Global Chip Shortage Spurs a Rise in Counterfeit Components

 August 4th, 2022 |   By Area51 Electronics |   0 Comments
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Out of stock. Limited supply. One per customer. Phrases that have become more and more familiar in the past year as shortages span across industries today. The Covid-19 pandemic continues to shift countless supply and demand landscapes worldwide. While the global chip shortage continues to persist, the demand for chips only increases. This has set the stage for a potentially dangerous and damaging problem – a sharp rise in counterfeit components.

Desperate Measures Leads to Risky Business

Counterfeits have long been a problem for the electronic components industry, but now as companies are becoming more desperate for chips, bad actors have spotted an opportunity to take advantage of worried buyers.

As these companies scramble to get their hands on the hard-to-find semiconductors, some have buckled under the threat of stopping production and have opted to take supply-chain risks – foregoing previous quality control measures.

Though it may still be too early to tell exactly how many counterfeit chips have surfaced during this shortage, the Semiconductor Industry Association (SIA), has estimated that counterfeits costs US-based companies over $7.5 billion each year.

Take for example, the case of the Nick Martin fraudster who, according to the Electronic Reseller Association International (ERAI), has created dozens of aliases and websites to scam organizations that are in search of electronic components. The ERAI first reported Martin in 2018, but his activities certainly have picked up in 2021. Victims have wired a total of over $400,000 to this entity alone in an effort to land hard-to-find components, only to never receive a product, any further communication, nor a refund.

Even when these bad actors do send product, counterfeit chips are notorious for failing long before a genuine chip would. Utilizing a counterfeit component can lead to some costly consequences for companies further down the line, including wasted purchasing costs, lawsuits, replacements, recalls, or a damaged reputation – not to mention anything more serious if the device were to fail at a critical life, death or security moment.

Counteract Counterfeits

How can companies avoid counterfeit components? The first step to ensuring the authenticity of electronic parts is checking the legitimacy of your supply chain. It is one of the best ways to be sure you are getting quality, genuine electronic components that won’t fail you at critical moments.

Check that the distributor has proven certifications like the SAE AS6081 Counterfeit Electronic Parts: Avoidance, Detection, Mitigation and Disposition for Distributors.

AS6081 is the aerospace standard and provides requirements, practices, methods, and guidance to mitigate the risk of purchasing and supplying suspect counterfeit and counterfeit parts.

It is vital to remain vigilant to mitigate counterfeit components and purchase from your trusted distributor. It may be enticing to get your hands on those precious chips using other means, especially since there’s a chip shortage – but the risks of using a potentially fake, or suspect counterfeit component will only do more damage down the line.

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