Semiconductor IP News and Trends Blog

The Shadow Supply Chain

Recent events highlight the existence of a counterfeit chip supply chain that is disastrous to the semiconductor industry and all of its customers.

In 2003, Harry Helms wrote about the shadow government in the U.S., calling it a cult of secrecy (see, “Inside the Shadow Government“) Now, a equally large shadow has fallen into the spotlight, namely, a shadow supply chain market for high technology chips that extends from the theft of intellectual property (IP) and design efforts to manufacturing and packaging.

I have covered all but one of these counterfeiting manifestations of the chip supply chain in various blogs and earlier articles (see, “DAC Panel Explores IP Theft in Global Markets” and “Foreign Fabs and Killer Apps“). Today, I’ll cover the last stage of the shadow chain, namely, packaging fraud.

For the last several months, details concerning the  VisionTech Components chip counterfeiting case has been revealed (see, “Feds close huge chip counterfeiting case“). Apparently, $16M in counterfeit chips from China and Hong Kong were sold under major brand names to almost all segments of the U.S. electronics industry – from mission critical military and medical systems to consumer goods.

The immediate sales loss is staggering, yet no more so than the ongoing losses from the theft of intellectual property, lost design and manufacturing jobs, and the future cost that will result from the damage caused by inferior counterfeit chips in mission critical applications.

But this is not the first time that counterfeit chips have been a problem.

In the early 1980s, I worked as a systems engineer for the DoD at China Lake. During that time, I saw the reverse engineering of counterfeit Texas Instrument (TI) 7400 series ICs recovered from various Russian missiles. These counterfeits looked just like the original ICs, including TI’s logo molded into the chips. Indeed, it turned out that the original molds were actually used in create the counterfeit packages. 

Today’s counterfeits – as in the VisionTech case – use a process called blacktopping to make the chip packages seem like original OEM products. Regardless of the technique, the result is the same in that dangerous, counterfeit chips are passed off as the real thing.

One solution to the immediate problem of counterfeit chip packaging has been proposed by our genetic engineering brethren. A company called Applied DNA Sciences proposes the use of “unbreakable and  uncopyable” botanical  DNA codes  to uniquely mark authentic OEM chips.

This is yet another encouraging example of the value of cross-discipline solutions between the semiconductor and generic engineering communities (see, “Biological IP? First Answer Analog vs. Digital Question“).

The multi-billion dollar US chip supply chain is being compromised, from the creation of intellectual property through design, manufacturing and final packaging. These dangers are real and imminent. Point solutions are fine, such as botanical DNA packaging marking to IP tagging (see, “IP Tagging Gains Renewed Interest“). But what is really needed is a  comprehensive, systemic solution. If the U.S. government or the semiconductor industry can provide no global solution, then the counterfeit supply chain will cast an even longer shadow.