The Under-Reported Story of the Semiconductor Shortage: Counterfeits

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At this stage, we are all aware of the semiconductor shortage. While chips are still in short supply, there’s been no shortage of news stories about the chip shortage. If media coverage of the problem actually generated chips, the shortages might well be over. We’ve all seen stories about exploding demand for consumer electronics, factories shuttered during COVID-19 lockdowns, supply chain bottlenecks, a dearth of raw materials, and even drought, all in an effort to explain why we can’t get enough of these critical components.

What’s been lacking in all this news coverage is the age-old problem that accompanies shortages of just about anything, which is the counterfeits that inevitably rush to fill the void. In the case of counterfeit semiconductors, whether they are refurbished, re-marked, fakes, working or not, or even just a fake online storefront, the resulting fraud and the damage it causes mount as the chip shortage persists.

Under normal circumstances, customers can purchase components directly from the manufacturer or franchise distributor. Chain of custody is easily tracked, and authenticity is rarely in question. During supply chain disruptions like we are experiencing now, many companies must look for components on the “gray market” from third party distributors. This is where the opportunity for counterfeits to corrupt inventories starts. Chips purchased through these channels can look perfectly legitimate, and many of them will be, but there are those that, on close inspection, can reveal a completely different component on the inside. The COVID-19 pandemic, with factories shut down or slowed, combined with its huge spike in demand, created the perfect environment for counterfeiters to flood the market with fake chips.


Third-party independent distributors are not all created equal. Many run highly professional and trusted operations, and they fill an important need in our industry for both finding a home for excess inventory and as sources for obsolete components. Some of the best of these gray-market distributors are members of IDEA (Independent Distributors of Electronics Association) and ERAI (Electronics Resellers Association International), organizations that hold their members to high quality standards and practices, including screening for counterfeit parts.

To read this entire article, which appeared in the January 2022 issue of SMT007 Magazine, click here.


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