Beginning with the first Wuhan quarantine in January 2020, the COVID-19 pandemic hit the world from both sides of the law of supply and demand. Independent Distributors of Electronics Association (IDEA) founder Steve Calabria believes this two-handed squeeze will spark a wave of counterfeit electronics, impacting the longevity and reliability of equipment built with substandard components.
Supply, demand and counterfeiting
Pandemic lockdowns in industrial cities have squeezed supplies of both finished products and raw materials, while demand for electronic products has skyrocketed due to both the need for remote work/school equipment and the simple boredom of people unable to travel , eating out and partying in the ways they are used to.
The immediate impact of this shortfall is clear and well-reported – for instance, it’s so hard to buy a graphics card right now that manufacturer MSI is bringing back the 2014 Nvidia GT 730. The GT 730 is, frankly, garbage – it offers just over half the performance of Intel’s UHD integrated graphics and less than a fifth of the performance of the 2015 GTX 950. But it to work– and right now that’s the most important thing that can be said about it.
Breathing new life into an old product line and labeling it accurately is of course fine. But it’s an option only available to large, established manufacturers like MSI – companies with old but valid supply lines, licenses and, in some cases, long-storage parts that can be picked up, dusted off and put to good use again. Smaller and less scrupulous companies hoping to cash in on the pandemic have a faster, easier way to meet unmet market demand: counterfeit goods.
A hint of things to come
Calabria tells ZDNet that “global shortages have opened the door for criminals to exploit the electronic component market,” adding that he is already seeing early signs of trouble. “Companies that have never been reviewed by any other company in the industry [are] with significant quantities of parts that are scarce.”
Counterfeit electronics, of course, is not a new problem. Counterfeit iPhones, Kindles, and so on have long been abundant on e-commerce sites such as Alibaba and AliExpress. But counterfeit chips target a slightly different market: Instead of going after consumers trying to save some money, counterfeit chips target production lines that are in danger of coming to a complete standstill.
It can be easier to make a counterfeit chip than a complete device. A consumer device needs an operating system, hardware integration, and more, making most counterfeits obvious at first glance to a reasonably educated buyer. The chips used to be faked to make that device can often be a much simpler proposition, with little or no obvious visible indicators that something isn’t quite right.
A counterfeit chip can be a counterfeit chip designed cheaply from the outset as a drop-in replacement, or it can be a genuine but polished-off part, detached from the board it was found on, cleaned up and put back into service as new . Either way, such chips can often work well enough to initially pass the test, but fail sooner than genuine parts – either under a specific load or in a specific environment that the original would have passed.
Desperate times lead to desperate measures
Manufacturing companies are well aware of counterfeit chips and usually have extensive measures in place to detect and avoid them. But according to Diganta Das, a counterfeit electronics researcher at CALCE, those processes can lag when it comes to whether the line is running or standing still. If a company needs 5,000 parts to keep a production line running next week, “you’re not following the rules for verifying the supplier or going through testing processes.”
Das says it’s too early to notice an increase in the number of counterfeit reporting databases, such as those maintained by the Electronic Reseller’s Association International (ERAI). But like Calabria, he is confident that there is already a wave of counterfeit parts in the supply chain – and that this will become more visible in the coming months as companies must address the issues caused by the use of counterfeit parts.
This isn’t a problem likely to affect the biggest tech manufacturing giants, who buy their parts directly from the chip foundries that produce them in massive batches. The risk affects companies that purchase their components in smaller batches from distributors further down the supply chain. However, those distributors supply manufacturers in the healthcare, automotive and defense industries.
One such distributor, AERI, has an excellent guide to spotting counterfeit components, with plenty of helpful illustrations. Original components often have small holes in certain places on the chip. Counterfeiters may forget to reproduce them, fill them up during sanding and refinishing (to make old parts look new), or make them in the wrong size, place, or shape. These notches thus serve similar purposes to security ribbons and threads in paper money.
Physical surface examination is not always sufficient to tell the difference between fake and genuine products. In some cases, time-consuming, destructive disassembly and microscopic examination are required, as can be seen in this superbly illustrated report at Zeptobars, to reliably detect a new counterfeit.
Counterfeiters are well aware of the time constraints companies face and structure their pitch to target them. “I have 5,000 in stock, but you have to buy them today, not next week” can force a desperate manufacturer to cut corners and forget about the normal supply chain verification process. But putting error-prone counterfeit parts in a product only prevents the crisis. In most cases, the question is whether that company is losing money now through idle lines or losing it later through product replacements, lawsuits, and mass recalls.