There is a wide disparity between different organizations’ assessments of the revenue and job losses caused by counterfeit chips.
In 2017, the US Department of Defense’s Advanced Research Projects Agency (DARPA) pegged the losses at $170 billion.
That same year, the Semiconductor Industry Association estimated that counterfeit chips cost the chip industry $7.5 billion annually.
But all of this happened before the Covid-19 epidemic, which caused severe chip shortages and long wait times in markets such as automobiles and appliances, especially for 8-inch mature process chips.
So far, the losses caused by these chip shortages have not been well estimated. However, there has been much research on how to recognize and prevent counterfeit chips.
When we had a chip shortage, the number of counterfeit chips went up. This is because there is a demand for the chip in the market and the counterfeiters know this so they will try to bring to market chips that are in demand.
In addition, most of the chips in shortage are actually made with older technology rather than state-of-the-art technology.
“As the supply chain expands, so does the growing problem of chip counterfeiting, which is more serious than most chip makers can imagine,” says Konrad Bechler, brand protection and anti-counterfeiting security consultant at Infineon.
When it comes to consumer products such as watches or designer clothing, getting them at bargain prices in strange places may indicate that they are counterfeit.
Fake chips also have the potential to be life-threatening; think about if an airbag doesn’t deploy properly in a car accident, or if a medical device like an automated electronic defibrillator doesn’t work in a life-threatening situation.
These are just two use cases, but semiconductors are already such an integral part of our daily lives that fake chips could very well lead to a person’s death.
How to avoid fake chips
Stopping the flow of fake chips requires a concerted effort across the supply chain. The situation is being improved, but not all types of chips are having the necessary measures taken.
“Some solutions have become more acceptable and easier to implement,” says Tehranipoor.
“For example, recycling is actually quite easy to detect. If you put an ‘odometer’ in your chip, which is very inexpensive, it will easily tell you if the chip has been used and for how long.
“More and more companies seem to be embracing the idea of incorporating low-cost measures such as odometers into their integrated circuits to help solve this problem.
“Re-tagging is also easily solved using electronic chip ID, but this applies mainly to large circuits. Cloning and overproduction of fake chips, on the other hand, are difficult to address.”
What can chip manufacturers do？
Harrison points out that other segments of the electronics industry are catching up.
“If we look at the Internet of Things, it may be slightly behind the automotive industry. But there’s a huge vision there because these semiconductor suppliers are losing money, so it’s in their interest to focus on anti-counterfeiting.”
For chip suppliers, it’s always a question of cost versus risk. “Let’s say Company X sells a lot of analog chips,” says Tehranipoor, “and some of them are sold at 5 cents a unit, would you add the cost of a 1-cent anti-counterfeiting solution on top of that?
“The answer is clearly no. As a result, many companies do their own risk analysis to determine whether to include anti-counterfeiting solutions in their chips.”
Nonetheless, Tehranipoor wants semiconductor OEMs to know that counterfeiting is easier to detect than they think if all precautions are taken early in the design process.
“Imagine you have a small authentication IP that you can put into a chip and that IP will tell you if the chip is going to be recycled, cloned or relabeled.”
He said, “It’s easy to do for chips with more than a couple million logic gates, and it’s worth it. It gives everyone peace of mind. When we move to smaller chips, the issue is risk-cost analysis.”