Just like any other product, semiconductor products can be counterfeited.
Semiconductors are tiny devices that power modern technology products and services, the “brains” inside electronic systems. You can find them in computers, tablets, smartphones, video games, digital cameras, medical equipment such as x-ray, and car airbag systems.
They are embedded in artificial intelligence (AI), autonomous vehicles, advanced communication networks such as 5G, aerospace systems, and more. One product or system can use dozens, sometimes thousands of semiconductor components.
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The fake semiconductors market
It may seem that semiconductors are too difficult to counterfeit, but unfortunately, this is not the case. According to Industry Week the fake semiconductor market has reached $75 billion.
The U.S. Semiconductor Industry Association (SIA) which promotes the U.S. global leadership in the industry, acknowledges the fact that most chips are now manufactured in Asia, where most counterfeiting occurs.
The dangers of counterfeit semiconductors
A counterfeited “brain” is unsafe. It means that uncontrolled electronic components control the system and may cause health and safety issues.
Consumers may not buy semiconductors directly, but they use products and systems that rely on the performance of embedded semiconductors. If the semiconductor devices in certain products do not perform well, such as in an airbag system, it can endanger the driver and passengers.
In 2019, a semiconductor counterfeiter was sentenced to prison for selling counterfeit semiconductors he believed were intended for the U.S. military and could have jeopardized national security.
Counterfeiters not only replicate semiconductors and sell their fake products. According to a 2013 report by the Semiconductor Industry Association, the source of many of the counterfeit semiconductor components is electronics waste “using crude processes, and then re-marked to indicate they are new or are otherwise different from how they were originally marked.”
To do so, they remove components from electronics waste, then erase old markings and put new ones, clean and package them to appear new and real before selling them to distributors. The products are not new, they were stored in uncontrolled storage conditions, often exposed to water, salt, or humidity. Although authentic, they have issues of reliability.
Counterfeiters also rebrand sub-standard products to look like they are high-grade products and other ways to mislead buyers. They use chemicals or mechanical grinders that can contaminate or damage the product. With semiconductor components, sophisticated counterfeiters make an effort to create a misleading appearance of the device and the packaging to better sell their products. When they make counterfeits look real, they also make sure prices are not too low, as to not alert buyers.
Original manufacturers vs. Counterfeiters
Semiconductor manufacturers, their authorized dealers and distributors and trusted suppliers have systems in place to make sure the products perform well. Counterfeiters have zero quality control. Due to counterfeiting, Original Equipment Manufacturers (OEMs) or their authorized manufacturers have seen increasingly high failure rates and warranty claims.
Counterfeit semiconductor devices have no factory warranties. A semiconductor failure can be costly when it causes damage, but they are unlikely to accept liability, especially when the damage is significant.
Whereas counterfeit semiconductors can fail when first used, they are more likely to fail after some time or not perform well even if they pass electrical testing. Sophisticated counterfeiters take used components, refurbish them, and sell them as new components that allegedly perform better than they really do.
In fact, they offer lower quality and less reliability.
Counterfeiters can offer reduced prices and short delivery times, so although their products can be bought unknowingly, some choose to buy them intentionally.
Semiconductors are part of so many essential products that they have become attractive for counterfeiters. Since semiconductor counterfeiting is profitable, it is a center of criminal activity with counterfeiters who will not easily give up on their profits.
The rise of e-commerce saw independent distributors, online sellers, and online component exchanges that enable the purchase from unauthorized suppliers. Numerous new websites sell semiconductor products from unauthorized distributors and resellers. They may look well-established and professional, while in fact, they can change names, web addresses, and other information to disguise their true identity and avoid liability.
Semiconductors supply chains
Supply chains are also significant to combat counterfeits and for warranty purposes. Genuine components provided outside of authorized supply chains may be damaged by wrong or inappropriate handling, storage, and shipping. Even if appearance does not show it, there are reliability and functional issues that may result. And if they do, there is no manufacturer warranty to cover it.
Counterfeits infiltrate the supply chain mainly through buyers going outside the authorized dealers, using independent distributors and brokers. As mentioned above, they are often cheaper and even easier to buy. A report also points to a “malicious insider” that helps the counterfeits enter the semiconductor supply chains.
Semiconductors: online brand protection problem
Intellectual property protects semiconductor innovation and enables the prosecution of parties engaged in semiconductor intellectual property theft.
However, despite efforts by original manufacturers and industry associations such as the Semiconductor Industry Association (SIA) and its Anti-Counterfeiting Task Force (ACTF) that work to fight the semiconductors counterfeiting problem, the challenges remain. The sale of counterfeit semiconductor devices is widespread, especially online. Counterfeit components cause losses and other damages. Reputation erodes when buyers believe that your products are unreliable.
Online brand protection solution for semiconductors
Wiser Market online brand protection agency helps original component manufacturers to combat the sale of counterfeit products or the unauthorized sale of their legitimate products through unauthorized supply chains online.
We use our advanced monitoring system and proprietary algorithm to detect IP infringements and unauthorized sales activity. Detection is followed by analysis to construct the best means for removal and eliminate counterfeits.
Our team of brand protection analysts has years of experience protecting companies’ online intellectual property from brand abuse and gray marketing in both B2B and B2C industries. We provide exceptional customer service and are proud to deliver unrivaled results at attractive costs.
As a leading online brand protection agency, Wiser Market offers a 360° automatic solution, protecting your business from IP infringements and combating online counterfeits damaging your sales.
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