Picture this, after weeks of tense searching for a coveted shipment of semiconductors you find a seller. They have an order for semiconductors ready to ship out in less than three weeks, far sooner than any of your normal vendors. Some of your usual vendors are even on backorder and you’ve been facing the awful decision of shutting down production as you wait for one tiny part to complete your product.

It sounds too good to be true. Almost always, it is.

Your shipment of semiconductors arrives three weeks later, as promised. Upon opening the box, you notice something strange about the chips inside. The font seems off and when your experts test this batch of semiconductors they all fail. You’ve just been scammed, in front of you rests an entire order of counterfeit chips.

This story isn’t a rare cautionary tale. It’s been happening to numerous manufacturers across the globe for years and only rising in incidents. Counterfeit components are a dangerous and well-known threat in the electronics industry but continue to slip into even the most well-protected supply chains.

How? And what can we do to protect ourselves?

How Counterfeit Components Enter Supply Chains

Counterfeit components can enter a supply chain anywhere and at any time. The counterfeiting business is an extremely profitable market that targets companies anywhere from 3D manufacturers, to nuclear power plants, and even the U.S. military. In a report from Europol in March, the European Union law enforcement agency warned of the dangers “sham semiconductors” present to desperate buyers.

“Counterfeiters are exploiting the global supply shortage in semiconductor chips,” Europol’s report said. “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 semiconductor firms.”

Semiconductors are an integral part of critical systems in the transport, defense, trade, and healthcare sectors. Counterfeit semiconductors can cause failure in critical infrastructure and, worse still can feature malware or harmful software. The Electronic Resellers Association International (ERAI) and the U.S. Department of Homeland Security have reported numerous incidents where counterfeiters used different methods to enter supply chains.

In late 2021, scammers impersonated Digi-Key personnel to sell ST Microelectronic-branded microcontrollers. These microcontrollers were on backorder at Digi-Key for 65 weeks, and the scammers promised a quick turnaround. The U.S. Department of Homeland Security reported that “the concentration of production assembly in China has increased the risk of counterfeit or used components being inserted into products.”

Homeland Security went on to cite one example of Chinese workers in assembly plants secretly producing extra products or repackaging rejected components as new products. Over one million suspect components were discovered in military applications in 2012. Homeland Security has concluded that counterfeit components are a national security risk.

The most specific and clear warning sign of increasing counterfeit risk is during global shortages. Covid-19 presented a unique opportunity for many counterfeiters. The risk of production stalls and long lead times forced many businesses to look where they might never have gone before. For one company, that meant buying chips from AliExpress. For others, buying into the false sellers proclaiming they were Digi-Key personnel.

Counterfeiters don’t always wait until the world is in a global chip shortage to slip suspect components into a supply chain. Shortages only give them far more opportunities to try.

What to Do to Mitigate the Counterfeit Risk

While counterfeit components present a troublesome and terrifying risk there are many ways to mitigate the damage. Even better, is that new methods of identifying counterfeits and tracking genuine components are being developed every day. Homeland Security is awarding contracts to small businesses to develop tools to determine component authenticity. The semiconductor industry is moving into blockchain technology to track parts and materials from the original source.

The ERAI provides counterfeit part and supplier risk mitigation solutions across several industries. Fake electronics can be reported anonymously to the ERAI, which will then provide this information to its members so they can vet vendors and avoid counterfeits. Richard Smith, the VP of business development at ERAI, said that 80% of devices reported in 2020 were first-time reports. What does that mean for others? New counterfeits of new components are always springing up.

Another way to avoid counterfeits is by investing in a quality management system. These systems have effective tests outside of electric testing, to determine component authenticity. These include visual inspections (EVI), X-ray examination, and decapsulation among others. Keeping a heightened sense of alertness during shortages will help you spot bad actors faster. Though it might not always be enough.

Investing in a stringent quality management system takes time and even more so to find the staff with the experience to run it. There is a way to protect yourself without finding time you don’t have. That’s through certified electronic component distributors that have the means, and the governing body certification to back them up.

A Certified Electronic Component Distributor

A certified electronic component distributor is the key to obtaining genuine components, saving time, and protecting your products from counterfeits. A certified electronic component distributor usually has one or more certifications that work to protect their clients from counterfeits. The two most important certifications are ISO 9001 which concerns quality management system requirements, and AS6081 which provides instructions for assessing and mitigating suspect components.

Area51 Electronics is a certified electronic component distributor in both ISO 9001, AS6081, and more. As a member of the Society of Automotive Engineers or SAE G-19D committee, Area51 Electronics is dedicated to maintaining the highest standards in the detection, avoidance, mitigation, and disposition of counterfeit electronic components. With the added benefit of being an authorized and independent distributor, Area51 Electronics is fully equipped to handle the high demands of shortages without falling into the tangled web of suspect components.

The market tells us that electronic components are going to continue to grow in demand. As a result, shortages might be more abundant, and counterfeiters will continue to seek out new opportunities. Keep your consumers safe and yourself from becoming a victim of counterfeits with Area51 Electronics.