Countering the Counterfeiting of End-of-Life Semiconductors
By George Karalias, Director of Marketing and Communications at Rochester Electronics

The continuing influx of counterfeit semiconductors into the supply chain demonstrates significant and substantial weaknesses in inventory management, procurement procedures, recordkeeping, reporting practices, inspection and testing protocols, and communication within and across all industry and government organizations. Counterfeiting is present at every level of the supply chain, and data suggests that incident report rates do not fully reflect the size and scope of the counterfeit problem.

Because an original semiconductor’s end-of-life (EOL) schedule does not typically support the continuing needs of all customers – especially in industries whose products usually have long system life cycles, such as government, military, aerospace, and space – OEMs need to strategically plan for EOL announcements. A semiconductor EOL announcement can create a costly inconvenience for customers, who may find it difficult to accurately forecast last-time buy requirements or absorb the additional inventory and storage costs associated with last-time buys. If last-time buy estimations are inaccurate, an OEM can be left in a difficult position trying to fulfill long-term supply requirements for vital semiconductor devices, and may be tempted to turn to the gray market for availability. Counterfeit products enter the supply chain through these gray market sales-brokering networks that exist to source and supply difficult-to-find products.

The Gray Market
There are many risks in buying components through brokers or independent distributors on the gray market. Customers not only need to worry about purchasing counterfeit semiconductors on the gray market, but also any product that is not supplied either directly from the original manufacturer or through the original manufacturer’s approved channels has the potential to be substandard. Incorrect handling of semiconductors can introduce weaknesses and early failure due to contamination or electrostatic discharge, as well as assembly problems due to incorrect dry packaging. The original manufacturers understand these problems and take steps to prevent them. The original manufacturers also choose their distribution outlets carefully and, from time to time, audit them to ensure they are storing and handling all devices correctly. Because gray market sources are not authorized by the original manufacturer, they can provide no factory traceability, no approved quality control, and no manufacturer’s guarantee of the authenticity of components.

In addition, semiconductor pricing and availability on the gray market can fluctuate significantly and is heavily influenced by supply and demand. As the supply of obsolete semiconductors inevitably decreases, the price increases, sometimes exponentially.

Cost and Reputation
Prices offered by a counterfeit source are almost always less than prices charged by the original manufacturer. Exceptions to this may occur at times of original product shortage or in the case of obsolete and discontinued products. Counterfeiting operations trade on the good name of the original manufacturer, who has spent considerable time and resources to develop the devices and the market for them. The original manufacturer will also have spent a considerable sum on ensuring that devices are properly specified for, and work reliably in, the intended applications. They expect to recoup these development costs through the sale of quality devices. The counterfeit operations do not have these development costs, and, by lowering the market price, they reduce the ability of original manufacturers to recover their costs. This, in turn, impacts the original manufacturers’ ability to generate new products, and also affects returns for their stockholders.

In addition to damaging the reputations of legitimate and reliable semiconductor manufacturers and distributors, counterfeiting causes purchasing dilemmas for component buyers, reliability concerns for equipment manufacturers, and field failures for equipment operators. Counterfeit components can cause catastrophic disasters through equipment failure, and, in mission-critical applications, this can result in the loss of life.

Effective Detection
Identifying and detecting counterfeit semiconductors is an increasingly difficult task because of their complexity and small size. The packaging of many devices is too small to allow sophisticated marking techniques, and, even with the older, larger-packaged devices, it is relatively easy for counterfeiters to replicate original manufacturers’ markings. It is virtually impossible to screen every device for high-reliability, high-performance, and high-temperature qualifications. In addition, paperwork intended to guarantee compliance can be easily forged.

Testing
Three types of testing are required to check for counterfeit product:

• Visual Checking – Inspecting the device paperwork/documentation, device packaging, and device marking and appearance. Initially, this can be carried out by the buyer, but, if there is any inconsistency or uncertainty, the original manufacturer must be involved. Only the original manufacturer can confirm specific details such as the certificate of conformity data, date and lot code markings, chip layout, and assembly materials. Some disassembly of product may be necessary to check the last two items.

• Electrical Testing – This typically requires help from the original manufacturer. While there are independent test houses that can check electrical performance, they are unlikely to be able to test a device exactly the same way it was tested by the original producer.

• Reliability Testing – A complex exercise and one that takes considerable expertise, equipment, and time.

Anti-counterfeit Identification Technology
Development of identification technology is an emerging process. Original semiconductor manufacturers are working on various sophisticated techniques for the marking of semiconductor devices. One example is hidden, encrypted, on-chip performance designation and more sophisticated coded marking. Another example is radio frequency tagging of devices and packaging.

The Solution
Purchasing only directly from the original manufacturer or the original manufacturer’s authorized and franchised sources is the most secure ways of ensuring that only genuine product is delivered. Equipment manufacturers need to take steps to limit the impact of counterfeiting on their manufacturing and equipment operation to ensure they don’t jeopardize relationships with their customers. To do this, an effective procurement process must be established and managed.

For the industry to be successful in fighting the practice of counterfeiting, it is essential that everyone is made more aware of the problem. OCMs and OEMs need to be more open with each other and be prepared to work together to identify counterfeiting instances and prosecute offending sources and manufacturers. Trade associations and data reporting authorities such as the Government-Industry Data Exchange Program (GIDEP) can help in raising awareness of the issue by establishing databases for notification of validated counterfeiting instances.

Conclusion
Counterfeiting of semiconductors is a growing problem. When faced with EOL announcements, semiconductor buyers can limit their risk of purchasing substandard devices by following some simple practices. First and foremost, buy parts only from component manufacturers and their authorized distributors. Secondly, consider cost instead of pricing. If the semiconductor device purchase price is a bargain, or too good to be true, it probably is not a good investment. In the end, the purchase of counterfeit or faulty devices could cost significant manufacturing downtime or failure of the end product. These potential end-cost consequences significantly outweigh any front-end savings. Check with authorized suppliers regarding hard-to-find parts, as authorized distributors normally buy up EOL lots, and companies such as Rochester Electronics are authorized by suppliers to build legacy parts using the suppliers’ original die and tooling.

Many facets of the industry are reluctant to admit they have encountered the counterfeit problem. Until this situation is resolved, and companies are more prepared to disclose situations, the legislative and governing authorities are hampered in their efforts to identify, prosecute, and punish the counterfeiters. The issue is a worldwide one due to the global manufacturing nature of the industry. It is essential that all countries recognize the problem and attack the counterfeiting operations consistently. Only with worldwide cooperation will anti-counterfeiting efforts be successful. If devices are procured from a questionable source, the risk is high. Without traceability, a device must be subjected to the fullest extent of legitimate, supplier-approved testing, especially in mission-critical situations.

In addition to damaging the credibility of the genuine manufacturers, counterfeiting can also damage the equipment industry, as the unintentional use of counterfeit devices can lead to equipment malfunctions. In a safety-critical operation, this could have disastrous consequences.

Ultimately, there are only two fail-safe ways to ensure that the components being purchased are legitimate: buy directly from the original manufacturer or enlist the help of authorized distributors and manufacturers.

Rochester Electronics

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