Counterfeit chips are more profitable than running drugs
Product Design and Development had an article about the explosion of counterfeit chips we are seeing worldwide. They had a scary story about GPS units with bogus maps that were endangering ships. I know for a fact that knock-off copies of chips are becoming way more common. Jim Williams told me that he used to get called to a lab bench maybe every couple of months to look at a chip that someone claimed was a Linear Technology chip but wasn’t. These days he says it seems like it is a couple times a week he is seeing a counterfeits. This is a huge concern for a company like Linear, who makes high-performance chips. In the old days, the counterfeits were rip-offs from Asia where someone had gotten a hold of the mask set and made a copy. These days what is more common is that some cheaper or less capable part from an offshore vendor is put in a package that is mis-marked with an LT part number. There are other ways that bogus parts get into the supply chain. When I was at National Semiconductor, a customer was all upset that some audio parts were not working in his board. We asked about the date code on the parts, and it turned out that his whole lot was an engineering build of the part before it was ready for production. Those parts should never have gone out, someone must have stolen them from a dumpster, perhaps at the metal recycling yard, and then gotten them into some gray market through unscrupulous small distributors. You see a lot of this at times like right now (summer 2010) when parts are on allocation and purchasing agents are getting creative about where they find stuff. Trust me, tell your purchasing guy to buy from reputable distributors or it is very likely that reel of parts he is buying off the back of a truck is counterfeit. Then you get called in to figure out why your circuit no longer works to spec.
This is just a sliver of the entire counterfeit goods problem. What first brought this to my attention was a 2008 PBS/National Geographic special called Illicit: The Dark Trade. The problems of imitation brand items are showing up in every industry. That program had scary storylines about counterfeit medicine that was killing hundreds of people as well as the billion dollars in lost revenues from reputable companies. When I was living in the Office/loft/shop/warehouse/consulting-place megaplex, there was a Korean machinist a few doors down about 20 years ago. His dad was making fake Louis Vuitton purses and selling them in New York. I didn’t see too much harm in that, after all, what Louis Vuitton charges for purses is criminal. But now I realize that you are paying for more than the name. You are paying for higher quality materials and the ability to return the merchandise, and better customer service. It is fine to sell cheap purses, but now I realize it is wrong to pretend that they are haute couture purses when they are not.
One problem is that all this is seen as a white-collar crime. As the PD&D article noted, the penalties are far less for counterfeit chips than for narcotics. When people start dying because of bogus chips in medical equipment maybe we will see that the people doing chip counterfeiting are more morally reprehensible than drug runners. One day I hope the US gets like Red China. China didn’t care when it was foreigners dying from Chinese bogus goods, but once a bunch of their babies were killed by tainted formula, well; you have to hand it to those authoritarian countries like China. About three months after it happened, they hauled the CEO out in front of a firing squad. A few more cases like that might get these counterfeiters to realize that we will not tolerate this widespread fraud anymore. That might seem barbaric, but as someone who was working in the America auto industry while the management actively sought to make cheap crappy products, I like the idea of China shooting 18 managers at a refrigerator plant because of ongoing quality issues. Heck a couple of GM CEOs and a few union bosses executed back in 1975 and maybe we would not have lost 300,000 jobs to the Japanese. China is also pretty good about executing government officials that are on the take. OK, as I have gotten older I actually have become an opponent of the death penalty. But life in prison is not too extreme for people that are murdering consumers in order to put a little filthy lucre in their pockets. They can bunk with all the Wall Street CEOs we should be locking up instead of bailing out.
Artfldgr commented:
I am canceling my subscriptions to EDN, and am telling others to do so as well.
Socialism/Communism murdered over 100 million people, and you think its a good thing?
the Author probably wet his pants when he saw the German efficiency in Schindler list, those socialists really know how to get factories going, no?
he loves the way they improved things in china, starving tens of millions, torturing Christians, and executing business owners.
perhaops the fact that these parts are coming from a communist state wishing to harm its competitor, and siphon money is the reason, and suggesting we join em, is the wrong thing
The US is becoming a planned economy like germany after weimar, and its idiots like this author that think thats good.
my family has experienced such goodness close up, he should first experience it, before he even mentions it this way.
bet he likes the barracks above the factories where humans kept like cattle make things for him to use...
EDN promoting totalitarianism, and its misery, death, lack of freedom, is unconscionable.
JustaTTech commented:
Lets just shoot them.
I have seen this for the past 25 years.
Bogus parts are everywhere.This is not new.
I cant count how many times I have had circuits fail because of counterfeit parts.All from certified distributers.Crap ..Iso crap ...Rhos crap....and certified crap.We buy the cheapest crap then whine when we see capacitors bulge just sitting on a shelf.....
KyferEz commented:
Most of the people replying here obviously have no reading comprehension, or at least are jumping to extremes...
The idea of shooting managers who REPEATEDLY have the SAME problems isn't reprehensible, but (despite whether it ever really happened in China) Americans should take the idea metaphorically. CEOs and managers who allow and often promote poor design practices need not be managers or CEOs anymore. Actually shooting someone? No, and it was obvious to me that Paul wouldn't actually condone that, but may feel envious of the definite and strict punishments that are enforceable for those in positions and encourage and/or allow such things to occur repeatedly.
I feel similarly. There must be some responsibility and accountability. No-one, no matter who they are or what they do should be financially or criminally immune to the disasters their actions cause when those actions were intentional, dangerous, and occur repeatedly.
Doremus Jessup commented:
Oh yeah, brilliant idea. Let's just shoot everybody when there are quality problems. Got a run in your car's paint job? Shoot 'em. Steak not done enough? Shoot 'em. What planet are you from dude, Arizona?!
Super Tough Guy commented:
Counterfeiting is a problem for chips? Stop whining, sissies, and use discreet transistors! Yeah, that's right, you heard me. Analog engineers have gone soft. And use carbon comp resistors too. And paper caps!
Paul Rako commented:
TO the first commenter, well perhaps get _your_ facts straight, or take a reading comprehension test. Vendors have no control when a bootleg assembly house stamps your part number on a package. Also, it was National that had an engineering build get into a customer's hands, but once again, it was not their fault-- they contract with disposal and recycling companies if only because ICs used to have lead in them. It was one of those companies that either left the parts in a dumpster or more likely, just sold the parts to an unscrupulous middle man.
As to the commenter that thinks all op amps witt the same pin-out are the same, well I was an amplifier application engineer for 5 years, and I can promise you they're are not. Indeed, even parts made by legitimate companies with the same part number are not the same and may not work in your circuit. No, it is not "market segmentation" that makes Linear Tech op amps cost more, it is because their specs are better. This is anablog-- for analog engineers, digital guys and purchasing agents please stay away. Are there really engineers that think every 8-pin op amp is the same?
I do apologize for linking to the bogus article about the 18 managers-- but, as I would like to point out to the guy that wants me to interview companies and do research, this is blog post, not a feature article. When I can spend two weeks for every post, I will research them and not link to snopes material. As a daily thing, sorry, you get the warts as well as the meat. And the meat of the matter is that counterfeiting chips is a huge problem, and getting worse. When that doctor hooks up the test equipment you better hope it was designed, built and tested by people that know every op amp is different. If this comes off as a rant to some people it is only because they do not understand the seriousness of the issue.
James commented:
Is this just a rant? So LT is having problems with engineering samples landing up in circulation. It just means their own process to destroy unwanted/scrap product is faulty. Getting them out of dumpster?? Are you kidding me? Does LT really dispose their samples in a dumpster.....? Get your facts straight, this would be a major issue if that is true!!
I am not questioning the counterfeit issue as such but would have liked to see more fact finding and from other companies too, and some more constructive suggestions than shooting everybody like China does. I doubt if China should be the model example to use, where piracy is rampant and protection against IP theft especially to foreigners is minimal or non existent. Their govt does not care even if it hurts their own people, they just care and act when they have to make an example of someone. For every one of them they execute there are at least 1000 more thriving in piracy and they will not do anything unless they suspect a revolt. And shouldn't LT have a trace where those samples came from in the first place? Out of China may be?
In today's world when most of the parts come from APAC region, changing laws in US will do nothing, even if we decide to shoot them like China.
John John commented:
One can expect more intensive piracy from China in the future.
In several years they will steal so much of technology and add to it their own technology that US will be behind.
As for Wall Street crooks they will probably move to China because there will no money in US anymore.
Get your fact straight! commented:
Hi Paul,
Before you write an inflammatory article like this, you better check and get your fact straight. The CEO, who you talked about, was “shot” by your article not by Chinese government. She is actually in jail and serving an 18 years sentence in Hebei province. It is very irresponsible of you to write garbage like this.
Michael commented:
The story on the execution of 18 Chinese managers at a refrigerator plant was a satire, by the way... first link on Google: 18 chinese managers snopes
chet commented:
Having fought thru some problems with this lately the problem isnt even slightly different chips, its parts that have been stripped off a board and remarked, leads straightened then fed into the broker system. Parts start failing unexpectedly since they are used and stripped and reworked under questionable conditions. If you don't control your supply chain carefully you will get bit
Andy T commented:
You counterfeit $100 bills, not nickels or pennies by bleaching your $1's and inkjetting the $100's, which was the rage among retirees paying their bills a few years ago.
Blacktopping and relabeling a cheap op amp into a nearly same one, specwise and with the same pinout, that sells for 10x the money because of "segmentation" is an open invitation for anyone clever enough to buy a $3 rubber stamp.
Perhaps if Linear didn't charge an arm and a leg for some of their devices, the counterfeiting wouldn't be as profitable and lucrative as it is and the counterfeiters'd go back to making Louis Vuitton murses for you. A shipment of chips, like Intel processors, is more lucrative than a Brinks truck full of cash, as far as highjackings go.
You are also calling for penalties for counterfeiters operating in countries where there is no, zero, nada, IP law enforcement. How's that going to work when the economic and supply uncertainty in the USA and Europe is actually a good thing for these countries' internal economy and world prowess - which is all they care about.
It's the counterfeit aircraft bolts that have me more worried, actually....though, admittedly, the ScareBus is fly by wire....
