WINNING THE BATTLEAGAINST COUNTERFEIT
SEMICONDUCTOR PRODUCTS
A report of the SIA Anti-Counterfeiting Task Force
August 2013

Winning the Battle Against Counterfeit Semiconductor Products
SIA Anti-Counterfeiting Task Force
August 2013
Executive Summary
As with every type of product, ranging from jewelry to wine to currency, semiconductor products can becounterfeited. Semiconductors are the “brains” inside critically-important electronic systems, including
healthcare and medical equipment, electric power grids, communications systems, automotive braking
and airbag systems, and military and aerospace systems. Because they control the operation of theseand other vital electronics, counterfeit semiconductor components pose major risks to the health,safety, and security of people worldwide. Often harvested from electronic waste (e-waste), mostcounterfeit semiconductors are components re-marked to indicate they are newer than the originalunits or they perform to a higher standard. Semiconductor companies and their AuthorizedDistributors, Authorized Resellers, and Authorized Aftermarket Distributors/Manufacturers haveextensive, proven controls to ensure products are properly manufactured, tested, handled, and stored
to prevent failures. Counterfeiters have few if any such controls. The result is that, unlike legitimate
semiconductors from authorized sources, counterfeits and other semiconductors available from nonauthorized sources often have low quality and poor reliability.
Due to the dangers posed by counterfeits, the Semiconductor Industry Association (SIA) AntiCounterfeiting Task Force (ACTF) continuously works to curtail the supply and demand for these illegal
products and to educate customers on how to avoid purchasing counterfeits. The ACTF works closelywith government agencies worldwide, including Customs and other law enforcement agencies, toidentify and stop parties involved in manufacturing or trafficking in counterfeit goods. In addition, theACTF has been instrumental in driving anti-counterfeiting legislation, regulations, and policies. The ACTF
conveys counterfeit component avoidance strategies via conferences, webinars, and white papers.
Counterfeit semiconductor products have proliferated due to poor purchasing and supply chain
practices. Counterfeit components reported to SIA member companies and reported through theGovernment-Industry Data Exchange Program (GIDEP) consistently involve purchases from open market
sources that are not authorized by the Original Component Manufacturers (OCMs) to manufacture orsell semiconductor products. The open market includes independent distributors, brokers, and on-line
component exchanges that obtain products from a wide range of suppliers. Unfortunately, some
suppliers either intentionally or unknowingly introduce counterfeits into the open market supply chain.
The only way to ensure that semiconductor components are authentic, and have optimal quality andreliability levels, is to buy them exclusively through authorized sources. The upfront costs of products
purchased through authorized sources are sometimes higher than those offered by open market
sources. However, products purchased through authorized sources are usually more cost effective inthe long term, since they have superior quality and reliability levels, and carry full factory warranties.

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Table of Contents:
Note: Sections are hyperlinked to immediately take readers to the sections of most interest.
I.

Background on Counterfeit Semiconductors

II.

Overview of the Semiconductor Industry

III. The Semiconductor Industry Association
IV. How Counterfeit Semiconductors Threaten Health, Safety, and Security
V.

How Counterfeit Semiconductors Cause Economic Harm

VI. Prevalence of Counterfeit Semiconductors
VII. Manufacturing of Legitimate vs. Counterfeit Semiconductors
VIII. Quality/Reliability of Legitimate vs. Counterfeit Semiconductors
IX. Authenticity Determinations
X.

Authenticity Does Not Guarantee Performance and Reliability

XI. How Authorized Supply Chains Prevent Counterfeit Infiltration
XII. How Counterfeits Can Enter Non-Authorized Supply Chains
XIII. How to Avoid Counterfeit Legacy Products
XIV. ACTF Strategies and Initiatives to Combat Counterfeits
XV. Summary of How to Win the Battle Against Counterfeit Semiconductors
XVI. References
XVII. Acknowledgements

I. Background on Counterfeit Semiconductors
Reports of counterfeit semiconductors first became widespread during the 1997-2000 dot-com boom,
but counterfeit semiconductors have been around since at least the 1970s. Although counterfeit
semiconductors are not a new problem, there is no universally-accepted definition of counterfeit
electronic components. In January 2010, the Bureau of Industry Security, which is part of the US
Department of Commerce, published a report that defined a counterfeit electronic part as “one that is
not genuine because it: is an unauthorized copy; does not conform to original OCM design, model, or
performance standards; is not produced by the OCM or is produced by unauthorized contractors; is an
Copyright © 2013 by the Semiconductor Industry Association2

off-specification, defective, or used OCM product sold as “new” or working; or has incorrect or false
markings or documentation, or both.” [Reference 1.] This is an excellent definition for a counterfeit
semiconductor, albeit rather lengthy. A task force of experts on counterfeit semiconductors from six
worldwide semiconductor industry associations has agreed on the following more concise definition:“Semiconductor counterfeiting is considered the act of fraudulently manufacturing, altering, distributing,or offering a product or package that is represented as genuine.” As with other counterfeit goods,
counterfeiters are trying to trick purchasers into thinking they are buying legitimate products.
Until media coverage of counterfeit semiconductors became widespread in recent years, most people inthe semiconductor and electronics industries had little or no awareness of counterfeit semiconductors.
The prevailing view was that semiconductor products were too difficult and too expensive tocounterfeit, and that the supply chain for semiconductors minimized the likelihood of counterfeits being
introduced. While this view had some validity many years ago, four major changes since the mid-1990s
have allowed counterfeit components to proliferate:
1. The dot-com boom in the late 1990s and subsequent periods of strong semiconductor demand
resulted in extended lead-times and rising prices for semiconductor components that madethese components attractive to counterfeiters.
2. Increased environmental awareness resulted in electronics waste (e-waste) no longer always
ending up in landfills. Instead, electronic components were often removed from scrap circuitboards sent for “recycling,” and some of these used components were then refurbished and remarked to indicate they were new and/or higher performing components.
3. Tens of thousands of independent distributors and brokers worldwide established Internet sites
to buy and sell semiconductor products outside of the traditional supply chain of OCMs andtheir Authorized Distributors/Resellers. As with other industries, the Internet and electroniccommerce have facilitated the sale of counterfeit and otherwise questionable components dueto the ease and speed at which companies and individuals can establish professional-looking
Internet sites and then quickly change company names, web addresses, contact information,etc. in an effort to avoid liability.
4. Component purchasers increasingly focused on price and availability, often ordering
semiconductor products from Internet-based brokers and on-line exchanges offering the lowest
prices and “immediate” delivery.
While in the 1970s and 1980s there were negligible counterfeit semiconductors in the supply chain,
beginning in the late 1990s, the combination of the above developments allowed counterfeit
semiconductors to proliferate. Many Original Equipment Manufacturers (OEMs) and their Contract
Manufacturers (CMs) were oblivious to the risks of counterfeit components until they encountered highfailure rates in their production lines and/or large warranty claims that were subsequently found to be
due to counterfeits. OEMs and CMs have understandably been reticent to publicize their problems andassociated financial losses due to counterfeit components, but these losses can be huge. In addition,
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field failures of electronic systems due to counterfeit components can severely damage the reputationsof OEMs that otherwise provide reliable products. Fortunately, OEMs and CMs are able to easily avoid
counterfeits by always buying semiconductor components either directly from OCMs or directly from
OCMs’ Authorized Distributors/Resellers. Many component buyers are not aware that older, out-ofproduction products that are not available through most OCMs’ Authorized Distributors/Resellers, arestill generally available through Authorized Aftermarket Distributors/Manufacturers who buy end-ofproduction products and/or obtain licensing to reproduce the original products. These Authorized
Aftermarket Distributors/Manufacturers of legacy products literally have billions of older products thatmeet all of the storage, handling, transportation, performance and reliability requirements of the OCM.
In many cases, these products are available for immediate delivery.

II. Overview of the Semiconductor Industry
Semiconductors are the “brains” inside an incredibly diverse range of end products and systems. These
include products for:







Everyday communications and entertainment: Computers, servers, cell phones, video games,
digital cameras and camcorders, televisions, security systems, electronic tolls, networking, etc.;
Healthcare and medical equipment: Patient monitoring including bedside-to-server dataexchange systems, medical imaging including x-ray and CAT scan systems, pacemakers anddefibrillators, blood pressure and heart rate monitors, robotic surgery equipment, etc.;
Critical infrastructure: Electric power grids including nuclear and solar power generation
systems, banking and stock market systems, local and national communication networks,
emergency response systems, etc.;
Industrial and automation systems: Motor control systems, thermal and vibration sensors,
factory control systems, electronic test and measurement, environmental monitoring, etc.;
Transportation systems and controls: Engine controls, braking systems, air bag systems, seatbelt tensioners, collision avoidance radar, GPS navigation systems, train control systems, traffic
lights, etc.; andAerospace and defense: Navigation systems, flight control and radar systems, identification
friend or foe (IFF) systems, space and satellite communication systems, missile systems, defense
electronics, etc.

Semiconductor components are classified as either discrete devices, such as diodes and individualtransistors, or Integrated Circuits (ICs), which consist of multiple transistors and other devices that areinterconnected on one or more “chips” to form an electronic circuit. Discrete devices are sold in chipform, wafer-form, or package-form, and they only have two or three electrical terminals. Average
Selling Prices (ASPs) for a single discrete semiconductor range from less than one cent to hundreds ofdollars. ICs are available in chip-form and wafer-form as well as a very wide range of package styles andsizes, with package pin/package solder ball counts ranging from just two to several thousand, dependingon the complexity of the IC. Transistor counts for a given IC range from single-digits to hundreds ofmillions. Not surprisingly, given the extremely wide range in IC complexities and IC packages, ASPs for asingle IC range from a few cents to tens of thousands of dollars.
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III. The Semiconductor Industry Association [Reference 2]
SIA is the voice of the US semiconductor industry, one of America's top export industries and abellwether of the US economy. Semiconductor innovations form the foundation for America's $1.1
trillion technology industry affecting a US workforce of nearly 6 million people. Founded in 1977 by five
microelectronics pioneers, SIA unites companies that account for 80 percent of the semiconductor
production of this country. Through this coalition SIA seeks to strengthen US leadership ofsemiconductor design and manufacturing by working with Congress, the Administration and other key
industry groups. The SIA works to encourage policies and regulations that fuel innovation, propelbusiness and drive international competition in order to maintain a thriving semiconductor industry in
the United States. More information on SIA is available at http://www.semiconductors.org.

IV. How Counterfeit Semiconductors Threaten Health, Safety, and Security
Due to the widespread use of semiconductors in a myriad of applications worldwide, counterfeit
components pose major threats to the health, safety, and security of everyone that relies on electronics.
While consumers do not usually buy semiconductor components directly, most people routinely use
electronic products as well as infrastructure and other systems that require reliable embedded
semiconductors to function properly over time. Each of these products and systems typically uses
dozens, hundreds, or even thousands of semiconductor components. The failure of a single counterfeit
semiconductor component in one of these products or systems can have catastrophic consequences.
OEMs that sell electronic products and systems are reluctant to disclose incidents of counterfeit
components causing failures since this can damage their reputations. However, known incidents ofcounterfeits causing or potentially causing health, safety, and security issues include:
1. A counterfeit semiconductor component was identified in an Automated External Defibrillator(AED), resulting in a defibrillator over-voltage condition. Failure to detect and address this issue
could have resulted in improper electrical shocks being applied to heart attack victims, thus
jeopardizing their lives.
2. A counterfeit semiconductor component caused a fire in the control circuitry in a vacuum
cleaner for residential use. This fire was successfully contained, but it had the potential to resultin major property damage or even loss of life.
3. A counterfeit semiconductor failed in a power supply used for airport landing lights. This did not
result in any reported airline take-off or landing incidents, but the potential for such incidents
was obvious.
4. A broker shipped counterfeit microcontrollers intended for use in braking systems in high-speed
trains in Europe.

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55. A broker shipped counterfeit microprocessors intended for use in automated medication
applications, including intravenous (IV) drip machines.
6. A broker shipped counterfeit voltage regulators intended for use in automotive braking systems
and automotive airbag deployment systems.
7. A broker shipped counterfeit semiconductors intended for use in radiation detectors thatemergency responders would use in cases of a nuclear power accident.
8. A broker shipped counterfeit semiconductors intended for use in nuclear submarines.
The preceding examples represent just a fraction of the incidents where counterfeit semiconductor
components jeopardize the health, safety, and security of the general public worldwide. While somecounterfeited products, such as jewelry and apparel, do not endanger consumers, counterfeit
semiconductors can be particularly dangerous depending on their end application. This is why it is so
critical that semiconductor components be procured exclusively through authorized sources.

V. How Counterfeit Semiconductors Cause Economic Harm
In addition to jeopardizing health, safety, and security, counterfeit semiconductors cause significant
harm to the economy. Semiconductor companies spend tens of billions of US dollars per year
developing, manufacturing, and supporting products that will operate reliably for many years incustomer applications. In contrast, counterfeiters spend minimal money developing and“manufacturing” products, and they provide no post-sales customer support. When an Original
Component Manufacturers’ products are counterfeited, the low quality and poor reliability of thecounterfeit components can cause damage to an OCM’s reputation, especially if the parties thatexperience failing components do not realize that these components are counterfeit. This damage to an
OCM’s reputation can result in loss of business even though the “manufacture” and sale of thecounterfeits was completely outside the control of the OCM.
Due to their low-cost operations based on theft of OCMs’ Intellectual Property (IP), counterfeiters canusually undercut the Average Selling Prices (ASPs) of OCMs and their Authorized Distributors. While
component purchasers may think they are getting a good deal in terms of pricing and/or availability byturning to the open market and ordering components based on quick Internet searches, there are no
assurances that these components are consistently authentic and reliable. Just one counterfeit
semiconductor component in an electronic system can cause the entire system to completely failunexpectedly during end-customer use. If this system is a video game console or an electronic toy, theeconomic consequences of failure are minimal. However, if this system is a computer server for
financial transactions or a control system for electric power grids, the economic damage from failures
can be very substantial.

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Components bought through the open market carry no factory warranties, and most non-authorized
sources are too small to be in a financial position to pay large liability claims stemming from high ratesof OEM system failures caused by counterfeit components. Thus, component purchases from the open
market that are initially viewed as inexpensive can turn into an extremely costly mistake, particularly ifsystem failures result in millions of dollars in warranty expenses and/or liability claims against the OEMor their CM. Moreover, the cost of high failure rates on electronic systems due to counterfeit
components can be even greater if these failures result in major damage to the OEM’s/CM’s reputationand the loss of future business. The economic harm can be almost incalculable if counterfeit
semiconductors result in critical infrastructure failure or if counterfeits in safety-critical electronicequipment cause loss of life. The OEMs/CMs can avoid these major risks by always buying components
directly from OCMs or directly from their Authorized Distributors/Resellers. By avoiding counterfeits
and otherwise inferior products by adopting procurement policies requiring purchases throughauthorized sources, the OEMs/CMs will protect the health, safety, and security of everyone that
depends on reliable electronic products and systems on a daily basis.
Individuals and companies involved in the sale of counterfeit components/electronic systems to the US
Department of Defense (DoD) can face nearly unlimited financial liabilities along with severe criminal
penalties. Section 818 of the National Defense Authorization Act for Fiscal Year 2012 (NDAA) requires
defense contractors to establish effective policies and procedures to detect and avoid counterfeit
components. [Reference 3.] Even if defense contractors have implemented comprehensive safeguards
against counterfeits, they may be financially liable for all costs associated with completely remediating
any issues stemming from counterfeit components in electronic systems. As detailed in Section IX,
authentication determinations on suspect components are difficult to make and are often erroneous.
Consequently, most counterfeit mitigation programs will not be effective unless they require thatcomponent purchases be exclusively through authorized sources. If counterfeit components areincorrectly deemed authentic and integrated into complex military systems deployed worldwide, thefinancial costs may be enormous to replace suspect or confirmed counterfeits. Thus, any savings that
defense OEMs or their CMs may have realized by purchasing semiconductor components from the open
market would be dwarfed by the costs of replacing previously-installed counterfeit components infielded military systems. Moreover, the reputations of defense contractors and their suppliers involvedin counterfeit issues can be badly damaged. NDAA Section 818 and subsequent related legislation coveradditional provisions including reporting requirements for suspect counterfeit components and criminal
penalties for trafficking in counterfeit goods and services. For example, per Section 818, an individual
who intentionally traffics in counterfeit goods to the DoD can be fined up to $2 million and/or
imprisoned for up to 10 years, double the penalties under previous laws. [Reference 3.]

VI. Prevalence of Counterfeit Semiconductors
As with most illegal activity, accurately determining the magnitude of semiconductor counterfeiting is
not possible. However, the data that exists on semiconductor counterfeiting clearly shows that this is amajor issue:
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1. Over a three week period in November/December 2007, United States Customs and Border
Protection (CBP) and European Union Customs seized over 360,000 counterfeit integrated
circuits and computer network components bearing more than 40 different trademarks as partof “Operation Infrastructure,” the first joint intellectual property rights enforcement operation
undertaken by CBP and the European Union. [Reference 4.] Following this success, at SIA’srequest, CBP initiated Operation Infrastructure II and in May/June 2008 seized 420,000
counterfeit ICs and computer networking components bearing 50 different trademarks.
[Reference 5.] Considering that these enforcement operations were for only a few months, did
not cover all US ports, and likely did not capture 100% of the counterfeits entering the agency’s
targeted ports, the total counterfeit semiconductors imported that year was many multiples of
the 780,000 seized components.
2. In April 2012, market research firm IHS iSuppli reported that “The five most prevalent types ofsemiconductors reported as counterfeits represent $169 billion in potential risk per year for the
global electronics supply chain.” [Reference 6.]

The US government has been particularly interested in quantifying the extent of counterfeits entering
the military end-use segment of the market.
1. In January 2010, the Bureau of Industry Security (part of the US Department of Commerce)
published a report that highlighted “an increasing number of counterfeit incidents being
detected, rising from 3,868 incidents in 2005 to 9,356 incidents in 2008.” This finding was basedon a survey of 387 companies and organizations in the defense industrial base. [Reference 1.]
2. In November 2011, the Senate Armed Services Committee (SASC) issued a Background Memodetailing the investigation by SASC staff that “uncovered approximately 1,800 cases of suspect
counterfeit electronic parts being identified by some companies in the defense supply chain,with the total number of suspect parts exceeding 1 million.” [Reference 7.]
3. In November 2011, during an SASC hearing, SIA President Brian Toohey provided oral testimonythat “Experts have estimated that as many as 15 percent of all spare and replacement
semiconductors purchased by the Pentagon are counterfeit. Overall, we estimate thatcounterfeiting costs US-based semiconductor companies more than $7.5 billion per year, whichtranslates into nearly 11,000 lost American jobs.” [Reference 8.]
The military end-use segment is particularly prone to counterfeits because of the price gap between
military and commercial components and because of a greater reliance on legacy products. However,the significant numbers of counterfeits documented in this segment that represents less than one
percent of the worldwide semiconductor market is indicative of the very large number of counterfeits inthe total market.

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VII. Manufacturing of Legitimate vs. Counterfeit Semiconductors
Due to the critical importance of having electronic products and systems function as expected for many
years, semiconductor companies spend billions of dollars per year to design and manufacture products
to the highest quality and reliability levels. Semiconductor manufacturing consists of four high-levelsteps: wafer fabrication, package assembly, electrical test/burn-in, and final packing/boxing.
1. Wafer fabrication occurs in some of the cleanest, most advanced, and most expensive
factories (referred to as “fabs”) in the world. A new, advanced-technology wafer fab that canprocess 12” wafers patterned with nanometer-scale feature sizes costs several billion dollars.
The wafer fabrication process transforms a “bare” wafer (a thin, round, high-purity slice of an
ingot made from a semiconductor material such as silicon or gallium arsenide) into a fullypatterned wafer typically consisting of hundreds or thousands of small, identical circuits or“chips” separated by narrow lines called streets. The circuits consist of layers including
diffusions/implants (where the conductivity of the semiconductor surface is increased),dielectrics (nonconductors), metallization and vias (horizontal and vertical conductors), and a
final glass-like layer (a protective insulator). Each new layer is built upon the previous layerusing a complex, repetitive process based on depositing (adding) and/or etching (removing)materials. A process called photolithography is used to pattern each layer, with the specificpattern defined by a photomask. A set of photomasks for a single IC product with minimum
feature sizes measured in nanometers (billionths of a meter) can cost over one million dollars.
In addition to the photomasks, what makes wafer fabrication so expensive is that the wafer
processing must be conducted in ultra-clean rooms with highly-advanced equipment that
constantly maintains extreme controls over wafer curvature, alignment, temperature, etc. Since
minimum feature sizes for transistor gate oxide layers on advanced processes can be on theorder of just 1 nanometer (about 1/70,000th the width of a hair!), airborne particles and othercontaminants must be eliminated to prevent defects that could cause an IC to function
incorrectly or be unreliable. This is accomplished through many costly measures, including using
highly advanced air cleaning systems; manufacturing with ultra-pure chemicals, gases, anddeionized water; and having fab personnel wear “bunny suits” (cleanroom suits). This is one of
the reasons that a wafer fabrication facility is so expensive to build and operate.
2. The package assembly process transforms wafers into individual ICs housed in packages withelectrical terminals typically consisting of metal pins or metal solder balls. The packages havea wide range of sizes and materials. Historically, most packages have been assembled by firstsawing the wafer along the streets between each chip on the wafer, with each chip (also known
as a die) then mounted on a metal leadframe or a laminate (essentially a small printed circuitboard). After this die attach process, thin gold, aluminum, or copper wires (typically 25 microns
or less in diameter) are bonded between metal bond pads on the die and metal fingers or padson the leadframe or laminate. The final major assembly step is to encapsulate the wire-bonded
die, typically using mold compound (plastic). Many other semiconductor packages are used by
the industry, including ceramic and metal packages where the packages provide hermetic seals
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between the semiconductor die and the outside world. Traditional plastic, ceramic, or metal
packages are increasingly being replaced by what are commonly referred to as wafer-levelpackages or bumped die where the die has solder bumps (solder balls) attached directly on its
bond pads. In this case, the x- and y-dimensions of the “package” are the same as the die after
it is sawn from the wafer, thus resulting in a very small package (sometimes less than 1 square
millimeter in area). While package assembly needs to be conducted in clean environments,
packages generally are not assembled in the most advanced cleanrooms since package featuresizes are significantly larger than die circuitry feature sizes. Thus, due to reduced capital
equipment and cleanroom requirements relative to wafer fabs, package assembly facilities are
significantly less expensive to build and operate than wafer fabs.
3. The next major manufacturing process for semiconductors is final electrical test and, in somecases, burn-in. Components are electrically tested on Automatic Test Equipment (ATE) usingsophisticated test programs with hundreds or thousands of lines of code that can take many
months for Product Test Engineers at OCMs to develop. The ATE systems, which can costhundreds of thousands of dollars to several million dollars each, are connected to ATE handlers
which feed components into the test sites on the ATE systems. Most commercial-grade
components are ATE tested at room temperature (e.g., +25 °C = +77 °F) or elevated temperature(e.g., +70 °C = +158 °F). Automotive-grade and military-grade components are often also tested
at extremely cold (e.g., -55 °C = -67 °F) and extremely hot temperatures (e.g., +125 °C = +257 °F)
to guarantee they will operate correctly over very wide temperature ranges. ATE testing at cold
temperatures is particularly challenging given the components tend to “frost up” unless
expensive, specialty ATE handlers are used. Products used in high-reliability applications are
sometimes subjected to burn-in whereby components are electrically operated in hightemperature ovens for extended periods of time to screen out any latent defects. Based on the
ATE results and, if applicable, the burn-in results, each component is “binned out” as passing or
failing. All failing components are physically destroyed; this often is accomplished byincinerating components and recovering the metals (gold, silver, copper, etc.) used in packages.
Passing components are sometimes further segregated into different performance grades basedon the specific ATE results. The tops of the packages for passing ICs are typically laser-marked
with the OCM’s logo, part number (including any performance grade), and production codes.
The specific markings vary somewhat between OCMs, and physical package sizes sometimes
constrain the amount of information that can be marked on components.
4. The last high-level manufacturing process is packing/boxing of components prior to shipping
finished goods to OCMs’ Authorized Distributors/Resellers as well as to some customers thatbuy components directly from OCMs. Automated equipment is used to take components thatpass ATE testing and insert or place them in carrier media including canisters, tubes, trays, andreels. Products that are sensitive to moisture are baked (e.g., at +125 °C = 257 °F for 12 hours)
to remove any moisture from the packages. The carrier medium containing the baked
components is then inserted into a static-protected moisture barrier bag along with desiccant
and a humidity indicator card. The moisture barrier bag, which has a label that includes the
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Moisture Sensitivity Level (MSL) of the components, is then properly evacuated and sealed.
Sealed moisture barrier bags are then placed in static-protected boxes along with staticprotected dunnage (such as specialty crumpled paper), and the boxes are sealed and labeled.
As with all prior manufacturing steps, OCMs and their subcontractors have advanced controls
throughout the packing and boxing operations to ensure that components are properly handled
and stored and are never subjected to electrostatic discharge (ESD) events that could result indamage.
The contrast between manufacturing of legitimate semiconductors and counterfeit semiconductors
could not be more extreme. In the case of counterfeits, components are often “harvested” fromelectronics waste (e-waste) using crude processes, and then re-marked to indicate they are new or areotherwise different from how they were originally marked. The typical “manufacturing” process forcounterfeit components [Reference 9] is as follows:
1. Using “mountains” of scrap electronics as an input, workers remove printed circuit boards(PCBs) from old electronic systems.
2. PCBs are heated over an open flame to melt the solder used to secure components to theboards. The boards are then banged against a hard surface so that the components will fall out
into buckets. The components are then sorted, typically based on the package sizes and styles,
and the electrical functions of the components.
3. The original markings on the components are removed using methods of increasing
sophistication ranging from sanding to chemical etching to “black-topping” to “micro-blasting.”
4. New markings, including trademarked OCM logos, are added to the components. These newmarkings generally are intended to make the parts more marketable and/or more expensive.
For example, parts with old product codes may be marked with new product codes; packages
that contain the element lead (Pb) may be marked to indicate they are lead-free (Pb-free); parts
that have low performance may be marked to indicate they have high performance; andinexpensive commercial-grade parts may be marked to indicate they are more expensive
automotive-grade or military-grade parts.
5. The external pins, pads, or solder balls on the packages are reworked to make them appear
new. This sometimes entails using harsh chemicals to clean these external package connections.
In addition to this particular form of “manufacturing” of counterfeit components, counterfeiters havedeveloped numerous other ways to try to deceive component purchasers. In some cases, thecounterfeiters simply have packages assembled with no die in them, the wrong die in them, or no bondwires. Such components are completely useless, but the purchaser may not be able to get his or her
money back if the seller is a fly-by-night operation. More sophisticated counterfeiters sometimes takeused or new low-grade components and have them re-marked as high-grade components with the samefunctionality. These components may operate as expected under nominal conditions, but then failwhen used at elevated temperature, increased clock frequency, decreased supply voltage, etc. Finally,
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counterfeiters may remove die from the original packages and have them re-assembled in new
packages. In some cases, this involves removing die from old plastic packages and assembling them in
new hermetic packages, since products in hermetic packages usually sell at a significant premium overthe same products in plastic packages. Detecting re-packaged die is particularly challenging since thepackages are new and the packages are not re-marked or otherwise physically altered.
While many of the “manufacturing” processes used by counterfeiters are manual and primitive relative
to the advanced, automated processes used by OCMs, the workmanship on these counterfeits is often
excellent. Counterfeiters realize that customers will be checking the physical appearance of packages
including the markings on the packages, and counterfeiters usually now go to great lengths to maketheir illicit components look indistinguishable from legitimate components. Thus, unlike years ago,
package visual inspection with a microscope and other straightforward analytical techniques are usuallyineffective at detecting counterfeit components.

VIII. Quality/Reliability of Legitimate vs. Counterfeit Semiconductors
By adhering to rigorous Quality Management Systems and by conducting manufacturing operations inhighly advanced factories as described in Section VII, failures of legitimate products are extremely rare.
Quality Management Systems ensure that components are not subjected to any conditions which could
reduce the quality and reliability levels of components. For example, OCMs and their AuthorizedDistributors and Authorized Resellers ensure that:
1. Components are continuously protected against electrostatic discharge (ESD) and electricaloverstress (EOS) events during manufacturing and handling.
2. Components that are sensitive to moisture are properly baked and dry-packed.
3. Components are properly stored to avoid exposure to contamination as well as to temperatures,
humidity levels, shock levels, and other environmental stresses beyond the rated limits of thecomponents.
The net result of the highly advanced design and manufacturing controls used by OCMs as well as theproper handling and storage of components by OCMs and their Authorized Distributors/Resellers is that
failures of legitimate semiconductor components are very unusual. Industry data has shown that
<0.01% of legitimate semiconductor products will ever fail during operation in electronics systems.
Counterfeit semiconductors have far higher failure rates than legitimate semiconductors. While somecounterfeit semiconductors will fail immediately when electrically tested or first used, other counterfeit
semiconductors pose a much larger threat in terms of their susceptibility to failure after days, months,
or years of operation. This is because counterfeiting operations often introduce latent defects that canremain undetected during testing of electronic systems. These subtle defects can later result in either
sudden failures during system use, or, more insidiously, can cause erratic performance and produce

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unexpected results, which may be undetectable until the counterfeit component completely fails. The
causes of these reliability failures are numerous and include the following:
1. Package cracking, package delamination, and/or die cracking may be induced by component
removal from scrap Printed Circuit Boards (PCBs). Counterfeiters rarely take any precautions
against package damage during board removal. Flexing of PCBs and removal of components
from boards can cause subtle cracking, either on the outside or inside of the package, that is not
visible with component inspection. A common form of damage caused by board removal isstress fracturing at the metal pins or metal solder balls on the outside of the package.
Components having pins or solder balls with subtle stress fracturing may pass electrical testing
after they are re-mounted on new PCBs. However, during customer application, particularly inharsh environments, the stress fracturing can progress to the point that the component fails
intermittently or continuously. Components removed from PCBs and re-marked to indicate they
are new may fail at the worst possible time. For example, if the flight control system for a jet
plane has a counterfeit component with a micron-scale crack in the silicon chip, the mechanicalstress on the chip from flight turbulence could cause the crack to propagate, resulting incomplete electrical failure of the component. The resulting failure of the flight control system
could result in loss of control of the plane, jeopardizing the lives of everyone onboard.
2. “Popcorning” of counterfeit components may occur during PCB assembly since counterfeiters
rarely handle or store components properly. Many components, including components withmold compound (plastic) encapsulant, will absorb significant moisture. While OCMs always
properly bake and dry-pack moisture-sensitive components, counterfeiters usually skip one orboth of these manufacturing operations or take shortcuts to save time and cost. Even if
counterfeit components are dry-packed in sealed moisture barrier bags, they may not havebeen properly baked first. The net result is that during component mounting on PCBs using
high-temperature reflow ovens, the moisture in the counterfeit components expands very
rapidly (since steam forms above 100 °C = 212 °F), causing the package to “popcorn,” which can
result in cracking or delamination inside the package. As in the previous case, this internalcracking or delamination can become worse during end-customer use, resulting in total
electrical failure of the component.
3. Counterfeit components are often marked to indicate they do not contain the element lead(Pb) or other restricted materials when they in fact do, and this can result in major component
reliability risks. Components “harvested” from old scrap PCBs are often years or even decades
old, and most of these components contain Pb and/or other materials covered by the
Restriction of Hazardous Substances Directive (RoHS). Often, the Pb was incorporated in thesolder used in component packages to reduce the melting point of the solder. For example, tinlead (SnPb) solder was very common until RoHS and other environmental legislation went into
effect over the past decade. Since component packages with SnPb solder were generally
mounted on PCBs using relatively low peak solder reflow temperatures (typically between 220°C = 428 °F and 235 °C = 455 °F), the materials in the package did not need to be reliable to
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particularly high temperatures. However, with the industry transition to Pb-free packages overthe past decade, component packages are now usually mounted on PCBs using significantly
higher peak reflow temperatures (typically between 240 °C = 464 °F and 260 °C = 500 °F).
Semiconductor companies therefore re-engineered component package materials (such as moldcompound and die attach) so that they would be reliable at these higher temperatures. Since
most of the electronics industry has transitioned to Pb-free packages to meet RoHS
requirements, the demand for Pb-bearing packages has dropped precipitously. Thus,
counterfeiters usually re-mark old components to indicate they are Pb-free (when they are not).
In addition to the use of such counterfeit components causing RoHS compliance issues, PCB
manufacturers that assume these components are Pb-free and mount them on PCBs attemperatures of up to 260 °C = 500 °F can unknowingly induce major reliability hazards since thepackage materials were not designed to handle these high temperatures. For example,
counterfeit Pb-bearing packages that are mounted at such high temperatures may “popcorn,”
resulting in cracking or delamination of the package. As previously detailed, internal package
cracking or delamination can worsen during component field use, resulting in a sudden
catastrophic failure. In addition to die cracks propagating in the field, delamination can spreadto the point that internal bond wires snap, again causing the component to completely stopfunctioning. While marking Pb-bearing packages as Pb-free is very common, counterfeiters
sometimes do the inverse and mark Pb-free packages as Pb-bearing to meet remaining demand
for legacy Pb-bearing packages. Due to the lack of controls in “manufacturing” and handlingthese counterfeits, this results in a different set of reliability risks, such as the potential for tin
whisker formation that can result in shorting between electrical terminals on components.
4. Electrostatic discharge (ESD) damage may occur to semiconductors during component
removal from scrap PCBs or during subsequent operations such as stripping of original
package markings, adding new counterfeit markings, etc. All these “manufacturing” operations
for counterfeit components can cause them to become electrically charged, especially sincecounterfeiters almost never take any precautions against ESD (such as using ESD ground straps
and using ionizers to safely discharge components). When the charged components
subsequently contact metal surfaces such as a metal storage bins, they will discharge via highcurrent transients that can slightly damage thin dielectric layers in the component circuitry, suchas nanometer-scale gate and capacitor dielectrics. These dielectric layers, which are meant to
be insulators, then conduct leakage currents. These leakage currents may be too low to result inelectrical failures during initial use. However, after weeks or months of operation, the leakage
currents can increase to the point that components suddenly fail catastrophically.
5. Chemicals used by counterfeiters to strip original markings and/or to clean component
package connections can result in reliability failures due to corrosion. In their effort to makeold or used components look new, counterfeiters often use harsh chemicals to “recondition”
packages. These chemicals are sometimes incompatible with the package materials, and thus
the integrity of the packages will be compromised by these chemicals. Even if the chemicals arecompatible with the packages, they may not be fully rinsed off by the counterfeiters. For
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example, acid used by counterfeiters to clean oxide layers and other contaminants frompackage pins, pads, and solder balls will initially penetrate only the surfaces of packages.
However, weeks, months, or years later, the acid can work its way to active circuitry on thesemiconductor chip, thus corroding away this circuitry and resulting in loss of functionality. This
corrosion mechanism is accelerated by temperature and humidity; the time-to-failure of thecounterfeit components will decrease as the temperature and/or humidity they are exposed toincreases. Even if the PCB manufacturer washes circuit boards and/or applies conformal
coatings to circuit boards, any acid that had partially penetrated packages during counterfeiting
will be trapped in the packages and can eventually lead to catastrophic failure.
6. Finally, counterfeiters can introduce reliability issues by incorrect laser marking of component
packages. As the semiconductor industry has largely transitioned from ink-marked components
to laser-marked components, counterfeiters have followed suit. Conducting laser marking on
components in plastic packages has become increasingly challenging as these packages havebecome thinner. More specifically, the laser marking needs to be sufficiently deep into the
package to make it legible without reaching bond wires or other critical internal packagefeatures. Due to their expertise at developing, characterizing, qualifying, and monitoring laser
marking processes, semiconductor companies do not compromise package integrity during laser
marking operations. However, counterfeiters usually do not know the depth of bond wires andother critical features on a given component. This is especially the case if counterfeiters havechemically or mechanically removed the original package markings and have thus reduced thethickness of the package. When bond wires or other interconnects inside packages are hit bylasers used by counterfeiters, the current-carrying capability of these interconnects is reduced.
This can result in time-dependent failures when the damaged interconnect eventually fuses
open during component use. Hermetic packages may likewise have poor reliability due to laser
marking by counterfeiters. For example, in the case of iron-based lids that are plated with nickel
and/or gold, if laser marking removes the plating, subsequent exposure of the package tomoisture will cause the iron to corrode. Prolonged exposure to moisture will cause the iron tocorrode away to the point that holes develop in the package lid, resulting in loss of package
hermeticity and likely catastrophic failure due to moisture entering the package.
The net result of the above issues is that counterfeit components that pass electrical testing after board
mounting may still have significant field reliability problems. If even one counterfeit semiconductor
component ends up in an electronic system with hundreds or thousands of components, the reliability ofthe entire system may be greatly compromised by this one bogus component. Classic system-level MeanTime Between Failure (MTBF) reliability calculations, such as those detailed in MIL-HDBK-217, arecompletely meaningless if one or more components in the system are counterfeit. [Reference 10.]

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IX. Authenticity Determinations
As counterfeiters have refined their “manufacturing” processes, making authenticity determinations has
become increasingly difficult for everyone except the Original Component Manufacturer (OCM). Yearsago, many counterfeit semiconductors had irregular solder on external package pins, poorly-marked
logos, sloppy alphanumeric characters, and/or evidence of package surface sanding or “blacktopping.”
These and other telltale signs of counterfeiting made it easy for anyone with a good, low-power
microscope and some general training to identify the more blatant counterfeits. Some of these older,
relatively crude counterfeits are still available through non-authorized purchase sources. More recently,
however, counterfeiters have become far more sophisticated. For example, semiconductor package
surfaces and external pins/solder balls as well as package markings (including logos) may be essentially
identical to those on legitimate products. In addition, tubes, trays, reels, dry-pack bags, desiccants,
humidity indicator cards, shipping boxes, shipping labels, certificates of conformance, and other packing
materials and documents may be counterfeit or forged and may be indistinguishable from those used
for legitimate shipments. Moreover, while very low retail prices were historically an indicator thatcomponents were likely bogus, counterfeits now often cost nearly as much as legitimate components,
thus boosting the profits for counterfeiters and their supply chains while making retail prices a poor
indicator of product authenticity.
Many third-party laboratories and some Original Equipment Manufacturers (OEMs) and/or Contract
Manufacturers (CMs) claim they can make authenticity determinations with a high degree of accuracy,
but this often is not the case. Various standards, including SAE AS5553 and IDEA-STD-1010, provide
detailed guidelines on identifying counterfeit components. [References 11-12.] These standards are
sometimes helpful in identifying counterfeits where component packages have obviously been
“refurbished” and/or components have been re-marked. However, SIA member companies havenumerous examples where third-party laboratories reportedly using these standards have madeincorrect authenticity determinations. Moreover, these standards are generally ineffective for
identifying the latest forms of counterfeiting. For example, counterfeits where used, low-grade, or
second-source die are assembled in new packages and are marked as higher-grade components would
likely escape detection. In addition, some of the test techniques used for counterfeit detection that areconsidered non-destructive can cause subtle damage to components. For example, x-ray inspection can
result in shifts in key electrical parameters for components, particularly in the case of high-performance
products. Third-party laboratories and OEMs/CMs routinely conclude that components are legitimatebased on their own electrical testing, which usually consists of curve tracer testing that measures thecurrent vs. voltage characteristics of component pins. However, while curve tracer testing can identify
the most obvious counterfeits, this and other simple bench-top electrical testing cannot begin to
replicate OCMs’ thorough electrical testing of ICs using expensive Automatic Test Equipment (ATE)running up to thousands of lines of test code as detailed in Section VII. Curve tracing only checks a few
transistors connected directly to each IC pin, while ATE testing by OCMs with proprietary test programs
assesses the full functionality of even the most complex ICs that can each have millions of transistors.
Thus, unless ICs have been tested on OCMs’ ATE that is designed to ensure only high quality and

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reliability products are shipped, conclusions about product authenticity should never be based on ICs“passing” electrical testing.
A common problem with authenticity testing is working on the false assumption that testing samples
pulled from a population of suspect parts will allow conclusions to be drawn about all the parts. Due tothe time and expense of conducting laboratory tests to try to identify counterfeits along with thedestructive nature of some tests (e.g., package decapsulation followed by die visual inspection), usually
only a small fraction of the parts in a shipment of suspect components is tested. However,counterfeiters are familiar with sampling protocols, and thus they often “seed” legitimate units at the
beginning and end of tubes and reels so that if these easily-sampled parts are tested they will pass.
Even in cases where good parts are not “seeded” in an otherwise counterfeit reel, tray, or tube of parts,
any assumption that a population of parts is homogenous is almost always incorrect in the case ofcounterfeits. More specifically, due to the variability in the processes used during the “manufacturing”
of counterfeits, only some of the parts may be damaged by mechanisms such as ESD, corrosion, die or
package cracking, etc. The bottom line on authenticity determinations made by anyone other than the
OCM is that they are time-consuming, expensive, and often inaccurate. Moreover, even if testingcorrectly identifies that components are authentic, there is no way to prove that components outside
the authorized supply chain have not been mishandled or improperly stored, thus jeopardizing their
quality and reliability.
Although counterfeiters have become very sophisticated, OCMs can readily make authenticity
determinations on suspect products marked with their logos. OCMs incorporate overt and covert
features into semiconductor packages as well as packing materials. In many cases, technical experts at
OCMs can quickly make authenticity determinations when provided with high-resolution photos of the
top-side and bottom-side of semiconductor packages as well as associated shipping labels and packing
materials. OCMs’ methodologies for making authenticity determinations are only valuable when they
are kept secret, so OCMs do not divulge any details on covert features and authenticity methodologies.
In cases where authenticity determinations cannot be made from photos, OCMs can consistently makeaccurate determinations when provided with physical samples of suspect components marked with
their logos.
While OCMs are proficient at making authenticity determinations on “their” components, most OCMs
limit their authenticity determination services to suspect products detained by Customs and to suspectproducts that are the subject of law enforcement investigations. OCMs generally do not provide
authenticity determinations as a free service for non-government agencies. This is because many
billions of suspect components are available on the open market, and OCMs would need to staff large
departments to try to respond to tens of thousands of authenticity requests from independent
distributors and brokers as well as individuals or companies buying from these non-authorized sources.
OCMs provide extensive post-sales support to customers that buy their products from authorized
sources, but, as with other industries, there is no viable business model for OCMs to provide free
support on suspect products that may not have been manufactured by the OCM. Again, as with otherindustries, OCMs support products they sell through authorized channels; OCMs are not in the businessof supporting counterfeits and other suspect products available on the open market.
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X. Authenticity Does Not Guarantee Performance and Reliability
A major misconception is that if an authenticity determination is made (by whatever means) and theassociated semiconductor components are deemed legitimate, then they will have high quality andreliability levels. In many cases, nothing could be farther from the truth. Any components outside theauthorized supply chain (whether authentic or not) may not have been handled, stored, and transported
properly. Even if a customer buys components from a broker or an independent distributor that has
always handled and stored components correctly, the broker/independent distributor may haveobtained the components from an “upstream” source that did not do so. Unfortunately, unlike withsome other products, semiconductor components can be mishandled or stored improperly yet show
little or no physical evidence that they have been abused. Examples of damage that can occur due toimproper handling and storage when components are outside the authorized supply chain include:
1. Electrostatic Discharge (ESD) damage due to handling without adequate ESD controls;
2. Bent pins, scratched pads, and deformed solder balls due to rough handling;
3. Solderability issues caused by exposure to excessive temperature and/or humidity;
4. Package contamination due to handling and storage in a dirty environment;
5. Package “popcorning” caused by incorrect or missing dry-packing.
Unfortunately, as detailed in Section VIII, some of the above issues do not always result in immediate
component failure. Both ESD damage and package contamination can result in time-dependent failures.
Since the quality and reliability of components can be severely degraded by improper handling and storage,
semiconductor companies do not offer warranties on components that are outside the authorized supply
chain. Thus, if components bought on the open market have high fail rates in electronic systems,
semiconductor companies have no liability. Although the component purchaser may try to pass warranty
costs and other large financial liabilities on to the company they bought the parts from, most open market
sources are not in a financial position to pay out large liability claims. For example, fly-by-night operators
often “disappear” when faced with liability claims or lawsuits. The net result is that the Original Equipment
Manufacturers (OEMs) and/or their Contract Manufacturers (CMs) are saddled with high financial liabilities
and in many cases damaged reputations due to selling systems with poor reliability. The OEMs/CMs can
avoid all these problems by buying components directly from OCMs or directly from their AuthorizedDistributors/Resellers.

XI. How Authorized Supply Chains Prevent Counterfeit Infiltration
The authorized supply chain for semiconductor components is very clear and ensures that this supply chain
is not contaminated by counterfeits. Original Component Manufacturers (OCMs) sell their products in two
ways:
1. Directly through their sales force and through their Internet sites;
2. Directly through Authorized Distributors, and, in some cases, Authorized Resellers.
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Each OCM identifies and qualifies their Authorized Distributors using a broad set of criteria including longterm business viability, quality systems, order placement and fulfillment processes, customer support, andcustomer returns policies. While the details of the processes for selecting Authorized Distributors vary
somewhat between semiconductor companies, the contracts between OCMs and their AuthorizedDistributors always require them to obtain components solely from OCMs. Contracts specify that
Authorized Distributor relationships can be terminated if distributors ever allow product not sold by them tobe “returned.” OCMs periodically audit their Authorized Distributors to ensure products are always handled
and stored properly to prevent ESD and other damage. These audits also include validating that the
distributors’ policies and procedures cannot allow counterfeit or otherwise questionable components into
the supply chain. The net result is that, just as with component purchases directly from OCMs, customers
buying from Authorized Distributors are assured of receiving legitimate products with high quality andreliability levels. Components bought from Authorized Distributors carry the same factory warranties as
those bought directly from OCMs.
Semiconductor companies have made it easy for customers to identify their Authorized Distributors. OCMs
list their Authorized Distributors and any Authorized Resellers on their Internet sites. If a link to authorized
sources is not available on a given OCM’s home page, just search on “distributors” to find them. The SIA
ACTF has partnered with SIA member Rochester Electronics to create, develop and maintain the Electronics
Authorized Directory at the following URL: http://www.authorizeddirectory.com/. [Reference 13.] This
web-based search tool provides distributor information that is maintained, checked, and updated on aregular basis from the OCMs’ websites. No user registration or password is required to access this website,
and the user can readily search by OCM and by location to find Authorized Distributors worldwide. Whenchoosing Authorized Distributors, keep in mind that a given distributor may carry a very broad line ofcomponents and may only be an Authorized Distributor for a subset of those components. Thus, if a
distributor makes a general statement that they are authorized, be sure to check that they are authorized by
the specific OCM of interest to sell that OCM’s components.

XII. How Counterfeits Can Enter Non-Authorized Supply Chains
OCMs and their Authorized Distributors have proven systems for ensuring that components boughtfrom them are legitimate and are handled, stored, and transported properly. However, oncecomponents are out of the authorized channel there are no assurances that the component is legitimate
or functional. Components on the open market often pass through many different hands. For example,
during his opening statement at the Senate Armed Services Committee (SASC) Hearing on Counterfeit
Electronic Parts in the Department of Defense’s Supply Chain, SASC Chairman Senator Carl Levindescribed how one set of suspect counterfeit parts went through six different brokers/independent
distributors in three different countries before they were assembled into an electronic system.
[Reference 14.] Given the number of parties involved and the associated extensive shipping andhandling operations, there are numerous opportunities for counterfeit components to enter nonauthorized supply chains. In many cases, the majority of parties in the supply chain are unaware thatthey are dealing with counterfeits. It is not surprising these parties usually plead ignorance if aninvestigation takes place and civil or criminal charges are filed. However, any individual or company thatis knowingly or unknowingly involved in the distribution of counterfeit components can be charged withtrafficking in counterfeit goods.

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While many brokers/independent distributors are diligent about avoiding counterfeits, some open
market sources intentionally engage in the distribution and sale of counterfeit components. For
example, the SIA Anti-Counterfeiting Task Force worked with US government agencies to analyze
suspect components, many of which were determined to be counterfeit, sold by brokers MVP Micro, J.J.
Electronics, VisionTech Components, Epic International Electronics, and their affiliated companies.
[References 15-18.] The defendants in the MVP Micro case manufactured counterfeit semiconductors
in the US, thus illustrating that the manufacturing of counterfeit components is not just limited tocountries with a history of providing minimal Intellectual Property (IP) protection. In the J.J. Electronics,
MVP Micro, and VisionTech Components cases, the defendants knowingly sold counterfeit electronic
components to the US military and other customers via their professional-looking websites. The
defendants in these cases later served time in prison for trafficking in counterfeit components and otherunlawful activities. The defendant in the Epic International Electronics case was charged in July 2013
with importing counterfeit semiconductors for sale in the US. Some of these counterfeits were intended
for use in nuclear submarines, thus underscoring the major risks that counterfeit semiconductors poseto health, safety, and security.
Although the majority of brokers and independent distributors in the US do not knowingly sellcounterfeit components, SIA member companies, working in conjunction with US Customs and Border
Protection (CBP) as well as OEMs and CMs, have identified hundreds of brokers and independent
distributors that have attempted to import and/or have imported or otherwise obtained counterfeit
components. This SIA and CBP data is consistent with Government-Industry Data Exchange Program(GIDEP) alerts detailing incidents where hundreds of open market suppliers worldwide have sold suspect
or confirmed counterfeit components to GIDEP member companies. [Reference 19.] Thus,
unfortunately, the sale of counterfeit components is not just limited to a few rogue brokers andindependent distributors; counterfeits have infiltrated much of the open market and are commonly
seen on web-based purchases where the buyers’ primary purchasing criterion is lowest price. As a final
example illustrating this point, the Government Accountability Office (GAO) published a report that
concluded that “Suspect counterfeit and bogus—part numbers that are not associated with any
authentic parts—military-grade electronic parts can be found on Internet purchasing platforms, as noneof the 16 parts vendors provided to GAO were legitimate.” [Reference 20.]

XIII. How to Avoid Counterfeit Legacy Products
Due to industry changes and customer demand for the latest and most advanced technologies, OCMs
routinely discontinue the manufacture of products. Consistent with JEDEC JESD48C [Reference 21],semiconductor companies generally provide customers with at least six months to place orders and one
year to ship orders after a Product Discontinuance Notice (PDN) is issued for a given product. PDNs
usually specify replacement products and/or alternate sources for products that are being discontinued.
In many cases, customers expect to receive these PDNs, and they have little if any impact on theiroperations. For example, the Restriction of Hazardous Substances (RoHS) Directive and otherenvironmental legislation have driven the demand for many non-military components in Pb-bearing
packages to zero. As customers have transitioned their PCB manufacturing operations to Pb-freeprocesses, they have no need for legacy Pb-bearing packages. Thus, OCMs have issued many PDNs on
Copyright © 2013 by the Semiconductor Industry Association20

Pb-bearing packages, but in most cases the same products are available in Pb-free packages, and formost customers these PDNs are just a formality. In other cases, PDNs are issued when old wafer
fabrication processes will be shut down. Often, these same products or very similar products will beavailable on newer wafer fabrication processes, though the specifications for the recommended
replacement parts may vary from the parts being discontinued. In such cases, whenever possible,
component customers should transition their future orders to the recommended replacement products.
The transition should be scheduled to be completed by the time the customer runs out of the legacy
product bought during the last-time shipment period. Customers that use a large number of different
components should consider having SIA member companies and/or OCM-Authorized Distributors thatspecialize in product life cycle management handle some or all their business processes for ensuringcontinuous availability of components.
Several options are available to customers requiring legacy products where the customer cannot use
recommended replacement parts for any reason, including potentially high costs for qualifying a new
product. These options will ensure that customers are receiving authentic products with high quality
and reliability levels as well as full warranty coverage and post-sales support.
1. The first option is to buy legacy components from OCMs’ Authorized Aftermarket
Distributors/Manufacturers that obtain legacy products exclusively from OCMs in wafer, die,or final packaged form. [Reference 13.] For many legacy products, decades of supply areavailable for immediate delivery from Authorized Aftermarket Distributors that have literallybillions of packaged components in stock. In cases where the product needs to be packaged but
is only currently available in die or wafer form, Authorized Aftermarket
Distributors/Manufacturers for legacy products can have the product assembled as per thecustomer’s needs using either subcontracted or internal package assembly processes. As withproducts assembled by the OCM and marked with the OCM’s logo, products assembled by the
Authorized Aftermarket Distributor/Manufacturer and marked with the Aftermarket
Distributor/Manufacturer’s logo have full warranty coverage and post-sales support.
2. Additionally most Authorized Aftermarket Distributors/Manufacturers are authorized by
OCMs to manufacture discontinued products. Several SIA member companies have extensive
portfolios of products that OCMs have authorized them to produce using the same wafer
fabrication process flows and tooling as well as the same packages as the original products.
These aftermarket products have comparable or better performance, quality, and reliability as
the original products, and they carry full warranties from the Authorized Aftermarket
Distributors/Manufacturers. In cases where they do not already have the capability to
manufacture legacy products of interest, Authorized Aftermarket Distributors/Manufacturers
usually can re-engineer these products after obtaining authorization from the OCMs. Due to thetime and cost of doing so, this option is generally only used when no Authorized Distributors
have the ability to meet customer demand requirements (shipment quantities with specified
delivery dates) for the products of interest.

XIV. ACTF Strategies and Initiatives to Combat Counterfeits
Since its formation in 2006, the Semiconductor Industry Association (SIA) Anti-Counterfeiting Task Force(ACTF) has been actively battling against counterfeit semiconductors. Through the ACTF, major
Copyright © 2013 by the Semiconductor Industry Association21

semiconductor companies in the US have jointly developed and advanced ongoing initiatives and strategies
to reduce the supply and demand for counterfeit semiconductor products. Major accomplishments include:
1. The ACTF has driven counterfeit component awareness and actions. SIA members provide
leadership and give presentations at conferences, technical symposia, and webinars, includingCounterfeit Electronic Parts and Electronic Supply Chain Symposia, and Diminishing Manufacturing
Sources and Material Shortages (DMSMS) Conferences. [References 22-23.] These presentations
focus on the quality and reliability risks posed by counterfeit semiconductors, along with the criticalimportance of always buying components directly from OCMs or their Authorized Distributors andAuthorized Resellers to avoid problems with counterfeit components. SIA President Brian Toohey
has testified before both the Senate Armed Services Committee and the House Homeland Security
Committee on how counterfeit semiconductors jeopardize the safety and effectiveness of US
military personnel and operations. [Reference 8.] SIA members also regularly meet with House,
Senate, Department of Commerce, Department of Defense, Administration, and other government
officials to brief them on how counterfeit semiconductors are a danger to the health and safety ofthe public, and to work with them on solutions to this insidious problem. Through written
responses to Requests for Information and to Notices of Proposed Rulemaking, the ACTF provides
government agencies with specific recommendations on how to avoid counterfeit semiconductor
products. The ACTF has also been instrumental in driving anti-counterfeiting legislation, regulations,and policies, including legislation that increases government-industry sharing on suspected
counterfeit semiconductors, and that increases penalties for selling counterfeit components to themilitary.
2. The ACTF works closely with Customs to keep counterfeit components from crossing borders.
Since 2006, the ACTF has partnered with US Customs and Border Protection (CBP) in the battle
against counterfeit components, and the ACTF has a very effective working relationship with the
CBP Center of Excellence and Expertise – Electronics that was formed in October 2011. [Reference25.] ACTF member companies conduct CBP Port Officer training on an ongoing basis; this training
allows CBP to identify suspect counterfeit components based on specific telltale signs. In cases
where they cannot readily make authenticity determinations on their own, Port Officers havecontacts at SIA companies. When provided with photographs and/or other details on suspect
shipments, SIA companies rapidly determine whether the shipments are legitimate or are most
likely counterfeit. Shipments of legitimate semiconductors are released by CBP, while shipments ofcounterfeit semiconductors are seized and later destroyed. CBP has published Intellectual Property
Rights (IPR) seizure statistics showing that the total Manufacturer’s Suggested Retail Price (MSRP)
for counterfeit consumer electronics/parts that were seized in Fiscal Year 2012 was approximately$101 million. [Reference 26.] Although this only represents a small fraction of the counterfeit
electronics entering the US, these seizures are reducing the supply of counterfeit semiconductors
and are serving as a deterrent to open market suppliers that are knowingly or unknowingly
attempting to import counterfeits into the US. While the ACTF’s focus has been primarily with
Customs in the US, SIA member companies have also conducted training for Customs officials inother countries, including China, France, India, and Italy. As in the US, SIA companies provide
Customs officials worldwide with rapid responses to component authenticity requests.
3. The ACTF also partners with law enforcement to help prosecute those involved in the
manufacturing and/or trafficking of counterfeit semiconductor components. SIA companies
conduct in-depth laboratory analyses on suspect components from undercover buys made bygovernment agencies. Using CBP seizure data as well as OCM laboratory reports on confirmed
Copyright © 2013 by the Semiconductor Industry Association22

counterfeit components, law enforcement agencies obtain search warrants and conduct
enforcement actions (raids) resulting in the arrest of suspects dealing in counterfeit components.
SIA companies provide on-site support to law enforcement immediately after enforcement actions
occur. This support includes identifying the manufacturing processes used by counterfeiters anddetermining which seized components are counterfeit. Subsequent support includes testifying incourt cases and providing Victims Statements to sentencing judges. Recent cases that the ACTF
assisted government agencies in investigating and prosecuting, including MVP Micro in Irvine,
California, and VisionTech Components in Clearwater, Florida, have resulted in defendants beingordered to pay restitution and being sentenced to several years of incarceration. [References 1617.] The Epic International Electronics case is in the prosecution phase, but the defendant is facing
up to 20 years in prison if convicted. [Reference 18.] These and other high-visibility cases, whichhave received significant media coverage, serve as a major deterrent to those manufacturing and/or
selling counterfeits or those contemplating doing so.
4. The ACTF is active in evaluating component security features and in developing international
standards relating to supply chain assurance and anti-counterfeiting. SIA member companies use
a wide range of security features, both overt and covert, and they work both independently andwith third-parties to continue to advance these features to stay ahead of counterfeiters.
Semiconductor companies do not plan to adopt a single, industry-wide security feature sincecounterfeiters would then only need to figure out this one feature, and if they did so, they could
readily counterfeit components from any semiconductor company. Rather, OCMs use security
features that change over time and are tailored to the specific components being manufactured.
This approach has proven to be the most effective at deterring counterfeiters. These security
features only have value when they are dynamic and are kept secret. Therefore, semiconductor
companies do not disclose security features to customers, governments, or any other entities.
5. While the semiconductor industry is opposed to any mandates for a single authentication
technology, SIA member companies are actively involved in the development and deployment of
a consolidated set of standards covering anti-counterfeiting. The ACTF has highlighted that much
more coordination is required between the numerous standards and regulatory bodies that haveissued or are developing anti-counterfeiting standards and specifications. For example, NASPO, SAE,
ANSI, ISO, and JEDEC all either have or are developing such standards and specifications, many ofwhich overlap with each other and sometimes conflict with each other. Unfortunately, too many ofthese standard and specifications are geared toward providing users with detailed methods to try to
identify counterfeits. As described in Section VIII, no suite of test methods, even if conducted on
100% of suspect units, can provide full assurance that products are authentic and reliable. Open
market sources and third-party laboratories that claim they can electrically test suspect components
almost never can do so as rigorously as OCMs and their Authorized Distributors that use test
hardware and test software developed and maintained by product experts. Thus, the only way toguarantee that products are authentic and reliable is to buy them directly from authorized sources.
Component purchasers can avoid issues with counterfeits by always adhering to standards andspecifications requiring that purchases be from OCMs and their Authorized Distributors/Resellers.
6. In addition to industry-government initiatives, the SIA ACTF has joined forces with otherassociations to advance the battle against counterfeit semiconductor components. The UnitedStates SIA is a leading member of the World Semiconductor Council (WSC) Anti-Counterfeiting Task
Force (ACTF) that has been active since 2012. The WSC unites the six SIAs from the six major
semiconductor-producing countries/regions of the world, i.e., China, Chinese Taipei, Europe, Japan,
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Korea, and the United States. [Reference 25.] The WSC ACTF recognizes that the counterfeit
semiconductor problem cannot be solved by any one country, but rather requires worldwide
strategies and initiatives focused on both the supply and demand for counterfeits. The WSC ACTF isreviewing best practices identified by individual SIAs and is working to deploy them more broadly.
This requires extensive interaction with governments worldwide, and a key forum for formalizingthese interactions is the Government and Authorities Meeting on Semiconductors (GAMS), which isheld annually. [Reference 27.] In addition to working with the WSC ACTF and GAMS, the SIA ACTF
interfaces with other associations involved in anti-counterfeiting initiatives, including the Electronic
Components Industry Association (ECIA), the Aerospace Industries Association (AIA), and the US
Chamber of Commerce. [References 28-30.]
7. When an OCM discovers that an open market supplier is erroneously indicating they are an
Authorized Distributor, the OCM will typically take legal action to stop this misrepresentation.
This is an ongoing problem since open market suppliers continuously establish websites that are
intended to make customers think they are Authorized Distributors. For example, when broker
websites have banners and/or line cards showing OCMs’ logos, the OCMs will issue cease and desist
letters. In most cases, brokers will promptly remove OCMs’ logos from their websites. In rare cases
when brokers do not do so, additional legal actions are taken to prevent brokers from continuing to
infringe logos and to deceive customers. In addition, as previously detailed, the SIA ACTF promotes
use of the Electronics Authorized Directory so that customers can easily identify AuthorizedDistributors for all major OCMs. [Reference 13.]

XV. Summary of How to Win the Battle Against Counterfeit Semiconductors
The key to winning the battle against counterfeit semiconductors is elegantly simple: Exclusively buy
semiconductor products either directly from the Original Component Manufacturer (OCM) or directlyfrom the OCM’s Authorized Distributors/Resellers. By eliminating poor purchasing practices that allow
or even encourage procurement from the open market, the Original Equipment Manufacturers (OEMs)and their Contract Manufacturers (CMs) can avoid encountering counterfeits. The OEMs/CMs thatprocure components exclusively through authorized sources, including Authorized Aftermarket
Distributors/Manufacturers, will also eliminate the need to conduct costly, time-consuming, and errorprone authenticity testing. The Authorized Distributors for a given OCM can be easily found on the
OCM’s website. Alternatively, the following website sponsored by the Semiconductor Industry
Association (SIA) provides instant access to Authorized Distributors for most component OCMs:
http://www.authorizeddirectory.com/.
The critical importance of buying in-production semiconductor products from OCMs and their
Authorized Distributors, and buying legacy products from OCM’s Authorized Aftermarket
Distributors/Manufacturers, is underscored by the many risks posed by buying components through theopen market. As compared to the authorized market, the open market, including independent
distributors, brokers, and Internet-based component exchanges, has far fewer controls over proper
handling, storage, and transportation of components, and often lacks component traceability to the
manufacturer. This lack of controls and traceability, along with the frequency and ease at which
components move through this non-authorized supply chain, make the open market an easy target for
counterfeiters to infiltrate to sell their illegal products that often have poor reliability. Semiconductor
products purchased on the open market may be cheaper in the short-term than those bought from
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authorized sources, but they can be far more expensive in the long-term if they are counterfeit and/or
were improperly handled and stored, thus potentially resulting in major rework costs and high warranty
or liability claims. OCMs and their authorized sources have extensive, proven systems for ensuring
semiconductor products are authentic. Thus, OEMs/CMs that have procurement policies requiring
purchases exclusively from OCMs and their authorized sources will consistently receive authentic
products with high quality and reliability levels and full factory warranties. This in turn will protect thehealth, safety, and security of people throughout the world that count on reliable electronic products
and systems in their daily lives.

XVI. References
1. “Defense Industrial Base Assessment: Counterfeit Electronics,” published by the Department ofCommerce’s Bureau of Industry and Security, January 2010:
http://www.bis.doc.gov/defenseindustrialbaseprograms/osies/defmarketresearchrpts/final_counte
rfeit_electronics_report.pdf.
2. Semiconductor Industry Association website: http://www.semiconductors.org/.
3. National Defense Authorization Act for Fiscal Year 2012, H.R. 1540, Section 818:
http://www.gpo.gov/fdsys/pkg/BILLS-112hr1540enr/pdf/BILLS-112hr1540enr.pdf.
4. US Customs and Border Protection press release on Operation Infrastructure:
http://cbp.gov/archived/xp/cgov/newsroom/news_releases/archives/2008_news_releases/feb_200
8/02222008.xml.html.
5. US Customs and Border Protection press release on Operation Infrastructure II:
http://cbp.gov/archived/xp/cgov/newsroom/news_releases/archives/2008_news_releases/nov_20
08/11202008_7.xml.html.
6. IHS ISuppli press release, “Top 5 Most Counterfeited Parts Represent a $169 Billion Potential
Challenge for Global Semiconductor Market,” April 4, 2012:
http://www.isuppli.com/Semiconductor-Value-Chain/News/Pages/Top-5-Most-Counterfeited-PartsRepresent-a-$169-Billion-Potential-Challenge-for-Global-Semiconductor-Market.aspx.
7. Background Memo: “Senate Armed Services Committee Hearing on Counterfeit Electronic Parts inthe Department of Defense’s Supply Chain,” November 8, 2011:
http://www.levin.senate.gov/newsroom/press/release/background-memo-senate-armed-servicescommittee-hearing-on-counterfeit-electronic-parts-in-the-dod-supply-chain.
8. Oral Testimony of SIA President Brian Toohey during the Senate Armed Services Committee Hearing
on Counterfeit Electronic Parts in the Department of Defense’s Supply Chain, November 8, 2011:
http://www.semiconductors.org/news/2011/11/08/news_2011/sia_president_testifies_at_senate_armed_services_committee_on_dangers_of_counterfeit_chips/.
9. Business Week article and video from October 13, 2008:
http://images.businessweek.com/ss/08/10/1002_counterfeit_narrated/index.htm.
10. MIL-HDBK-217F: “Military Handbook - Reliability Prediction of Electronic Equipment,” December,
1991: http://www.sre.org/pubs/Mil-Hdbk-217F.pdf.
11. SAE AS5553, “Counterfeit Electronic Parts; Avoidance, Detection, Mitigation, and Disposition,”
available for purchase at http://www.sae.org/.
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12. IDEA-STD-1010. “Acceptability of Electronic Components Distributed in the Open Market,” available
for purchase at http://www.idofea.org/.
13. Electronics Authorized Directory: http://www.AuthorizedDirectory.com/.
14. “Senate Armed Services Committee Hearing on Counterfeit Electronic Parts in the Department of
Defense’s Supply Chain,” Slide 01, November 8, 2011: http://www.armedservices.senate.gov/statemnt/2011/11%20November/Documents%2011-08-11/1.pdf.
15. Federal Bureau of Investigation press release on the J.J. Electronics case:
http://www.fbi.gov/losangeles/press-releases/2009/la012109a.htm.
16. US Department of Justice press release on the VisionTech Components case:
http://www.justice.gov/usao/dc/news/2011/oct/11-472.html.
17. US Department of Justice press release on the MVP Micro case:
http://www.justice.gov/usao/dc/news/2012/feb/12-065.html.
18. US Department of Justice press release on the Epic International Electronics case:
http://www.justice.gov/opa/pr/2013/July/13-crm-790.html.
19. Government-Industry Data Exchange Program: http://www.gidep.org/.
20. Government Accountability Office (GAO) Department of Defense (DoD) Supply Chain Report:“Suspect Electronic Parts Can Be Found on Internet Purchasing Platforms,” February 2013:
http://www.gao.gov/assets/590/588736.pdf.
21. JEDEC Standard JESD48C: “Product Discontinuance,” December 2011, available for download after
registration at http://www.jedec.org/.
22. Counterfeit Electronic Parts and Electronic Supply Chain Symposium:
http://www.smta.org/counterfeit/.
23. Diminishing Manufacturing Sources and Material Shortages (DMSMS) Conference:
http://www.dmsms2012.com/.
24. Customs and Border Protection (CBP) Centers of Excellence and Expertise (CEE):
http://www.cbp.gov/linkhandler/cgov/trade/trade_transformation/industry_int/cee_overview.ctt/c
ee_overview.pdf.
25. Customs and Border Protection (CBP) Intellectual Property Rights (IPR) Fiscal Year 2012 Seizure
Statistics: http://www.cbp.gov/xp/cgov/trade/priority_trade/ipr/.
26. World Semiconductor Council website: http://www.semiconductorcouncil.org/wsc/.
27. Government and Authorities Meeting on Semiconductors:
http://www.semiconductors.org/news/2012/08/27/trade-article/13th-government-and-authoritiesmeeting-on-semiconductors-gams-sept.-24-28-2012/.
28. Electronic Components Industry Association: http://www.eciaonline.org/default.aspx.
29. Aerospace Industries Association: http://www.aia-aerospace.org/.
30. US Chamber of Commerce: http://www.uschamber.com/.

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XVII. Acknowledgements
SIA would like to thank the following people for their contributions to this paper: Andrew Olney, Analog
Devices, Inc., Chairman of the SIA Anti-counterfeiting Task Force, for editing the paper and providing
much of the content; Corrina Sinatro, Advanced Micro Devices; Brian Way, Altera Corporation; Tom
Kane, Analog Devices, Inc.; Brad Bryson and Jack Taylor, Freescale Semiconductor; Taffy Kingscott, IBM
Corporation; Steven Jeter, Infineon Technologies; Greg Warder, Integrated Device Technology; David
Brown and Lawrence “Lonnie” Hurst, Intel Corporation; Lee Mathiesen, Lansdale Semiconductor; Daryl
Hatano and Gary Pugsley, ON Semiconductor; Ron Davis, Qualcomm; Dan Deisz, George Karalias, andSteve Hirschfeld, Rochester Electronics; Barry Dove and Billy Nixon, STMicroelectronics; Lisa Maestas,
Paula Collins, and Rick Logsdon, Texas Instruments; James Burger, Thompson Coburn LLP.

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