© 2011 Rochester Electronics, LLC

Page 8

September 2011

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manufacturing flow. Often, these components are used in military applications. Counterfeiters purchase

lower-cost, lower-performance components, re-mark them, and sell them as their higher-priced, higher-

performance counterparts.

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Re-marking to suit customer need: Often, manufacturers produce a number of similar parts that share

performance similarities. Some may work in some applications but not in others. Slight differences can

cause all kinds of problems, even ultimate failure. Counterfeiters often mark one semiconductor so it can

masquerade as the one that really fits the situation. Sometimes the switch is not immediately discovered.

•

Counterfeits from scratch: Counterfeiters manufacture a device that looks like and seems to function

like the genuine item, but almost always is of substandard quality. Because the parts are marked and sold

as if they were produced by the original manufacturer, the counterfeiter can sell them at a higher price

than if they were marked with a less-prestigious brand. Once these counterfeit parts make their way to an

equipment manufacturer, the original manufacturer cannot warranty them, or take them back as a return.

Such operations range from one-man shows to organizations that counterfeit an entire company’s

identity, from product right down to website and business cards. This category also includes components

that are produced or distributed in violation of intellectual property rights, copyrights, and/or trademark

laws.

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Product skimming: Original semiconductor manufacturers are most often “fabless” and use

subcontractors for diffusion and/or assembly and testing of devices. If they are not monitored carefully,

dishonest subcontractors can produce more parts than they report to their customer. Often these

“overruns” are produced on a second shift, perhaps by personnel with less expertise using lower-quality

materials. The overrun can be sold without the knowledge of and the authorization by the original

manufacturer on the gray market where they are, to make matters worse, subject to improper handling

and storage.

•

Scrap and reject components: Components that are rejected during the manufacturing process are

usually sold to companies that salvage precious materials from the parts before they are disposed of.

These companies provide certificates of scrapping to the original manufacturer. However, some salvagers

provide the certificate and then send the rejected components into the supply chain.

•

Reclamation of used components: Vast quantities of electronic equipment are scrapped, and much of it

contains working semiconductors. In an effort to decrease the amounts of toxic e-waste, the European

Union has instituted the Waste Electrical and Electronic Equipment Directive (WEEE Directive), which

burdens the original manufacturer with the disposal of used products when they become electronic waste.

This, together with similar, less-formal directives across the globe, has encouraged the development of

“disposal companies,” many of which operate in low-cost-labor countries across the world. Companies

send their waste for “documented disposal” without realizing that most of their scrap will be scavenged for

“usable” parts. The counterfeiters often target complicated components that are not easy to duplicate, but

are easy to refurbish and sell as “new.” The parts are not protected on their journey as “trash” across the

ocean, and they are not handled under ESD-protected conditions as they are “processed.” Because these

parts often retain their original markings, they are difficult to spot as counterfeit or substandard when they

return to the market. In addition, women and children often make up a substantial portion of the workforce

who perform the processing procedures. They suffer significantly elevated levels of lead in their blood,

which can cause health problems for both mother and baby during pregnancy as well as lowered IQ

potential in children. The chemicals emitted from the burning of the final, unused scrap even adversely

affect the health of people in the e-waste city communities who are not involved in the “business.”

•

False conformance documentation: The European Union, in 2003, adopted a directive commonly

referred to as Restriction of Hazardous Substances Directive (RoHS). This legislation restricts the use of

six substances, including lead, in the production of electronic and electrical equipment. Counterfeiters