

"In 2020, about 80 percent of those reported devices were reported for the very first time that year," Richard Smith, vice president for business development for ERAI, told The Register, indicating there was a crop of newly knocked-off parts.

"That demonstrates that counterfeit electronics is sort of a moving target," he added.

In 2019, the top-reported counterfeit device was a multilayer ceramic chip capacitor, which are small and inexpensive parts typically bought in huge quantities. "That was driven by a global parts shortage of capacitors that year, and driven by the explosion in demand from electric vehicles or vehicles in general ... and other consumer products, laptops, cell phones," Smith said.

Automotive companies verify their components to ensure compliance with regulations like America's Federal Motor Vehicle Safety Standard. The number of fake semiconductors reported peaked in 2011, and the number of reported parts were down in 2020 and 2021, partly because of the pandemic and people being unable to work.

"COVID certainly had a big hand in that because factories were starting and stopping and closing down. People working remotely. Some of the reporting just wasn't done in a timely manner," Smith said.

But the reporting has picked up in the early part of 2022 with people going back to work and clearing off the backlog that piled up toward the end of 2021. The identification of counterfeit parts is becoming better with technology, and standards like AS6081, which helps the aerospace industry verify parts, has also helped reduce the use of counterfeit electronics.

Homeland Security is also awarding contracts to small businesses to develop tools to help check that parts are genuine. Blockchain technology is being considered by the semiconductor industry to track parts and materials to the original source. ®

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